(Bloomberg) -- Prysmian SpA’s next chief executive officer said he’ll focus on increasing shareholder returns while selectively looking for deals to generate synergies for the Italian cable maker once he takes over in the spring.

Massimo Battaini, 62, who’s set to start as CEO in April, said in his first interview after being tipped for the job that the firm’s recent results should allow it to “to reach one euro of annual dividend by 2027.”

Milan-based Prysmian on Thursday posted full-year adjusted earnings before interest, taxes, depreciation, and amortization of €1.63 billion ($1.8 billion), beating estimates of €1.62 billion, and issued guidance calling for adjusted Ebitda in the range of €1.58 billion to €1.68 billion this year, compared with a Bloomberg-compiled consensus of €1.57 billion.

Cash flow in 2023 reached €724 million, up almost 30% compared with 2022 as the company plans to deploy around €1 billion for dividends as well as around €1.8 billion for mergers and acquisitions and share buybacks in its 2027 plan.

While the company has set guidance for 10% annual dividend growth in its strategy plan, “that’s just a floor,” Battaini said.

The main positive surprise of the results is “the strength” of free cash flow and that the company decided “at this stage” to seek authorization for a share buyback, Morgan Stanley analyst Max Yates wrote in a note to clients.

Prysmian’s board has requested authorization to shareholders for a buyback and disposal of treasury shares, the company said in its earnings statement. Shares rose as much as 1.3% in Milan trading. 

 

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A long-time top manager who lists cycling and snowboarding among his passions, Battaini, began his career with tiremaker Pirelli in the 1980s and is set to start as CEO at Prysmian in April.

The cable maker, carved out of Pirelli in 2005, has grown both organically and externally, but acquisitions have had a pivotal role in company history. 

“There wouldn’t be a Prysmian without M&A, we were born through an acquisition,” Battaini said. And since its formation through a unit sale by Pirelli to private equity funds owned by Goldman Sachs Group Inc., Prysmian has remained active on the deal front.

The firm in 2010 bought Dutch cable maker Draka Holding NV. Seven years later, it purchased US rival General Cable Corp. 

Under his tenure as CEO, Battaini expects M&A activity to continue.

“The acquisitions we have in mind are skewed toward building commercial synergies, which means increasing portfolio products in some geographies, increasing our market share or chasing new markets,” the executive said. 

The Battaini-led firm will be looking at businesses that mark a good fit with its own profile, he said.  “North America is our number one destination as it’s a consolidated marketplace, while Europe is fragmented,” he said, adding that Prysmian is also interested in Saudi Arabia.

Interview Highlights 

  • Prysmian’s reorganization into four units — renewable transmission; power grid; electrification; and digital solutions — is aimed at tackling trends that accelerated during the pandemic, Battaini said.
  • “The slowdown in the telecoms space, especially in the US, comes as a result of massive demand in 2022, when companies stockpiled to counterbalance supply chain disruptions,” he said.
  • The US telecoms sector is set to turn around in the second part of this year, when incentives to connect rural areas are released, Battaini said
  • “We’re trying to use 30% of recycled copper for our electricity cables; the challenge is to cut impurities that may reduce transmission,” the executive said.

--With assistance from James Cone.

(Updates with analyst comments, details in sixth paragraph)

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