Prysmian, Italy's Leading Cable Manufacturer, Anticipates a 34% Core Profit Growth by 2027 with New Strategic Approach

05 Oct, 2023

Prysmian, Italy's Leading Cable Manufacturer, Anticipates a 34% Core Profit Growth by 2027 with New Strategic Approach

Prysmian, the world's largest cable maker and an Italian industry leader, envisions a substantial core profit surge of approximately 34% by 2027. This ambitious growth strategy is fueled by the company's commitment to seizing opportunities arising from the global shift towards cleaner energy and digital transformation, building upon its existing business foundation.

Having expanded significantly through acquisitions, including the acquisition of Netherlands-based Draka in 2011 and U.S.-based General Cable in 2018, Prysmian now sets its sights on a new phase: "organic growth." This strategy will be facilitated by utilizing internally generated cash flow to fund capacity expansion.

In its inaugural strategic plan presentation, the Italian conglomerate underscored the increasing strategic importance of the cable industry. Prysmian recognizes its pivotal role in addressing long-term market trends, such as the rise in renewable energy generation, the surging demand for electricity, the expansion of power grids, and the explosive growth of data.

The implementation of this strategy is expected to elevate Prysmian's adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to approximately 2 billion euros (equivalent to $2.1 billion) by 2027, a significant surge from the 1.49 billion euros reported last year, as stated in Prysmian's official announcement.

This positive development is reflected in Milan-listed shares of the company, which demonstrated a notable 2.6% increase in value by 0730 GMT, positioning them among the top performers within Italy's blue-chip basket.

Massimo Battaini, Chief Operating Officer of Prysmian, emphasized the company's unique position to capitalize on the transformative changes driven by the convergence of the energy transition and digital transformation. He stated, "Prysmian is uniquely placed to benefit from the opportunities presented by the structural changes arising from the convergence of the energy transition and digital transformation."

Battaini is slated to assume the role of Chief Executive Officer from the upcoming spring, succeeding the current CEO, Valerio Battista, who has held the position since 2005, when Prysmian was established through the spin-off and sale of Pirelli's former cable unit.

The strategic plan also forecasts significant growth in annual cash flow, with expectations ranging between 0.9 billion and 1 billion euros by 2027, a substantial increase from the 559 million euros reported last year.

Equita analyst Luigi De Bellis noted the ambition of Prysmian's targets for 2027, expressing that they exceed market estimates.

As a component of this new strategic direction, the company announced a restructuring of its business units to better align with the prevailing market structure. Four new segments, namely renewable transmission, power grid, electrification, and digital solutions, will replace the existing three segments. This realignment is designed to enhance Prysmian's responsiveness to current market dynamics and emerging opportunities.