Prysmian S.p.A., nine-month 2010 results

Renewed sales growth in nine months
3rd quarter confirms upturn: organic growth in sales +7.6%; adj ebitda €100 m
power transmission order book climbs to approx. €1.4 billion 

Results at 30 september 2010
• Sales: €3,330 million vs €2,777 million in first 9M 2009 (organic change +0.3%)
• Adj Ebitda : €281 million vs €292 million in first 9M 2009 (-3.8%)
• Adj operating income : €224 million vs €242 million in first 9M 2009 (-7.7%)
• Adj net profit : €120 million vs €145 million in first 9M 2009 (-17.2%)
• Net financial position at €654 million vs €629 million at 30 september 2009

Results in line with FY 2010 target (Adj Ebitda expected in region of €375 million )
The Board of Directors of Prysmian S.p.A. has approved today the Company's consolidated results for the first nine months of 2010 (which are not subject to audit).

MARKET SCENARIO
The Group's positive third-quarter sales performance has confirmed the initial signs of market revival, already seen in the second quarter. Demand has started to recover even in the more cyclical businesses, such as cables for the construction industry and for power distribution, both of which particularly hard hit by the crisis.
The improvement in organic growth has been recorded across all the energy cable businesses, particularly in the higher-tech segments, including those linked to renewable energy, where Prysmian has confirmed its technological and market leadership. The sharp organic increase in the third quarter (+7.6% on the corresponding period of 2009), following the positive signs already reported in the second quarter, has produced a small year-on-year organic growth of +0,3% in the first nine months of 2010.

" The results of recent months – comments CEO Valerio Battista - confirm the effectiveness of the Group's strategy for addressing the current competitive environment, which, although still very challenging, presents renewed growth opportunities to which we are seeking to respond quickly. The improvement in results, combined with growth in the order book, allow us to pinpoint more precisely the year-end profit target at about Euro 375 million.
Also in future, we wish to carry on being a benchmark in our industry for ability to lead change and innovation. We have therefore recently introduced a new organisational model designed to improve still further the competitiveness of our production processes and market offer".

FINANCIAL RESULTS
Sales amounted to €3,330 million, up from €2,777 million in the first nine months of 2009. Net of metal price and exchange rate effects and variation in the Group perimeter, the organic change in sales was +0.3% on the first nine months of 2009, confirming the steady increase reported over the course of the year. In fact, the organic change in sales has improved from –11.2% in the first three months, to +4.3% in the second quarter, marking the beginnings of trend reversal, to the jump of +7.6% in the third quarter.

Adjusted EBITDA amounted to €281 million (€292 million in the first nine months of 2009), with a 1.0% third-quarter improvement on the corresponding period of 2009. The margin on sales was 8.4%, down from 10.5% in the first nine months of 2009, primarily due to growth in sales following the rise in strategic metal prices. EBITDA amounted to €272 million, up 0.2% from €271 million in the first nine months of 2009, with a margin on sales of 8.2% versus 9.8% in the first nine months of 2009.

Adjusted operating income was €224 million, down 7.7% from €242 million in the first nine months of 2009 and representing a margin on sales of 6.7%, down from 8.7%. Operating income (including the effect of non-recurring items and positive impact of €3 million from fair value changes in metal derivatives compared with a positive impact of €88 million in the first nine months of 2009) was €212 million (€309 million in 2009; -31.6%).

Net finance income and costs reported a negative balance of €79 million, compared with a negative €31 million in the first nine months of 2009. The negative change is primarily due to currency volatility and specifically the impact of the Euro's strong depreciation on the fair value of currency derivatives, as well as the impact of issuing the Eurobond and entering into a new Forward Start Credit Agreement.

Adjusted net profit came to €120 million compared with €145 million in the first nine months of 2009 (-17.2%), reporting a margin on sales of 3.6% (5.2% in the corresponding period of 2009). Net profit amounted to €92 million. The decrease from €204 million in the first nine months of 2009 is mainly attributable to fair value changes in metal derivatives, which were a positive €88 million in the first nine months of 2009 versus a positive €3 million in the first nine months of 2010.

Free cash flow (levered) was a negative €79 million (positive €22 million in the first nine months of 2009). This cash flow was affected by the negative impact of higher metal prices on working capital (around € 82 million), by the cash outlay for the Ravin Cables acquisition (€21 million), by bank fees and other expenses (€17 million) relating to the Forward Start Credit Agreement and to the Eurobond issue. Free cash flow (levered) generated over the last twelve months (October 2009 - September 2010) amounted to €82 million, and was also affected by the strongly negative impact of higher metal prices.

At the end of September 2010, Net financial position was €654 million compared with €629 million at the end of September 2009 (€474 million at the end of 2009). The net financial position at 30 September 2010 includes some €43 million for the impact of the two acquisitions in Russia and India and reports an improvement of €21 million compared to June despite rising metal prices and the volume upturn.

STRATEGY DEVELOPMENT 
• Investments in high-tech businesses: first flexible pipes by year end
In the first nine months of 2010 the Group invested €50 million, mainly for developing high-tech businesses such as flexible pipes for off-shore oil drilling in Brazil. The production of which is expected to start by year end, after the completion of a long authorization process to extend the Vila Velha plant, with the first deliveries made to Petrobras.

• Expansion into new markets: first high voltage cables contract in India
The Group has continued to integrate its new acquisitions in Russia (RybinskElektrokabel) and India (Ravin Cables), with the definition of initial investments for developing into higher-tech businesses. Prysmian has successfully commenced marketing its cables in India, securing its first high voltage contracts.

• Stable fixed costs: focus on industrial efficiencies
In the first nine months of 2010 the Group kept fixed costs largely stable relative to the corresponding period of 2009, having already made significant reductions in 2009 (€309 million versus €300 million, including the impact of the recent acquisitions). The Group also kept a strong focus on industrial efficiencies: efficiencies in materials, optimisation of logistics and production costs, and development of more effective production processes. 

Energy cables and systems performance and results
• Positive 9M organic growth (+0.7%); marked acceleration in q3 (+9.1%)
• Utilities: clear improvement in q3 (organic growth +7.9%)
• T&I, continued recovery: organic growth +5.4% in 9m, +13.5% in q3
• Industrial: increased volumes in second and third quarters; strong performance by cables for renewables and oil & gas

Sales to third parties by the Energy Cables and Systems segment amounted to €2,997 million, up from €2,465 million in the first nine months of 2009. Net of metal price and exchange rate effects and changes in the Group perimeter, the organic change in sales was a positive 0.7% on the first nine months of 2009. Sales performance steadily improved over the various quarters, going from -11.7% in the first three months of the year, to a trend reversal in the second quarter with +4.7% and further acceleration in the third quarter with +9.1%. Adjusted EBITDA amounted to €256 million (€267 million in the first nine months of 2009), reporting a margin on sales of 8.5% versus 10.8% in the corresponding period of 2009. Adjusted operating income came to €205 million (€222 million in the first nine months of 2009), representing a margin on sales of 6.8% versus 8.9% in 2009.

Utilities
Sales to third parties by the Utilities business amounted to €1,292 million in the first nine months of 2010, reporting an organic decrease of 1.4% year-on-year. The third quarter reported a clear improvement, with organic growth of +7.9% achieved thanks to an upturn in power distribution volumes and a continued positive trend for submarine projects. Adjusted EBITDA on sales went from 16.2% to 14.1%, while adjusted operating income on sales fell from 14.2% to 12.2%.

Sales by the submarine cable business enjoyed an organic increase on the corresponding period in 2009, confirming growth in investment by the utilities, particularly for developing off-shore wind farms and for commencing new power interconnection projects. During the third quarter Prysmian was awarded two of the most important new off-shore wind farm cabling projects, namely HelWin1 and BorWin2, thus adding to its order book which, at the end of September, provided sales visibility for a period of about 2.5 years.

The second-quarter signs of recovery in demand for high voltage underground cables were confirmed - particularly in Europe, the United States, South America and Asia - also thanks to demand for connections to renewable energy sources. From the second quarter, some of the utilities resumed their investment programmes in major power interconnections. The Group won the Transco project in Abu Dhabi, the largest contract for underground high voltage systems ever awarded to a single supplier in the Middle East.

The power transmission order book (for high voltage, submarine and underground cables) has grown since June 2010 to around €1.4 billion.

Demand in the power distribution business steadily improved over the last two quarters, particularly in Europe and South America. In fact, in Europe, after two years of largely flat demand, utilities recommenced investment in grid development or rationalisation projects. North America, one of the markets hardest hit by the crisis, confirmed a basic stabilisation in volumes at the minimum levels reached in the latest quarters.

Trade & Installers
Sales to third parties by the Trade & Installers business amounted to €1,095 million (€754 million in the first nine months of 2009), posting an organic growth of 5.4% year-on-year. Third-quarter sales performance (+13.5%) confirmed the trend reversal already in progress from the second quarter, particularly benefiting from the resurgence in demand in Europe and South America and the Group's ability to exploit its wide product range. The growth in second and third-quarter volumes reflected positively on nine-month profitability, with adjusted EBITDA amounting to €32 million and remaining stable on the first nine months of 2009, thus allowing the steep reduction in the early part of the year to be recovered. Despite resumed growth in volumes, fluctuations in exchange rates and the price of metals and other raw materials have kept price competition alight. Volumes are expected to carry on growing in the next quarters with a consequent increase in the utilisation of production capacity. Adjusted operating margin on sales went down to 1.9% from 2.9% in the first nine months of 2009.

Industrial
Sales to third parties by the Industrial cables business amounted to €529 million (€458 million in the first nine months of 2009), reporting an organic decrease of 3.5%. Industrial cables also showed signs of a trend reversal and steady improvement in organic sales growth over the various quarters: from -17.3% in the first quarter, organic sales growth climbed to +1.0% in the second quarter to achieve more marked acceleration in the third quarter with +8.1%. The biggest drivers of growth were cables for the Oil & Gas sector, with several important orders secured during the period in Libya and Asia, umbilicals in Brazil and the renewable energy sector. In China the Group conquered the leadership of the fast-growing market for wind turbine cables, with a share of around 35%, while it enjoyed double-digit growth for its solar energy cables in both Europe and emerging markets. Adjusted operating margin on sales was 5.1%, down from 6.2% in the first nine months of 2009.

Telecom cables and systems performance and results
• Increased volumes and market share for optical cables
• Growth in the high margin sectors of opgw and network components
• Stable margins

Sales to third parties by the Telecom Cables and Systems segment amounted to €333 million (€312 million in the first nine months of 2009), posting an organic decrease of 3.0% on the corresponding period of 2009. Although demand for optical cables was affected by the temporary postponement of certain important cabling projects, Prysmian boosted its market share in every geographical area with a growth in volumes on the first nine months of 2009. In particular, commercial penetration of major customers in the USA was increased, the market for optical cables in the Middle East showed positive developments, while demand for OPGW (optical ground wire) cables and network components grew strongly.

Adjusted EBITDA was stable at €25 million, with a margin on sales of 7.3%, down from 7.7% in the first nine months of 2009. Adjusted operating income was also basically stable at €19 million (€20 million in the first nine months of 2009), with a margin on sales of 5.6%, down from 6.4%.

PERFORMANCE AND RESULTS BY GEOGRAPHICAL AREA

The Group's sales in EMEA (Europe, Middle East and Africa) reported organic sales growth of 2.0% in the nine months, mainly due to an upturn in volumes for Power Distribution and Trade & Installers, with a sharp acceleration in the third quarter (+8.5%). EMEA accounted for 70.0% of total sales in the period.
Sales in North America posted an organic decrease of 5.0%. Although Canada saw a major upsurge in third-quarter volumes, this was absorbed by the impact of strong price pressure affecting both Trade & Installers and Power Distribution. North America accounted for 9.0% of total sales in the period.
Latin America posted organic sales growth of 4.9% in the nine months. The strong third-quarter recovery in the High Voltage, Industrial and Trade & Installers businesses translated into organic growth of +28.9% on the corresponding period of 2009. The region accounted for 10.0% of total sales in the period.
Asia Pacific reported an organic decrease in sales of 10.7%, almost entirely attributable to lower volumes in the Power Distribution and Industrial businesses on the Australian market. Demand stabilised in the second and third quarters at the minimum levels reported in the prior year. Asia Pacific accounted for 11.0% of total sales in the period.

BUSINESS OUTLOOK
The third quarter has confirmed the signs of recovery in demand and in industrial output for all the Group's businesses from the minimum levels reached in the first three months of 2010. Given this context, the Group expects to see a continued positive trend for Trade & Installers and Power Distribution, and in orders for power transmission projects and certain industrial applications, such as renewable energy and off-shore oil drilling.
Based on the results achieved in the first nine months, combined with the size of the current order book, the
target for FY 2010 adjusted EBITDA can therefore be confirmed in the region of €375 million (FY 2009: €403 million).
The Group also continues to rationalise and improve efficiency in its industrial footprint and to optimise its cost structure, while confirming its investment plans already started in the high value-added businesses to further strengthen its presence in the most profitable, high-growth segments and in the fast growing countries, as Russia and India, where the Group recently completed acquisitions.

APPROVAL OF THE PROCEDURE FOR RELATED PARTIES TRANSACTIONS
In accordance with CONSOB Regulation no.17221/2010 and with the positive opinion of the Internal Control Committee (composed by independent directors only), the Board of Directors has approved of the new "Procedure for related parties transactions".
The new procedure for related parties transactions will be published on the Company's websitewww.prysmian.com .

Prysmian's Third-Quarter Report 2010, approved by the Board of Directors today, will be available to the public from 10 November 2010, from the Company's registered offices in Viale Sarca 222, Milan and from Borsa Italiana S.p.A.. 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.

The managers responsible for preparing corporate accounting documents (Massimo Branda and Jordi Calvo), hereby declare, pursuant to art. 154-bis par. 2 of Italy's Unified Financial Act, that the accounting information contained in this press release corresponds to the underlying documents, accounting books and records.