Prysmian S.p.A., first half 2009 consolidated results

Margins improve in Second Quarter. ADJ EBITDA 10.5% on sales in first half.
Net profit Euro 150 million: high level maintained (8.1% on sales) after record 2008.
Strong cash generation: free cash flow Euro 272 million in last 12 months.
Power transmission: orders recover in Second Quarter.

• sales: Euro 1,848 million (Euro 2,659 million in first half 2008)
• organic change -18.3%
• adj ebitda
• Euro 193 million (Euro 291 million in first half 2008; -33.3%)
• adj ebitda improves to Euro 103 million in 2nd quarter, from Euro 90 million in 1st quarter
• adj operating income
• Euro 161 million (Euro 260 million in first half 2008; -37.9%)
• net profit:Euro 150 million (Euro 190 million in first half 2008; -20.9%)
• net financial position improved to Euro 660 million from Euro 780 million at 30 june 2008

Milan, 3 August 2009 - The Board of Directors of Prysmian S.p.A., a worldwide leading group in the industry of  cables and systems for energy and telecommunications, has approved today the consolidated results for the first  half of 2009.
In a still negative economic and market scenario, albeit with signs of recovery in the second quarter, the Group has  improved its margins in the second quarter compared to the first three months of the year. Adjusted EBITDA  represented 10.5% of sales in the half year (11.1% in the second quarter), up from 9.8% in the first quarter and  not far from the 10.9% reported in the first half of 2008, despite an organic decrease in Sales of 18.3% (net of  metal price and exchange rate effects and changes in the group perimeter) which fell to Euro 1,848 million. The  decrease in sales was particularly concentrated in the earlier part of the year, stabilizing in the second quarter,  when most of the businesses reported a slight increase in volumes on the first quarter.
The positive trend in margins was achieved thanks to an improved business mix following the strategic decision to  focus on higher value-added segments, such as the Utilities business, where Prysmian's Adjusted EBITDA increased  to 15.8% on sales. In the second-quarter the Utilities business showed a recovery in orders for high voltage  projects and in sales volumes for medium voltage cables, with positive contribution from product and technological  innovations introduced by Prysmian: the new HVDC (high voltage direct current) systems, which further enhance  its leadership in the submarine segment, and the eco-friendly medium voltage P-Laser cable, of which the first 350  km were sold.
“Despite the persisting effects of the world economic crisis – explains Valerio Battista, the Chief Executive Officer -  our Group has managed to retain the high level of margins achieved in 2008. The signs seen in the second quarter  are definitely positive, with volumes stabilising and margins improving significantly. In particular, the period of  marked slowdown of investments in new high voltage projects has come to an end with new orders secured in  several geographical areas. Further recovery in investments could come from the effects related to the stimulus  packages enacted by governments, particularly in the field of renewable energy.”& amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; lt; /p>

Adjusted EBITDA amounted to Euro 193 million, down 33.3% on Euro 291 million in the corresponding period of  2008; the margin on sales came to 10.5% compared with 10.9% in the first half of 2008. Margins basically stable  thanks to the greater incidence of high value-added business in the utilities sector, where the contribution margin  climbed from 19.2% to 21.3%, and strict control on costs. In the second-quarter Adj EBITDA increased to Euro  103 million from Euro 90 million in the first quarter.  EBITDA3 amounted to Euro 180 million compared with Euro 280 million in the corresponding period of 2008,  reporting a reduction of 35.5%. The margin on sales was 9.8%, compared with 10.5% in the first half of 2008. Adjusted operating income was Euro 161 million, 37.9% lower than the figure of Euro 260 million reported in the corresponding period of 2008. The margin on sales was down to 8.7% from 9.8% in the first half of 2008. Operating income amounted to Euro 148 million, compared with Euro 248 million in the first half of 2008,  posting a decrease of 40.1%.

Net finance costs/income were positive for Euro 57 million in the first half of 2009, compared with a negative Euro  10 million in the corresponding period of 2008. This change mainly reflects the lower cost of borrowings and the  positive impact of Euro 74 million from the fair value of derivatives compared with Euro 23 million in 2008.  Net profit came to Euro 150 million, down from Euro 190 million in the first half of 2008. Excluding the effect of  non-recurring expenses/income, the fair value of derivatives and exchange differences, adjusted net profit came  to Euro 94 million, of which Euro 49 million in the second quarter, up from Euro 45 million in the first quarter.  The Group confirmed strong cash generation in the first half of 2009, reporting Euro 164 million in Cash flow  from operations (before changes in net working capital). This cash flow was only partly absorbed by the increase  in net working capital, mainly associated with the progress of high voltage and submarine projects. Net  investments amounted to Euro 48 million (Euro 8 million more than at June 2008) mainly related to the construction of the new plant in Brazil to produce flexible pipes for the OG&P industry, the construction of the new plant in the USA for extra high voltage cables (Prysmian is the first group in the USA to have manufacturing capacity for extra high voltage cables) and to improve industrial efficiency. Free cash flow (before dividends) generated over the last twelve months (July 2008 - June 2009) kept at the very high level of Euro 272 million; this strong cash generation benefited also from a significant contraction in working capital (Euro 156 million since June 2008), due to the fall in volumes and reduction in metal prices.
At the end of June 2009, the Net financial position amounted to Euro 660 million, improving from Euro 780 million at 30 June 2008. In the period July 2008 - June 2009 the Group paid Euro 75 million in dividends (April 2009) and bought Euro 30 million of treasury shares (fourth quarter 2008).

BUSINESS PERFORMANCE AND RESULTS
Energy Cables and Systems (in millions of euro)
Sales to third parties by the Energy Cables and Systems business amounted to Euro 1,641 million in the first half of 2009, posting an organic decrease of 17.6% on the corresponding period of 2008. Compared with the first quarter of 2009, the second quarter reported generally stable sales and volumes, with no further evidence of decline. On the contrary, basically every segment, except for the Industrial one, experienced a slight improvement in sales volumes, especially the Utilities segment. Adjusted operating income was Euro 148 million, down from Euro 233 million in the first half of 2008, with the margin on sales slightly lower at 9%, down from 9.8%. In the second quarter adjusted operating income was Euro 78 million (compared with Euro 70 million in the first quarter of 2009), with margin on sales improved from 8.5% to 9.3%, confirming Group's capability to increase profitability even in less favourable environment.

Sales to third parties by the Telecom Cables and Systems business amounted to Euro 207 million, posting an organic decrease of 24.1% on the corresponding period of 2008. Adjusted operating income came to Euro 13 million (Euro 27 million in the corresponding period of 2008), with the margin decreasing from 9.1% to 6.1%.

Demand in the optical cables sector was largely stable throughout the period, with a rise in volumes and profitability in the second quarter. Prysmian has managed to increase its penetration of rapidly-developing emerging countries like China, where the Group has started working with the main local TLC operators, South America and South-East Asia, where it has secured major cabling contracts in Vietnam and Indonesia. The market for broadband/FTTH/FTTx is lively even if with still limited size.

The Group's sales in EMEA (Europe, Middle East and Africa) reported an organic decrease of 16.8% in the first half of 2009, mainly due to lower volumes in the Trade & Installers, Power Distribution and Telecom segments. EMEA accounted for around 70.2% of total sales in the period.
Sales in North America posted an organic decrease of 44.4%, going down to 9.3% of total sales in the period.
Latin America posted an organic reduction in sales of 5.4%. The region accounted for around 10% of total sales in the first six months of 2009.
Asia Pacific reported an organic decrease in sales of 9.6%, with this region accounting for 10.5% of total sales in the first half of 2009.

BUSINESS OUTLOOK

As already evident in the second half of 2008, the first half of this year confirmed the current weakness in the world economy, which is expected to continue throughout 2009. Given this economic scenario, the Group expects to see continued weak demand in the second half of the year in the Trade & Installers and Power Distribution businesses and for certain products in the Industrial segment more exposed to cyclical trends and a more resilient demand for power Transmission cables (based on the current order book) and for certain applications in the Industrial segment.
Based on the results achieved in the first six months, which were in line with internal forecasts, combined with the full order book in the higher value-added businesses and the actions already taken to restructure and reduce costs, FY 2009 adjusted EBITDA can be confirmed in the range of Euro 400 million with a margin of fluctuation of plus/minus 10% (FY 2008: Euro 542 million). This range reflects the uncertainty over the development of the reference markets in the second half of the year.
The Group also continues to rationalise and improve efficiency in its industrial footprint, while confirming its investment plans in higher value-added businesses to strengthen its presence in the most profitable, high-growth segments.

DISCUSSIONS IN PROGRESS WITH DRAKA

Further to the press release issued on 29 June 2009, the Company confirms that discussions are proceeding with Draka to evaluate a possible combination between the two companies, to be implemented through a share-for-share cross-border statutory merger with Prysmian as surviving entity. Any proposed transaction will be submitted to the respective Boards for approval only if, and when, the main elements of the combination have been sufficiently defined. Furthermore, any proposed transaction would be subject to several conditions, including shareholders' approval, financing and employee consultation procedures. There is therefore no assurance at this stage that this transaction will take place.

The Half-year financial report at 30 June 2009 will be filed at the Company's registered offices in 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.

This document may contain forward-looking statements relating to future events and operating, economic and financial results of the Prysmian Group. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Therefore, actual future results may differ materially from what is expressed in forward-looking statements as a result of a variety of factors.

Mr. Pier Francesco Facchini, manager responsible for preparing corporate accounting documents, hereby declares, pursuant to par. 2 art. 154-bis of Italy's Unified Financial Act, that the accounting information contained in this press release corresponds to the underlying documents, accounting books and records.