Prysmian shares ease from recent high as H1 results show 'some weakness'
H1 adj core earnings down 1% in to 869 mln euros
Sees full-year adj EBITDA of 1.90-1.95 bln euros
Co completed Encore acquisition in July
H1 EBITDA margins broadly stable at 11.1%
Shares down 3.4%, up more than 50% this year
Releads after analyst call, adds context
MILAN, Aug 1 (Reuters) -Prysmian PRY.MI has seen "some weakness" in its first-half performance, the world's No.1 cable maker said on Thursday, as margin pressure in its key electrification business took the shine off results for the period.
The Italian company raised core profit and cash forecasts for this year, although this was mostly due to its $4.2 billion acquisition of Ecore Wire in the U.S., a move aimed at bolstering its position in its North American profit powerhouse.
Based on 2023 sales data, the deal increased Prysmian's size by more than 15%.
Shares in the company, which by 1010 GMT were down 4.5%, have gained over 50% since the start of the year, hitting a record 64.66 euros on July 24 supported by Prysmian's expected role in global long-term trends of energy transition and digitalisation.
In the first half through June, the group's adjusted core earnings or EBITDA was little changed at 869 million euros ($937 million), meeting a company-provided analyst consensus of 864 million. Sales were down 3% in the period.
"The first half of this year ... shows weakness," CEO Massimo Battaini said, adding that in the same period of last year the company had benefited from a "huge" order backlog carried forward from 2022.
Analysts at Citi pointed to softer margins at Prysmian's electrification business and said the guidance raise was "broadly in line with expectations".
The electrification business was the main contributor to the first-half adjusted EBITDA result, but its performance fell from a year earlier with its margin down by almost a percentage point to 9.5% due to pricing headwinds.
For the full year, Prysmian guided investors to expect adjusted EBITDA to rise to between 1.90 billion euros and 1.95 billion, versus a previous forecast of between 1.575 billion and 1.675 billion.
Battaini said that around two thirds, or 200 million euros, of the forecast improvement was due to the addition of Encore, while only the remaining part came from a better outlook.
He added the company was highly confident of reaching the mid-point, or 1.925 billion euros, of its adjusted core earnings guidance.
"Let's wait for third-quarter results to see if we can reach to the top end," Battaini said.
The company posted a negative, although improved, free cash flow in the January-June period, but guided for total cash generation of between 840 million euros and 920 million this year, versus a previous forecast of 675 million to 775 million.
($1 = 0.9278 euros)
Reporting by Giulio Piovaccari; Editing by Christopher Cushing and David Holmes
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