Prysmian CEO Sees More Debt Cuts After Target Beaten
Prysmian SpA (PRY), the world’s biggest cable maker, plans to continue cutting debt this year after probably “slightly” beating its 2012 target, Chief Executive Officer Valerio Battista said.
Prysmian forecasts debt for the end of 2012 at about 1 billion euros ($1.33 billion), Battista said in a phone interview yesterday. The Milan-based company had net debt of about 1.45 billion euros at the end of September.
“Our focus is on cash generation and further debt reduction in 2013,” said Battista, who is today attending the World Economic Forum in Davos, Switzerland. “Deleveraging is a key priority before considering other major deals in line with the Draka acquisition.”
Prysmian acquired Dutch rival Draka Holding NV in 2011 at an enterprise value of 1.2 billion euros. The company has already realized “a significant part of the synergies” expected from the deal, allowing it to boost 2012 adjusted earnings before interest, taxes, depreciation and amortization to its target range of 625 million euros to 650 million euros, “even in a difficult economic scenario,” the CEO said. Adjusted Ebitda excludes non-recurring income and expenses.
Prysmian sees further synergies from Draka, reaching a total of 150 million euros at the end of 2015 through measures including the reorganization of production at some plants, Battista said.
Volume, Price Pressure
“2013 has so far been in line with the fourth quarter of last year as volumes and prices remain under pressure, especially in Europe,” Battista said. “We’re more confident on the second half.”
The main drivers for 2013 will be submarine high-voltage and fiber optic cables, the CEO said. Prysmian has “a very good backlog” in submarine and expects top-line growth this year. A project to build a European fiber network may benefit Prysmian, probably from 2014, Battista said.
Prysmian looked at the submarine-cable business of Alcatel- Lucent SA, which the French phone-equipment maker is looking to sell, but decided not to bid because the business is “too cyclical,” the CEO said. Prysmian last year purchased Global Marine Systems Energy Ltd. for about 53 million euros to expand its submarine power cable installation business.
“We could consider smaller acquisitions, especially in North and South America, of special and high-value added cable businesses,” the CEO said. “I don’t expect acquisitions in 2013, but we may seize opportunities if they arise.”
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