MILAN, Feb 27 (Reuters) - Italian cable maker Prysmian reported a 3.1 percent rise in 2017 core earnings on Tuesday, broadly meeting its target for a year which ended with a deal to buy U.S. rival General Cable.
Gains in energy projects and the telecoms sector helped the world’s largest cable maker post adjusted earnings before interest, tax depreciation and amortisation (EBITDA) of 733 million euros ($897 million), but foreign exchange weighed.
Prysmian had targeted adjusted EBITDA of 710-750 million euros, but Chief Executive Valerio Battista said in November that reaching the middle of that range would be difficult.
“Without the forex effect we would have been near to the max,” Battista said on a conference call on Tuesday.
A consensus of 17 analyst estimates, provided by the company, had pointed to adjusted EBITDA of 737 million euros.
Foreign exchange fluctuations will likely reduce 2018 core earnings by 20 million euros, Chief Financial Officer Francesco Facchini said on a conference call.
As European governments push to roll out high-speed broadband links, Prysmian is increasingly investing in developing cables and accessories for voice, video and data transmission, to cash in on fast growth in the sector and a shift towards 5G networks.
Sales of telecom cables and systems reached 1.258 billion euros, representing organic growth of 5.3 percent over 2016.
“Telecom is really the racehorse today,” Battista said.
The General Cable deal will create a group with combined sales of more than 11 billion euros, but Prysmian is looking around for more acquisitions.
Battista has said the group is looking at three targets, one in Asia, one in North America, and one described only as having a worldwide presence, but kept investors guessing on exactly what it wants to buy.
Despite paying a chunky premium for General Cable, Prysmian plans to pay cash for its Kentucky-based rival, then launch a rights issue to give it capital for other purchases.
It aims to raise up to 500 million euros through the rights issue, which is scheduled to be carried out by the end of July 2019. Shareholders will be called to a meeting to approve the deal on April 12.
Revenue for the full year hit 7.901 billion euros, representing a 0.1 percent fall from the previous year in organic terms, but beating the 7.797 billion euro consensus estimate provided by the company.
Shares fell 0.5 percent against a flat Italian blue-chip stock index. ($1 = 0.8172 euros) (Reporting by Isla Binnie and Massimo Gaia, Editing by Louise Heavens and David Evans)