Prysmian S.p.A. First Quarter 2007 Results

Continuing growth in profitability and cash flow net income more than doubled.

• Sales: €1,205 million (€1,107 million in Q1 2006)
• EBITDA¹: €152 million (€78 million in Q1 2006)
• Adjusted EBITA ²: €116 million (€80 million in Q1 2006)
• EBIT: €135 million (€52 million in Q1 2006)
• Net income: €52 million (€22 million in Q1 2006)
• Cash flow from Operations: €29 million (€-22 million in Q1 2006)

Milan, 14 May 2007 - The Board of Directors of Prysmian S.p.A., a world leading company in the energy and telecommunications cables and systems industry, approved today its financial results for Q1 2007.

Sales for the first quarter of 2007 reached €1,205 million, an 8.9% increase compared to € 1,107 million in the same period of 2006 (organic growth ³ was 8.7%).

Profitability increased sharply, with EBIT growing to €135 million in Q1 2007 from €52 million in Q1 2006. Cash Flow from Operations was positive for €29 million, thanks to the improvement in profitability and the effective management of working capital (in Q1 2006, Cash Flow from Operations was negative for €22 million).

"The excellent results of the first quarter 2007 confirm Prysmian's continued ability to generate a very strong performance," stated Chief Executive Officer Valerio Battista. "Results improved further compared to the positive trends recorded in 2005 and 2006. In a favourable market, Prysmian benefited from the ongoing efforts to refocus its offer on high added-value products and services, its constant attention to the level of profitability in traditional business segments, and the strengthening of its presence in markets with high prospects of growth and profitability. Thanks to this strategy, the Company continues to confirm its ability to create value for its shareholders".

Performance and results of the business units

Energy Cables & Systems
Sales of the Energy & Cables Systems business unit ⁴ in Q1 2007 reached €1,081 million, with an increase compared to €1,002 million for the same period of the previous year (organic growth was 8.2%). EBIT increased sharply to €94 million from €46 million in 2006, translating into a strong improvement in EBIT margin, which rose from 4.6% to 8.7%.

The trend was positive in all three areas of the Energy Cables & Systems business unit. Particularly significant factors include: the robust growth of the Industrial business area; the good order backlog of the Utilities business area, especially in the higher added-value segments - i.e. High Voltage and Submarine - and further increases in the profitability of the Trade & Installers business area, due to the repositioning of products with higher technological features.

Utilities
Growth was mainly driven by the high demand for cables for power distribution from utilities, to address increasing demand from industrial customers and household, both in Europe and in the USA . In extra high voltage cables and submarine cables the strong order book provides a good visibility of future sales.

Trade & Installers
In a market characterised by strong demand, both in the household and non-household segments, Prysmian continued to refocus on high added-value products (i.e.: LSOH/Afumex fire-resistant cables) and on more profitable geographical markets. The selective strategy of growth pursued by the company led to a further improvement in profitability.

Industrial
In the Industrial Cables business area, the strong growth was achieved thanks to the strong sales of cables for the oil & gas, railway, mining and renewable energy industries. Our new plant in Brazil , which manufacturers umbilicals cables, has already achieved the planned level of operation.

Telecom Cables & Systems
In Q1 2007, sales of the Telecom Cables & Systems business unit ⁵, reached €151 million, with an increase compared to €126 million in the same period of 2006 (organic growth was 14.0%). EBIT grew to €13 million, compared to €9 million in 2006, with an improvement in EBIT margin from 7.1% to 8.5%.

Growth was achieved mainly thanks to the high demand for optical cables, mainly in Europe and Asia-Pacific, and the decision to focus copper cables sales efforts on geographical markets with higher profitability prospects.

The products launched by Prysmian on the market, especially in the FTTH (Fibre to the Home) segment, were well received. Thanks to these products, Prysmian succeeded in maintaining the same price level of 2006, despite competitive pressure.

Consolidated Results

Adjusted EBITDA for the first quarter 2007 increased to €116 million, compared to €80 million in Q1 2006, with an increase in adjusted EBITDA margin from 7.2% to 9.6%.

EBITDA for Q1 2007 reached €152 million, up compared to €78 million in Q1 2006, partially due to non-recurring net income of €36 million (mainly related to a purchase price adjustment related to the acquisition of the Cables & Systems divisions from Pirelli & C. S.p.A. — completed in July 2005 — defined at the beginning of March 2007, amounting to approximately €40 million).

EBIT for the first quarter 2007 amounted to €135 million, compared to €52 million in the first quarter of 2006. The adjusted EBIT, net of the above-mentioned non-recurring income amounting to €36 million, increased to €99 million in the first quarter 2007, compared to €59 million in Q1 2006. EBIT margin conseguently increased from 5.3% to 8.2%.

Prysmian continued to develop its strategy through:

• focus on higher added-value products and services;
• strengthening in geographical markets with a higher potential for growth and higher profitability;
• further improvement of industrial efficiency.

Net income for Q1 2007 amounted to €52 million, more than double the Q1 2006 net income of €22 million .

Cash flow from operations for Q1 2007 was positive €29 million (compared to negative €22 million in Q1 2006), despite the growth in net working capital, related to the usual seasonality of the first quarter.

The Net Financial Position at 31 March 2007 amounted to €899 million, compared to €928 million at 31 March 2006 and €879 million at 31 December 2006.

A voluntary "limited review" of the results is in progress by PricewaterhouseCoopers S.p.A..

Outlook
In a market that is likely to remain favourable, Prysmian expects to be able to confirm the trend in organic sales growth, particularly in the high-added value segments of the Utilities and Industrial business, and in optical cables. For 2007 the Company expects to confirm the EBITDA margin growth trend recorded in recent years.

Other Resolutions of the Board of Directors
The Board of Directors of Prysmian S.p.A. also approved the amendment to Article 14 of the Articles of Association, which introduces a mechanism for the appointment of directors who meet requirements of independence, pursuant to current applicable laws. It furthermore approved the calendar of corporate events for the remaining months of the current year.

The Quarterly Report as of 31 March 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.

Prysmian
Prysmian S.p.A. is one of the world's leaders in the energy and telecommunication cables industry, with a strong market position in higher-added value market segments. Organised in two business units, Energy Cables & Systems (submarine and terrestrial cables for electricity transmission and distribution) and Telecom Cables & Systems (optical fibres and cables for video, data and voice transmission, and copper telecom cables), the Prysmian Group has a global presence in 34 countries, with 54 plants, 7 Research & Development Centres in Europe, the United States and South America and more than 12,000 employees. Specialising in the development of products and systems designed on the basis of clients' specific requirements, Prysmian's main competitive strengths include its focus on research and development, its innovative products and production processes, and the use of advanced proprietary technologies.

This announcement is not an offer for sale of securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Prysmian S.p.A does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from Prysmian S.p.A or the selling shareholder and that will contain detailed information about the company and management, as well as financial statements. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia or Japan.

¹We define EBITDA as Net Income/(Loss) for the period, gross of amortisation, depreciation and impairment, financial income and expense, and shares of results of associates and dividends from other companies and taxes. For further information, please see the table in Annex B, which provides the reconciliation statement between Net Income/(Loss) for the period, EBITDA and adjusted EBITDA.
²We define adjusted EBITDA as EBITDA net of charges and incomes that, according to the Group's management, do not have a recurring nature and are reported in the table in Annex B.
³Organic growth is calculated net of perimeter changes, metal effect and exchange rate effect.
⁴Sales of the Energy Cables & Systems business unit amounted to €1,081 million and include €22 million from sales to the Telecom Cables & Systems business unit, that were eliminated in the consolidation process.
⁵Sales of the Telecom Cables & Systems business unit amounted to €151 million and included € 5 million from sales to the Energy Cables & Systems business unit, which were eliminated in the consolidation process.