First Half 2007 Results

Record Growth in Profitability and Cash Flow.

Net Income Almost Doubled (+97.5%)

• Sales: €2,583 million (€2,417 million in H1 2006)
• Organic growth +8.3%
• EBITDA  : €299 million (€194 million in H1 2006; +53.9%)
• Adjusted EBITDA : €269 million (€205 million in H1 2006; +31.1%)
• EBIT: €266 million (€143 million in H1 2006; +86.7%)
• Net income: €150 million (€76 million in H1 2006; +97.5%)
• Cash flow from Operations : +€74 million (-€28 million in H1 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 H1 2007.

"The first half 2007 results continue to demonstrate Prysmian's ability to combine business growth and close attention to profitability, confirming the effectiveness of its strategy of focusing on high added-value segments and strengthening its presence in countries with high prospects of growth and profitability," stated Chief Executive Officer Valerio Battista. "In line with our strategy, in the last few months, we have carried out two new acquisitions in the Asia-Pacific area: Nicco Cables in India and International Wire & Cable in New Zealand, which demonstrate our ability to take advantage of new development opportunities. Based on the excellent results achieved in the first half, we expect to confirm a solid trend of organic sales growth also in the second half of the year, targeting an adjusted EBITDA well in excess of €500 million for the full year 2007".

Sales for the first half of 2007 reached €2,583 million, compared to €2,417 million in the first half of 2006.
Organic growth, net of perimeter changes, metal prices and exchange rate effects, amounted to 8.3%, confirming the positive trend recorded in the first quarter of 2007. Net of perimeter changes, growth was 14.4%.

Adjusted EBITDA in the first half of 2007 amounted to €269 million, posting an increase of 31.1% compared to €205 million recorded for the same period of 2006, with an improvement of adjusted EBITDA margin from 8.5% in the first half of 2006 to the record level of 10.4%. This result confirms the ability to pursue a trend of profitable growth maintaining fixed costs substantially stable.

EBITDA reached €299 million in the first half of 2007, rising 53.9% compared to €194 million in the first half of 2006, with EBITDA margin growing from 8.0% to 11.6%. This increase included positive non-recurring effects of €30 million (compared to negative non-recurring effects of €11 million in the first half of 2006).

EBIT reached €266 million in the first half of 2007, an increase of 86.7% compared to €143 million in the first half of 2006; EBIT margin surged from 5.9% to 10.3%.

Adjusted EBIT, before positive non-recurring items of €30 million, reached €236 million, posting an increase of 51.2% compared to €164 million in the first half of 2006. Adjusted EBIT margin rose from 6.8% to 9.1%.

Net income for the first half of 2007 almost doubled to €150 million, compared to €76 million in the same period of 2006 (+97.5% on the first half of 2006).

In the first half of 2007, Prysmian confirmed its strong cash generation, with a positive Cash Flow from Operations of €74 million, compared to a negative flow of €28 million in the first half of 2006: this improvement resulted from the sharp increase in profitability and the efficient management of working capital. Total cash flow from operations generated in the last twelve months (July 2006 - June 2007) amounted to €449 million (€253 million after investments and financial expenses).

Net Financial Position as of 30 June 2007 amounted to €908 million, down from €952 million as of 30 June 2006 (after €169 million reserves distribution and shareholders loan pay-back in the last twelve months).

PERFORMANCE AND RESULTS OF THE BUSINESS
Energy Cables & Systems
Sales to third parties of the Energy & Cables Systems business in H1 2007 reached €2,291 million, up from the €2,158 million for the same period in 2006 (organic growth +8.1%). Adjusted EBIT rose to €210 million from €143 million in the first half of 2006 (+48.2%), with an increase of adjusted EBIT margin from 6.5% to 9.1%. 

This positive growth in profitability confirms the effectiveness of the Group's strategy focussing on higher added-value products and sales channels. Specifically, the positive results recorded in the Industrial business area and the increasing importance of the projects carried out in High Voltage have contributed to further improve the already strong level of profitability achieved in Q1 2007. Prysmian was also able to take advantage of the favourable market in the Trade & Installers and Power Distribution areas, mainly due to sustained demand from the European utilities.

Utilities
In the first half of 2007, sales to third parties in the Utilities business totalled €931 million, showing a 2.8% organic growth. Demand for Power Distribution cables coming from utilities proved to be strong, particularly in Europe where operators faced an increasing power demand from industrial and household customers. High voltage cables recorded the most significant growth also due to the need to upgrade transmission networks making them more efficient and eco-friendly. In the Submarine business the strong order book provides good visibility for future sales and profitability growth, starting from the second half of 2007.

Trade & Installers
Sales to third parties in the Trade & Installers business reached €911 million in the first half of 2007 posting a 6.0% organic growth. In a market characterised by a strong residential and non-residential demand, particularly in Europe, Canada and Brazil, Prysmian achieved very positive results by continuing to focus on highly profitable value-added products (i.e. LSOH/Afumex fire-resistant cables) and geographical markets. The selective strategy of growth and improvement in the product mix, led to a strong increase in profitability (adjusted EBITDA +67.0% vs. first half of 2006).

Industrial
In the Industrial Cables business, Sales to third parties in first half of 2007 increased to €404 million recording a 21.5% organic growth, mainly due to Prysmian's increased market share in the oil & gas, railway, mining and renewable energy industries. Recently Prysmian secured an important contract from Norsk Hydro and Anadarko to supply Umbilicals for the Peregrino project in Brazil.

Telecom Cables & Systems
In the first six months of 2007, Sales to third parties of the Telecom Cables & Systems business reached €293 million from €258 million recorded for the same period of 2006 (organic growth 10.2%). Adjusted EBIT increased to €26 million compared to €21 million in first half 2006. Adjusted EBIT margins improved from 8.0% to 8.6%.

Prysmian benefited from growing demand in Europe, mainly in the United Kingdom, Spain, France and Germany, where the Company is involved in large-scale FTTH (Fibre to the Home) projects, and obtained positive sales results in the Asia-Pacific market. In the OPGW market (Optical Ground Wire) Prysmian strenghtened its leadership position, while the copper cables business achieved an improvement of product mix and recorded higher than expected demand from large incumbent Telecom Companies, especially in South America, Middle East and North America.
SALES BY GEOGRAPHIC AREA
In Europe sales showed an organic growth of 15.5%, due to growing demand in all segments; Europe represents 69.0% of total sales in the first six months of 2007.

Sales in North America decreased in the first six months of 2007, compared to the same period of 2006, almost entirely due to the contribution of sales related to the Neptune project in 2006 (organic sales growth - 14.5%; +2.1% excluding Neptune project). Sales in North America accounted for 13.0% of total sales in the first six months of 2007.  

In Central and South America, sales recorded an organic growth of 7.9% mainly due to the strong demand in the OGP industry, which Prysmian was able to meet thanks to its new production plant in Vila Velha, which is now running at the planned capacity level. Sales in Central-South America represented 9.0% of total sales in the first six months of 2007.

In Asia Pacific sales of industrial and telecom cables recorded a good trend, posting an organic growth of 4.8%; the region accounted for 9.0% of the total sales in the first six months of 2007.  

SIGNIFICANT EVENTS
In Q2 2007, the Group entered into a New Credit Agreement with six banks in order to refinance the previous Senior Credit Agreement. The total credit lines provided under the New Credit Agreement amount to €1,700 million and the syndication was successfully concluded on 29 June 2007. The New Credit Agreement has a 5-year term and offers much better economic conditions and higher financial flexibility than the previous agreement.

On 31 July, the Board of Directors of Prysmian S.p.A. approved a Term Sheet with the Indian group Nicco for the acquisition of a majority shareholding in a Newco, encompassing all the industrial and commercial operations related to the cables and energy systems activities of Nicco Corporation. In the last financial year the business recorded a turnover in excess of €55 million. The aim of the acquisition is to penetrate a fast growing market that Prysmian considers strategic, particularly in industrial cables and energy transmission and distribution business. Prysmian expect to finalize the acquisition by the first quarter of 2008.

The Group also acquired, effective 3 September 2007, the business operations of International Wire & Cable (IWC), a cable manufacturer based in New Zealand. This acquisition will allow Prysmian to further strengthen its presence in the Asia-Pacific area. IWC has been producing energy cables for over 60 years, and specialises in aluminium/neutral screened cables. In the last fiscal year the company recorded a turnover of around €20 million.

With the objective of further reinforcing its leadership position in the High Voltage market, the Group decided to invest around €25 million in USA to build a new production plant for High and Extra-High Voltage cables. The new plant will be located close to the existing Prysmian Abbeville plant and will be operative within the first half of 2009.

OUTLOOK
Based on the excellent results achieved in the first half of the year we expect to confirm a solid trend of sales organic growth also in the second half, targeting an adjusted EBITDA well in excess of €500 million for the full year 2007.

The Quarterly Report as of 30 June 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.

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 34 countries, 54 plants in 20 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.