By Giulio Piovaccari
MILAN (Reuters) -Italy's Prysmian aims at to increase core profit by around a third by 2027 as the world's largest cable maker takes advantage of opportunities from the global push towards cleaner energy and the digital transformation.
Prysmian was at the crossroads of long term market trends of increased renewable generation, growing electricity demand, expanding power grids and massive data growth, COO Massimo Battaini said on Thursday.
"Cables are going to be laid as opposed to gas pipes," he said presenting the group's first-ever strategic plan in Naples.
Battaini will inherit the CEO role next spring from Valerio Battista, who has led Prysmian since its creation in 2005 after its spin-off from the Pirelli group.
He will lead the group, which employs 30,000 people in 50 countries, in its ambition to become a "cabling solution provider", also with efforts to strengthen its position in areas including data centres, grid monitoring, connectivity and EV charging.
As part of its strategy Prysmian plans to bring investments to a total of 2.7 billion euros ($2.8 billion) over the 2023-2027 period, up 70% from the previous five years.
Milan-listed shares in the company were up 5% by 1210 GMT, the best performers within Italy's blue chip basket as investors welcomed the mid-term targets.
It also announced an internal reshape into four new segments -- renewable transmission, power grid, electrification and digital solutions.
INTERNAL GROWTH
After large acquisitions of Netherlands-based Draka in 2011 and U.S.-based General Cable in 2018, Prysmian said it would now focus on internal growth, funded through cash generation.
However, opportunities for "bolt-on" M&A in specific market segments, such as telecom, or geographies, such as North America, will be considered, without distracting the group from its "organic growth" strategy, Battaini said.
A warchest for M&A deals could "ideally" amount to 1.1 billion euros over the plan period, CFO Pier Francesco Facchini said, adding some 800 million euros would be consequently available for share buyback.
Prysmian on Thursday guided for adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of around 2 billion euros in 2027, from 1.49 billion euros last year.
EBITA growth will be driven by renewable transmission and power grid units, Prysmian said, while the performance of the electrification unit is expected to contract over the strategic plan period.
($1 = 0.9517 euros)