Q2 2026 Prysmian SpA Earnings Call Transcript
Key Points
- Record Q2 2026 performance with EUR730 million EBITDA, a 13.4% margin, and 9.4% organic growth, marking the best quarter in company history.
- Secured over EUR10 billion in cumulative optical data center revenues, including a 10-year deal with Molex, providing long-term revenue visibility.
- Digital Solutions segment delivered outstanding 24% EBITDA margin, surpassing transmission, driven by pricing power, efficiency, and a shift to data center applications.
- Raised full-year 2026 EBITDA guidance to EUR2.85-2.9 billion and free cash flow to EUR1.7 billion, reflecting strong operational momentum and the Molex down payment.
- Strong sustainability progress with 46% of revenues from sustainable solutions and a 42% reduction in Scope 1 and 2 emissions, supporting net-zero targets by 2035.
- Transmission and Power Grid segments showed robust organic growth (14.3% and 13% respectively), with Power Grid margins rebounding sequentially to 13.8%.
- Innovation pipeline includes hollow-core fiber and deeper cable burial solutions, enhancing competitive positioning and customer value.
- Net profit reached EUR569 million in H1 2026, the highest ever, with EPS growth expected to significantly exceed original targets.
- Leverage expected to drop to around 0.8x by year-end, providing financial flexibility for future M&A and investments.
- Strong demand across all regions, particularly in the US, with I&C segment showing the best quarter in 18 months, driven by data centers and residential recovery.
- Specialties segment continues to suffer from weak demand in elevators and oil & gas, with profitability under pressure in the Automotive business.
- Power Grid margins remain below target (13.8% vs. 15%) due to cost inflation and time lag in passing through price increases, though expected to recover.
- Adverse impact from rising metal prices negatively affected cash flow in Q2, with an estimated EUR250 million headwind for the year.
- I&C margins declined year-over-year, partly due to weaker performance in LatAm (Colombia and Argentina) and a slow start in April and May in the US.
- Free cash flow in Q2 was lower than Q1 due to metal price volatility, though expected to improve in H2.
- The company faces execution risks in ramping up fiber capacity and renegotiating contracts, with potential for customer disappointment due to supply constraints.
- M&A opportunities remain uncertain, with no confirmed deals, and the timing of a new Capital Markets Day is pushed to early 2027.
- The secondary listing in New York is delayed, with no clear timeline, as management prioritizes other initiatives.
- Hollow-core fiber technology is still in early industrialization, with production scaling challenges and limited market share potential (max 10%).
- The Molex down payment (EUR550 million) will need to be repaid in future years (2030-2033), creating a future cash outflow obligation.
Good morning, everyone. Thank you for joining this call, quarter two results. We are super excited to highlight that this is the best quarter ever of Prysmian, EUR730 million EBITDA, 13.4% EBITDA margin, 9.4% organic growth. So as you see it's a great quarter from the numbers perspective. It is also great in terms of the achievement of the appeals deals and mortgage deals with a EUR10 million in the optical space over the next 10 years.
Also, on the sustainability side, we exceeded our expectation with that 46% of the current revenue leading to sustainable solutions. When you read 46%, you need to read almost EUR10 billion, where we provide customers with low carbon footprint and solution that has achieved their own targets. 42% is amazing reduction of Scope 1 and 2 over the design of 2019, setting great confidence in achieving the net zero by 2035, well ahead of everybody else.
Moving to this quarter two perspective, I think is important to share these slides -- not moving up, right? It's
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