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UPDATE 1-Prysmian weighs M&A options after rise in 2016 earnings
March 1, 2017 / 8:15 PM / 9 months ago

UPDATE 1-Prysmian weighs M&A options after rise in 2016 earnings

(Recasts to add CEO comments on M&A)

By Francesca Landini and Massimo Gaia

MILAN, March 1 (Reuters) - Italian cable maker Prysmian is considering potential acquisitions, but could buy back shares if the opportunities do not come to fruition, its chief executive said on Wednesday.

Since 2011, when Prysmian became the world’s largest cable maker after buying Dutch rival Draka, the company has purchased small or medium-sized companies in high-growth areas.

Acquisitions are seen as a way to grow in a sector that is fragmented and oversupplied.

“We have some transactions under discussion, but we do not want to waste the money we earn,” CEO Valerio Battista told an analysts’ call after the Milan-based group reported a rise in 2016 earnings and said net debt fell more than expected.

Battista did not give details of the options the group is examining.

But he added that if no deals were finalised, the group intended to use 500 million euros ($527 million) it raised through an equity linked bond in January to launch a further share buy-back programme.

Prysmian, which manufactures cables for industries including telecoms and power, said 2016 core earnings rose 14 percent, in line with analysts’ consensus forecast provided by the company.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 711 million euros ($750 million), towards the top of a 670-720 million euro range the group gave as guidance last year.

Net debt was 537 million euros at the end of last year, down from 750 million at December 2015 and below analysts’ average forecast of 648 million.

“The debt will continue to come down in 2017 but slower than in the previous two years,” finance chief Pier Francesco Facchini said during the conference call.

The group’s sales rose 2.8 percent year-on-year to 7.57 billion euros, with high-margin energy projects and telecoms cables driving growth.

“The outlook remains positive both for submarine cables and for the telecom business, where optical cable demand remains high,” the company said. It will release guidance for 2017 when publishing first quarter results.

$1 = 0.9476 euros Reporting by Francesca Landini and Massimo Gaia; Editing by Valentina Za and Mark Potter

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