The focus on high value added segments allowed the Group to record an increase in Sales also in the first quarter of 2008, totalling the amount of €1,216 million. Net of metals price effects and exchange rate translation effects, organic growth was 3.4%. The Energy cables division benefited from a strong organic growth of 11.3% recorded in the utilities business, due to a sharp volumes increase in the submarine cables segment, where Prysmian is realising strategic projects worldwide, such as SA.PE.I. in Italy, GCCIA in Bahrain, Transbay in the USA and Cometa in Spain, as well as in the high voltage segment, especially in China, Russia and the Middle East. In the Telecom business, positive sales performance was achieved by optical cables particularly in Europe.
Strong demand in the high voltage and submarine cables segments is expected to continue due to the growing energy consumption combined with high oil price and the need to make transmission networks increasingly efficient and eco-sustainable. Prysmian can count on a growing order book that ensures high visibility on future sales. In submarine cables, the order book covers production capacity up to the end of 2009-beginning of 2010, while in high voltage cables the 2009 production capacity is already 50% booked.
In the first quarter of 2008 adjusted EBITDA totalled €129 million, up by 10.6% compared to €116 million in the corresponding period of 2007. This also led to an improvement in the margin on sales which rose to 10.6%, up from 9.6% in the first quarter of 2007. This increase comes from volumes growth in higher profitability businesses, together with the ability to keep fixed costs unchanged compared to the previous year.
In the first quarter of 2008 EBITDA amounted to €128 million. EBITDA in the corresponding period of 2007 was €152 million due to €36 million benefit of non-recurring items, mainly attributable to the price adjustment related to the acquisition of the cable business from Pirelli & C. S.p.A. in 2005. Margin on sales amounted to 10.5% compared to 12.6% in the corresponding period in 2007 which was positively affected by the non-recurring items above.
Adjusted EBIT reached €113 million in the first quarter of 2008, up by 13.9% compared to €99 million in the corresponding period in 2007, with a margin on sales rising to 9.3% from 8.2%. EBIT amounted to €112 million compared to €135 million in the first quarter of 2007 which benefited from €36 million of positive non-recurring items, mainly attributable to the price adjustment recognised by Pirelli & C. S.p.A.. The margin on sales was 9.2% from 11.2% in the first quarter of 2007.
Net financial income/costs were €23 million positive in the first quarter of 2008 compared to €64 million negative in the corresponding period of 2007. This change was mainly due to the write-off of bank fees for €59 million in the first quarter of 2007 and the recognition in the income statement of the positive effect from the fair value evaluation of derivatives (€50 million in 2008 before tax effects).
Net income was almost double compared to the corresponding period of 2007, rising to €103 million from €52 million (+ 97.6%). This result benefited from a positive extraordinary item of €31 million, due to the recognition in the income statement of the valuation of derivatives.
In the first quarter of 2008 the Prysmian Group generated Cash flow from operations (before net working capital changes) of €126 million, compared to €110 million in the corresponding period of 2007. This positive flow was offset by the increase in net working capital mainly linked to the execution of the high voltage and submarine cable projects. Free cash flow (before dividends) during the last twelve months (April 2007 – March 2008) was €194 million.
Net financial position at the end of March 2008 totalled €758 million, improving from €899 million at 31 March 2007.