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12 Dec 2014

Prysmian, the thrill of a comeback

A popular Italian financial blog devoted an in-depth and mostly positively nuanced news analysis to Prysmian that, it says in the headline, “is experiencing the thrill of a comeback”.

According to the blog, our Group is overcoming the problems of Western Link as the pro-activity it showed in this complex juncture is bearing fruit, when the first signs of recovery are showing up in the market. FY 2014 should therefore confirm the target of Ebitda in the 510 mn region, to move forward towards 600 mn next year. At the same time the exposure should fall to some 900 mn by year end and create the right conditions to re-start the acquisition policy that historically distinguished the company.

It writes that Prysmian closed the third quarter on an optimistic note and handpicked some quotes of CEO Valerio Battista from the statement noting that the Group should manage to shrink its financial exposure to some 900 mn by year end. A positive positioning that comes just while the Junker 315 bn investment plan is taking shape and the QE of the ECB is nearing. FY 2014 should meet the guidance of Adj. Ebitda in the 510 mn area to gain steam in 2015 when it should reach the 590 mn region, even discounting 50 mn of the remaining 73 mn of WL attributable to 2015-2016,while the cash flow is seen stable thanks to the efficiencies being implemented.

Market analysts showed to appreciate, as there are just no sell recommendations while the buy ratings are increasing. CEO Valerio Battista pointed out that the most critical situations of WL have been overcome and the company is at work to recover partially the costs it suffered or at least not have to add additional ones. It stresses that in the WL case Prysmian top management took a courageous stance, rewarded by the market, also with the aim of protecting and possibly improving its reputation in the valuable submarine business.

It says that inside Prysmian is nowadays perceivable a more optimistic sentiment, despite the still complex economic scenario, and the company is reasoning again on possible acquisitions, a matter familiar to the Group as it was a mean of its growth, but only after having totally overcome the WL remaining problems.

It then summarizes the quarterly figures wrapping them up together with extensive quotes of CEO Battista, that it said were welcomed by a good performance of the stock in the market, even if the continuous decline in the oil price somewhat smoothened the upward trend. It also picks up in detail all the available analyst recommendations on the stocks naming and quoting each single broker, noting the total absence of sell ratings.

It ends its analysis by indicating in a still weak economic scenario, falling oil prices and increasing price competition in the low end of the cable business the main challenges that the Group will be facing in the future, while nevertheless keeping intact its global leadership in the high value markets of submarine and optical cables.

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