ROADSHOW PRESENTATION. March 2010

Transcription

1 ROADSHOW PRESENTATION March 2010

2 Disclaimer This presentation does not constitute or form part of, and should not be construed as, any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of Prysmian S.p.A. (the Company ) or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities in the Company or any member of its group or any commitment whatsoever. Persons who intend to purchase or subscribe for securities in the Company in any proposed offering are reminded that any such purchase or subscription may only be made solely on the basis of the information (which may be different from the information contained in this presentation) contained in the final offering documents or listing particulars to be issued by the Company in due course in connection with any proposed offering. The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements in this presentation are forward-looking statements under the US federal securities laws, including the Private Securities Litigation Reform Act of By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changing business or other market conditions and the prospects for growth anticipated by the Company s management. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information contained herein and no reliance should be placed on it. None of the Company, any member of its group, their advisers, connected persons or any other person accepts any liability for any loss howsoever arising, directly or indirectly, from the issue of this document or its contents. The information contained in this presentation is solely for the information of selected participants only and is not for publication, release or distribution in Australia, Canada or Japan or to any person or entity in any jurisdiction or country where such distribution would be contrary to local law or regulation. This presentation and the information contained herein are not an offer of securities for sale in the United States and may not be viewed by persons in the United States (within the meaning of Regulation S under the US Securities Act of 1993, as amended (the Securities Act ). 1

3 With Us Today Valerio Battista Role: CEO Pier Francesco Facchini Role: CFO Joined Prysmian in: Feb 2002 Years at Prysmian/Pirelli: 22 Years in Industrial sector: 26 Joined Prysmian in: Jan 2007 Years at Prysmian/Pirelli: 3 Years in Industrial sector: 19 Giovanni Zancan Role: Finance Director Luca Caserta Role: Investor Relations Joined Prysmian in: July 2005 Years at Prysmian/Pirelli: 20 Years in Industrial sector: 20 Joined Prysmian in: Mar 2007 Years at Prysmian/Pirelli: 3 Years of experience: 12 2

4 Agenda Group Overview Business Description & Strategy Financial Highlights Appendix 3

5 Prysmian: a Truly Global Cable Manufacturer Production plant Countries with physical presence Industry leader with sales of 3.7bn and Adj. EBITDA of 403m (10.8% Adj. EBITDA margin) Ideally positioned in high growth and high margin industry segments Global presence with 56 plants in 39 countries; 11,704 employees Listed on the Milan Stock Exchange with a market cap of 2.5bn (a) True public company (a) As of 18-Mar

6 Becoming a Truly Public Company Public Company Organic Growth Product range enlargement Internationalisation Restructuring Process Closure of 11 plants Disposal of enamelled and transposed wires activities Mar-2010 Prysmian becomes the first full Italian Public Company Profitable Growth Significant enhancement of business footprint Establishment Company founded as Pirelli Cavi Establishment of first operations in Italy Growth by Acquisition Acquisitions (Siemens, NKF, MM, BICC) July 28th 2005: Goldman Sachs acquisition and creation of Prysmian Group May 3th 2007: Company listed on the Milan Stock Exchange (IPO) 5

7 A Complete and Diversified Presence and Product Offering Sales FY 2009 Euro Millions Business Area By By Geography Telecom 403 Others 2% 82 11% Industrial % 3,731m 43% Utilities 1,598 Latin America 365 APAC 10% 381 North America % 9% 3,731m 27% Trade & Installers 1,020 Energy (89%) Telecom (11%) 71% EMEA 2,636 6

8 A Leading Player in the Cables Industry Main Players in the Cables Industry 2009 revenues ( bn)(a) 4,595 3,731 3,144 3,039 2,785 2,568 Global Players 2,048 2,106 1,867 Nexans Prysmian Southwire General Cable LS Cables Furukawa Draka Fujikura Hitachi Co-leader in the Energy Cables Reference Market (2008) Number 3 Producer in the Optical Cables Market (2008) 100% = 73bn Nexans 7.2% Prysmian 6.3% General Cable 4.8% Draka 2.7% Others 79% Corning Draka Prysmian Furukawa YOFC (a) Source: Companies' Annual Reports Note: Nexans excluding Electrical Wire Segment and inter-segment eliminations which mainly refer to the same segment, General Cable excluding Rod Mill Products, Southwire as of December 2008, Furukawa considering only Electric Telecommunications and Energy & Industrial Products segments, LTM figures as of 31-Dec-2009, Fujikura including Telecom and Metal Cables & Systems segments, LTM figures as of 31-Dec- 2009, Hitachi including Wires & Cables and Information & Telecom Networking segments, LTM figures as of 31-Dec-2009, LS Cables non-consolidated sales (Cables and Components segments) pro forma for sales of acquired Superior Essex (Communications Cable segment) as of December All sales are in based on the average exchange rate of the reference period. Source: Company analysis based on CRU data 7

9 To Benefit From Expected Solid Volume Growth Across End-Markets Energy Cables Reference Market (~73bn) 89% of Prysmian s EBITDA Million Tons Conductor CAGR: 5.0% CAGR: 3.5% '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09E '10E '11E '12E Long term growth driven by: Energy consumption Investments in power grid interconnections Investments in power transmission and distribution Infrastructure investments Latin America 4% APAC 46% North America 16% 35% EMEA Telecom Cables Reference Market 11% of Prysmian s EBITDA Optical Cables Copper Cables Reference Market Size Million Km Fibre CAGR: 11% CAGR: 8% '98 '00 '02 '04 '06 '08 '10E '12E Market growth driven by increased investment in fibre access networks (FTTx) and Next Generation Networks Million Km Pair CAGR: (6)% 50 CAGR: (7)% 0 '98 '00 '02 '04 '06 '08 '10E '12E Declining historical development in copper cables expected to continue Optical Cables 4.2bn 49% 4% 16% 31% Copper Cables 4.5bn 44% 5% 15% 36% Latin America EMEA North America APAC 15% Source: Company analysis based on CRU data. Energy = Low Voltage and Power Cable; TLC = External Copper Tlc Cable, Fibre Optic 8

10 Prysmian Leverages on High Resilience Businesses PROFITABILITY Extended business perimeter SURF (Flexible Pipes + Umbilicals) Look for Profitable Growth Global businesses Focus on products and service High Industrial Optical Cables & Fibre Submarine Extra HV High Voltage Limited product diversification within regions Regional competition Medium Low Copper Telecom Cables Power Distribution VALUE ADDED Trade & Installers ~ 65% of FY 09 Adj.EBITDA Focus on solutions Diversification and innovation Competition on a global basis Take selective M&A opportunities Manage for Cash Low Medium High GROWTH 9

11 With a Unique Portfolio Driving Sustainable Margin Growth Adj. EBITDA ( Millions); Adj. EBITDA margin (%) Trade&Installers Industrial Utilities - Trasmission Utilities - Distribution Telecom Transmission: ~70% of adj.ebitda ~70% Industrial Priority: ~75% of adj.ebitda ~45% ~50% ~60% Optical: ~80% of adj.ebitda % 7.2% 7.2% 7.2% 12.5% 8.6% 10.6% 8.6% 14.2% 6.9% 10.9% 9.0% 16.7% 4.0% 9.8% 7.6%

12 Resulting in Best in Class Financial Performance Adj. EBITDA Margin Evolution 2009 Adj. EBIT / Employee 10.3% 10.5% 10.8% Adj. EBITDA ( m) Prysmian % 9.0% 6.5% 6.1% 7.1% 6.6% 6.6% 7.8% 6.9% 9.6% 8.0% 8.4% 7.0% 8.5% 7.2% 7.8% 6.7% General Cable 253 a) Nexans (b) 359 Draka 138 / % 6.0% 5.4% 5.7% 5.1% 5.1% 4.8% 4.7% # Empl (2009 YE) Prysmian General Cable (a) Nexans Draka 11,704 11,300 22,716 8,750 (a) Exchange rate: /USD = 1.39 (b) Nexans excludes Electrical Wires Division Source: Publicly available information from companies filings. Note: Not all companies calculate Adj. EBITDA and EBIT identically, therefore data may not be comparable 11

13 FY 2009 Key Financials Euro Millions Sales Sales Adjusted EBITDA (1) 5,007 4,686** +8.2%* 5, %* 5, %* 3, * Organic Growth ** Like for like excl. UK ROD business ( 321m) % 10.3% 10.5% 10.8% Free Cash Flow (Levered) Net Financial Position x x x x Net Financial Position NFP / Adj. EBITDA (1) Adjusted excluding non-recurring items, % indicates EBITDA margin 12

14 Key Prysmian Highlights A leader in its reference markets High level of diversification (by product, client and geography) and hence resilience Leader in high technology segments with high barriers to entry Industrial efficiency, production flexibility and operating leverage Good earnings resilience and best in class financial performance within the sector over time Relatively historical stable cash flow profile through the cycle Solid management track record A unique platform to capture end-market growth through excellence of execution, best-in-class operating leverage and cash generation 13

15 Agenda Group Overview Business Description & Strategy Financial Highlights Appendix 14

16 Market Outlook and Key Considerations Energy Telecom Prysmian strategic initiatives First tangible signs of start in European interconnections Leading player in fast-growing off-shore wind farms New Government stimulus packages Recovery in oil off-shore exploitation activities Growing investments in Asia-Pacific Development of renewable energy sources Optical cables: network expansion in developed countries and infrastructure demand in APAC Europe lagging behind US in optical infrastructure as growth driver for the future Focus on high value-added products and segments (e.g. Utilities Transmission, OGP, Renewables and Optical cables) Continue to improve cost competitiveness and service Focus on cash generation Pursue selective organic and external growth Maximum attention on high technology businesses less exposed to economic cyclical trends and on geographical markets with greater future potential Selective investments in production capacity increase Actions to improve industrial efficiency and customer service in order to exploit all commercial opportunities across all group segments 15

17 Laying the Future Disciplined Capex to Fuel Growth in High Value-Added Segments Utilities Industrial Surf T&I Telecom Total* 37 Capacity Increase & Product mix Development ( m) % 3% 57% - 5% 100% 73% 14% - 10% 3% 100% % 9% 4% 2% 13% 100% % 6% 43% - 8% 100% Capital Expenditure by Destination (2009) Surf 25 % Telecom Industrial 5 % 4 % Maintenance 17 % 107m 17 % IT, R&D Utilities 25 % 7 % Efficiency Capacity Increase & Product mix * % of Capacity Increase & Product mix 16

18 Prysmian s Product Portfolio Prysmian benefits from an end market exposure focused toward higher value added products and has created a lean efficient manufacturing base through its restructuring initiated in 2001 Euro millions, 2009 Division Business Area Business Line % Group s Adj. EBITDA Sales ( m) / Adj. EBITDA Margin Utilities Power Distribution High Voltage & Extra High Voltage Submarine Network Components Cables for power transmission and distribution networks Power Submarine cables Components for power distribution and transmission networks 66% Organic Growth ,5% 14,2% 16,7% % 12.1% (13.9)% Energy Cables and Systems Trade and Installers Trade & Installers Cables for the construction industry and civil engineering, building wires 10% ,6% ,9% ,0% Organic Growth 7.1% (5.0)% (21.5)% Telecom Cables and Systems Industrial Telecom Industrial Optical Cables & Fibre Copper Cables Special application cables for OEMs and Industrial contractors (e.g. OGP, renewable energy, transportation, crane, mining, marine, etc.) Cables and components for Telecom networks 15% 8% Organic Growth Organic Growth 10,6% 10,9% 9,8% % 5.0% (16.1)% 8,6% 9,0% 7,6% % 5.2% (20.7)% Prysmian (a) 403m Sales EBITDA Margin (a) Breakdown does not include Others for 3m EBITDA. 17

19 Agenda Group Overview Business Description & Strategy Financial Highlights Appendix 18

20 Key Financial Policy Drivers Conservative financial policy Good liquidity position and no short term debt Track record of solid financial performance and rapid de-leveraging Good Free Cash Flow generation and good Net Interest Coverage Ratio Disciplined approach to capex Dividend share confirmed at 2009 level (30% of reported net income) 19

21 Capital Structure (as of 31-Dec-2009) Amount X EBITDA (a) % on EV Considerations In million Term Loan Other Debt Total Gross Debt Cash & Cash Equiv. Other Finance Assets Net Financial Position to 3 rd Parties Market Capitalisation (b) Total EV (c) ,065 (492) (88) 485 2,456 2, x 1.2 x 7.3 x 36% 16% 100% Prysmian has the following financing arrangements in place: Senior Facilities comprising Term Loan, RCF and Bonding Line for a total amount of 1.7 billion The Term Loan and the RCF will be extended at their maturity of May 2012 until Dec 2014 through a Forward Start Facility The Senior Facilities and the Forward Start Facility are senior unsecured obligations of the Group Additionally, Prysmian has a 350 million securitisation program (d) Net Financial Position of 1.2x FYE 2009 Adj. EBITDA Net Financial Position represents only 16% of the total EV (a) (b) (c) (d) 2009 Adj. EBITDA. EBITDA 403m Market data as of 18-Mar-2010 EV calculated as Market Cap + Net Financial Position to 3 rd Parties (excluding employee benefit liabilities, minorities and associates) Utilization depending on the receivables 20

22 Funding & Liquidity (as of 31-Dec-2009) Debt Maturity Profile ( m) Funding Summary 546 millions Term Loan Amount 964 Drawn 964 Undrawn 0 Maturity Dec 2014 RCF Dec Securitization (a) Cash July 2012 NA Total 1,235 Limited maturities until 2014 In excess of 1.2 billion of available facilities / cash Looking to diversify funding sources Solid Liquidity and Limited Amortisation Pressure (a) Utilization depending on the receivables. 21

23 Focus on Profitability % 8.1% Industry-wide Pressure on Sales +8.2% +4.2% 5,007 5,118 5,144 3, Sales Organic Growth (a) Counterbalanced by Focused Cost Reduction and Margin Expansion (% Sales) 10.3% 10.5% -17.4% 18.8% 18.8% 21.2% 791m 10.8% Adj. EBITDA Contribution Margin 403m Considerations Double digit profitability margins confirmed even with declining volumes Adj. EBITDA at 10.8% (10.5% in FY2008) Strong improvement in operating leverage 39m decrease in fixed costs (- 9% Vs FY08) 21m gross efficiencies in variable costs Headcounts from 12,372 in 2008 to 11,704 incl. 350 employees from Rybinsk acquisition (a) Excluding Metal effect, Exchange rate and Acquisitions 22

24 Ideally Positioned to Cope with Industry Challenges and Benefit from Recovery Prysmian Focus on Fixed Costs Reduction (Total Fixed Costs p.a. in m) Prysmian Continuous Focus on Industrial Efficiencies (Cumulative Gross Efficiencies in m) Continuous optimization of geographical production footprint Improve plants productivity through optimized production process Lean organizational structure at Headquarter and subsidiaries level Continue improving material efficiency, reducing scrap and over-usage More effective cable design Optimize organization and process to achieve further manpower efficiency Reduce impact of other costs (logistic, utilities, maintenance, ) 23

25 Cash Flow Statement million EBITDA Change in WC 39 (60) Cash Taxes (56) (86) (83) (62) Capex (69) (83) (109) (97) Acquisitions - - (1) (3) Other Cash Items (7) (16) 17 (11) Free Cash Flow (Unlevered) % Cash Conversion (FCF / EBITDA) 74.9% 57.2% 78.8% 62.6% Financial Charges (112) (83) (88) (46) Free Cash Flow (Levered)

26 Leverage Evolution Net Financial Position Net Financial Position / Adj. EBITDA Leverage (a) 19% 23% 18% 2.0 x Cost of Debt (b) 5.0% 4.2% 3.6% 1.5 x m x 0.5 x 1.4x 1.1x 1.2x x Focussed debt reduction through cash flow generation Current leverage of 1.2x Low cost of debt Conservative leverage targets (a) Leverage= Net Financial Position / (NFP + EoY market cap). (b) Cost of Debt= average interest in period, including IRS effect 25