Prysmian S.p.A, results of the first nine months of 2007

Further increase in Profitability, Net Income at Record Level (+148%)
Solid Organic Growth in Utilities; major projects secured in HV and Submarine Cables

• SALES: €3,877 MILLION (€3,725 MILLION IN FIRST NINE MONTHS OF 2006)
• ORGANIC GROWTH +8.2%
• EBITDA : €439 MILLION (€302 MILLION IN FIRST NINE MONTHS OF 2006; +45.5%)
• ADJUSTED EBITDA : €405 MILLION (€320 MILLION IN FIRST NINE MONTHS OF 2006; +26.5%)
• EBIT: €390 MILLION (€228 MILLION IN FIRST NINE MONTHS OF 2006; +71.1%)
• NET INCOME: €238 MILLION (€96 MILLION IN FIRST NINE MONTHS OF 2006; +148.2%)
• FREE CASH FLOW (BEFORE DIVIDENDS) : € +61 MILLION (€ -35 MILLION IN FIRST NINE MONTHS OF 2006)

The Board of Directors of Prysmian S.p.A., a worldwide leading group in the energy and telecommunications cables industry, approved today its financial results for the first nine months of 2007.

Sales for the first nine months of 2007 confirmed the solid organic growth trend recorded during the first half of 2007, reaching €3,877 million compared to €3,725 million of the first nine months of 2006. Organic growth, net of perimeter changes, metal prices and exchange rate effects, reached 8.2%.

All business areas delivered a positive performance, with a significant acceleration of organic growth during the third quarter in the Utilities business (+8.1%), particularly in the power transmission business (High Voltage and Submarine cables), where Prysmian can rely on a growing order book that provides good visibility on future sales. Strong growth was achieved in the Industrial business, mainly oil & gas, mining, railway and renewable energies industries.

During the nine-month period, the business growth was always combined with a keen attention to profitability, which also rose significantly in Q3 2007. Adjusted EBITDA during the first nine months of 2007 amounted to €405 million, posting an increase of 26.5% compared to €320 million recorded in the same period of 2006. The EBITDA margin rose to a record level of 10.5%, up from the 8.6% in the first nine months of 2006. This result confirms the capability to pursue a trend of profitable growth, focussing on the higher value-added business segments and the fastest growing markets.

EBITDA reached €439 million in the first nine months of 2007, rising 45.5% compared to the €302 million in the same period of 2006, with EBITDA margin growing from 8.1% to 11.3%. This increase benefited from non-recurring net income of €34 million (compared to non-recurring net charges of €19 million in 9M 2006).

EBIT reached €390 million in the first nine months of 2007, posting an increase of 71.1% compared to €228 million of 2006; EBIT margin surged from 6.1% to 10.1%. Adjusted EBIT, before positive non-recurring items of €34 million, reached €356 million, recording an increase of 36.3% compared to €262 million in the first nine months of 2006. Adjusted EBIT margin rose from 7.0% to 9.2%.

Net income for the first nine months of 2007 reached the record level of €238 million (+148.2% compared to the €96 million of the first nine months of 2006). In addition to the positive non-recurring items of €34 million mentioned above, net income of the first nine months was affected by:
- appreciation of the fair value of the derivatives used to hedge operative and financial risks (positive effect before taxes of €40 million);
- impairment of non-amortised bank fees related to the previous credit agreement (negative effect before taxes of €59 million);
- release to profit of an equity reserve related to the valuation of interest rate derivatives defined as "cash flow hedges", necessary as a consequence of the old credit agreement refinancing (positive effect before taxes of €4 million).

In the third quarter Prysmian confirmed its strong cash generation with a positive Free Cash Flow (before dividends) of €61 million in the first nine months of 2007, compared to a negative flow of €35 million in the same period of 2006. This improvement resulted from the sharp increase in profitability and the efficient management of working capital. The total Free Cash Flow generated over the last twelve months (October 2006 - September 2007) amounted to €262 million.

Net Financial Position as of 30 September 2007 amounted to €899 million, significantly better than the €1,071 million as of 30 September 2006.

PERFORMANCE AND RESULTS OF THE BUSINESS AREAS

Energy Cables & Systems
Sales to third parties of the Energy business in the first nine months of 2007 reached €3,457 million, compared to €3,332 million of the corresponding period of 2006. The growth of volumes combined with an improvement of the product mix and prices, led in the first nine months of 2007 to an organic growth of 8.5%, driving a further improvement in profitability. Adjusted EBIT rose 40.4%, from €230 million in the first nine months of 2006 to €323 million, with a sharp increase in EBIT margin from 6.8% to 9.3%.

Utilities
In the first nine months of 2007, sales in the Utilities business totalled €1,422 million, showing a 4.6% organic growth; in particular, Q3 organic growth posted a significant acceleration (+8.1%). Prysmian achieved the most significant growth in the high-profitability businesses of High Voltage and Submarine Cables. Prysmian also managed to increase its order book, further improving visibility on future sales; investments to increase high-voltage and submarine production capacity are in progress and fully on track. In the submarine cables business major projects were secured in the USA (Trans Bay project) and in Spain (Cometa project), as well as significant high voltage cable orders acquired in the USA, UK and China. Profitability improved with an adjusted EBIT margin rising from 9.4% in the first nine months of 2006 to 11.3% in the corresponding period of 2007.

Trade & Installers
Sales in the Trade & Installers business reached €1,381 million in the first nine months of 2007. The +6.4% organic growth was achieved thanks to a strategy of selective growth which aims to improve the geographic and product mix and which led to an increase in profitability. Adjusted EBIT margin leaped from 5.5% in the first nine months of 2006 to 7.7% in the same period of 2007. The strong focus on high value-added products (e.g. LSOH/Afumex fire-resistant cables) had positive effects, particularly in the third quarter, and Prysmian achieved a positive sales trend in most European countries. In the United States the slowdown of the construction industry didn't affect Prysmian significantly, thanks to its limited exposure to this market. As last, the market position in South America was further strengthened.

Industrial
In the Industrial Cables business, sales in the first nine months of 2007 increased to €587 million compared to the €458 million of the same period of 2006, posting an organic growth of 19.9%. Prysmian increased its presence in substantially all of the most profitable segments of the market, and particularly in the oil & gas, railway, shipbuilding, mining, and renewable energies industries. Profitability increased significantly, with an adjusted EBIT margin rising to 8.5% from the 6.9% of the corresponding period of 2006.

Telecom Cables & Systems
In the first nine months of 2007, Sales to third parties of the Telecom Cables & Systems business went up to €420 million from the €393 million recorded in the same period of 2006; organic growth reached 5.9%. Adjusted EBIT amounted to €33 million, compared to €32 million in 2006, with EBIT margin stable at 7.8%.

Prysmian benefited from growing demand in the optical cables sector in Europe, and strengthened its presence in Asia and Oceania (especially India and Australia), where an important multi-year supply agreement was renewed with the Australian TLC operator Telstra. These results allowed the Group to limit the negative effects coming from the US demand slowdown.

Sales rose in the copper cables business, with good volumes achieved by Turkey and Romania, mainly for export markets, as well as in Brazil with a solid performance on the domestic market combined with a positive trend of exports to North and Central America.

SALES BY GEOGRAPHIC AREA

In Europe sales posted an organic growth of 14.5%, resulting from growing demand in all the business segments; in the first nine months of 2007 Europe represented 69.0% of total sales.

Sales in North America decreased in the first nine months of 2007, compared to the same period of 2006, almost entirely due to the effect of the sales related to the submarine Neptune project in 2006; excluding the effect of the Neptune project, the organic sales change was -0.9%. Sales in North America accounted for 13.0% of total sales in the first nine months of 2007.

In Central and South America, sales recorded an organic growth of 13.8% in the first nine months of 2007, with a significant acceleration during the third quarter, in particular thanks to the strong demand for cables in the oil industry. Sales in Central-South America represented 9.0% of total sales in the first nine months of 2007.

Finally, in Asia and Oceania the positive trend in Industrial and Telecom business more than offset the drop in demand from utilities in Australia that took place in the second quarter. Organic growth of sales was 8.2%; the region accounted for 9.0% of total sales in the first nine months of 2007.

OUTLOOK
Based on the excellent results achieved in the first nine months, the Company expects to confirm a solid trend of sales organic growth, targeting an adjusted EBITDA well in excess of €500 million for the full year 2007.


The Nine Months Report as of 30 September 2007 will be filed at the Company's registered offices at Viale Sarca 222, Milan, and with Borsa Italiana S.p.A. in compliance with relevant regulations. It will also be available on the corporate website at www.prysmian.com.

Mr. Pier Francesco Facchini, manager responsible for preparing the company's financial reports, hereby declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

_{• EBITDA is the Profit/(Loss) for the period, including depreciation and amortisation, financial income and expenses, the portion of the profit/loss attributable to associated companies, other company dividends and taxes. For further information, please see the table in Annex B, which provides the reconciliation statements between Profit/(Loss) for the period, EBITDA and adjusted EBITDA.
• We define adjusted EBITDA as EBITDA before charges and income that, according to the Group's management, do not have a recurring nature and are reported in the table in Annex B.
• Cash flow from operations after deducting taxes, net investment and finance costs, and before any distribution to shareholders}

Prysmian
A leading player in the industry of high-technology cables and systems for energy and telecommunication, the Prysmian Group is a truly global company with sales exceeding 5 billion euro in 2006 and a strong position in higher-added value market segments. With its two business, Energy Cables & Systems (submarine and underground cables for power transmission and distribution, for industrial applications and for the distribution of electricity to residential and commercial buildings) and Telecom Cables & Systems (optical cables and fibres and copper cables for video, data and voice transmission), Prysmian boasts a global presence with subsidiaries in 35 countries, 54 plants in 21 countries, 7 Research & Development Centres in Europe, USA and South America, and over 12,000 employees. Specialising in the development of products and systems designed to meet clients' specific requirements, Prysmian's key strengths include: a focus on Research & Development, the capacity to innovative on products and production processes, and the use of advanced proprietary technologies. Prysmian is listed on the Milan Stock Exchange Blue Chip index.