MILAN (Reuters) – Prysmian
Prysmian, which supplies cables for industries ranging from high voltage power transmission to offshore wind-farms, telecoms and cars, is based in Milan in northern Italy, the epicenter in Europe for the virus.
However, with 106 plants around the world, CEO Valerio Battista said the group was able to shift production from one plant to another.
“If we need to stop a plant in Italy, we can still feed the market with products from other areas, we’re very flexible,” Battista told Reuters in a phone interview.
He added that plant closures were mostly affecting countries like Italy and Spain, while operations in the rest of Europe, the United States and Asia, including China, were broadly regular.
“The Chinese market is rebounding, our operations have resumed at higher then expected rates,” Battista said.
Europe and the United States are by far its biggest markets, however, and Battista said the company has not yet made a full assessment of the impact of the coronavirus on its earnings forecasts. Still, he said he was confident its main businesses will cope with the emergency.
Battista said he did not see liquidity problems for Prysmian.
Fallout from the spread of the virus is prompting several companies around the world, especially in the manufacturing industry, to review financial targets.
Prysmian said earlier this month its adjusted core profit would come in at between 0.95 billion euros ($1.04 billion) and 1.02 billion euros this year, and its target for this year’s free cash flow was around 330 million euros.
But it warned its projections did not include the impact of the global spread of the coronavirus.
“It’s premature to make forecasts,” Battista said.
“At the moment we stick to what we said then, with all the warnings we mentioned,” he said, adding there were no plans to provide updated guidance.
The chief executive said he hoped the worst of the virus-linked emergency in Europe would be over in two months or so depending on the response from governments and authorities.
He said that bar the low tension cables’ segment – mostly used in construction – in southern Europe, other businesses were not “significantly” affected.
“People will more and more need renewable energies, interconnection, broadband. Those will be the last ones to be cut, and we’re there,” Battista said.
He said he was seeing some positive signs from the telecoms business which he had described as the “bad boy” of the company after a slowdown in the second half of 2019.
“It’s still struggling, but we see renewed interest from our clients. Networks are under pressure after the virus and many telecom operators have increased demand again,” he said.
Prysmian on Monday announced it would cut its dividend on 2019 results to 0.25 euros per share from a planned 0.50 euros, adding it would evaluate later this year whether to distribute the remaining part of it.
“We’re not worried about liquidity… our payout capacity is confirmed,” Battista said.
(Reporting by Giulio Piovaccari; Editing by Susan Fenton)
