Prysmian: Q2 preview and model update - another upgrade to estimates, PT goes to €190

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Prysmian: Q2 preview and model update - another upgrade to estimates, PT goes to €190

preview: Q2 is a seasonally strong quarter and we expect growth in both (91-22)ram.mehta@jpmchase.com6157-3233

topline and bottom line to accelerate, supported by all four segments. We J.P. Morgan India Private Limited

forecast organic growth further increasing to +6.7% in Q2 (which excludes the

impact from higher metal prices), from +5.0% in Q1, and forecast €5.63bn in Specialist Sales contact details:

revenue. While higher metal prices will dilute reported margins, we forecast a Sam Edmunds - Specialist Sales -

110bps increase in margins on standard metal prices to 15.6% from 14.5% a European Industrials

year ago, driven primarily by the Transmission and Digital Solutions segments. (44-20) 7742-8733

This should translate into Adj EBITDA of €713mn vs. €605mn a year ago. sam.edmunds@jpmorgan.com

Table 1 and 2 summarise our Q2 group and segment expectations. Key Changes (FYE Dec)

• Digital Solutions: Prysmian noted that optical fiber cables amount to ~60% of Adj. EPS - 26E (€) Prev4.73 4.92Cur 4.1%Δ

segment revenues and Prysmian is aiming to allocate capacity towards Adj. EPS - 27E (€) 6.02 6.40 6.4%

hyperscaler customers from broadband customers. This is due to significantly

longer visibility offered by hyperscale customers (5-10 years) where Prysmian Style Exposure

is negotiating framework agreements and plans to announce them before the

Q2 results. The company is also negotiating price increases with its Telecom

customers. In Q2, Prysmian expects a double-digit organic growth, coming

entirely from the better pricing as its capacity is constrained. Both growth and

margin expansion to accelerate in the coming quarters as Prysmian prices in