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

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[1]: €439 million (€302 million in first nine months of 2006; +45.5%)

§ adjusted ebitda[2]: €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)[3]: € +61 million (€ -35 million in first nine months of 2006)

Milan, 05 November 2007 – 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.