Prysmian S.p.A., first nine months 2008

Strong organic growth confirmed in the utilities business: +11.6%.
Important new contracts in Middle East for high voltage and submarine cables.
Strong cash generation: free cash flow up to Euro 280 million in the last 12 months. 
Targets confirmed for full year 2008:
Adjusted ebitda expected to rise above Euro 550 million (Euro 529 million in 2007)

•  sales: Euro 3,954 million (Euro 3,877 million in first nine months 2007)
•  organic growth: +4.5%
•  adj ebitda :  Euro 428 million (Euro 405 million in first nine months 2007; +5.7%)
•  adj operating income : Euro 381 million (Euro 356 million in first nine months 2007; +6.8%)
•  adj net incom e : Euro 265 million (Euro 222 million in first nine months 2007; +19.4%)
•  net financial position improves to Euro 746 million from Euro 899 million at 30 September 2007

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 results for the first nine months of 2008 (which are not subject to audit).

Investments in power transmission grids kept on growing also in the third quarter. Prysmian was able to take advantage of this demand securing important new contracts and further strengthening its leadership in high voltage underground and submarine cables and systems. Net of metal price effects, currency translation effects and changes in perimeter, overall organic growth was 4.5%, taking the Group's sales to Euro 3,954 million. The trend was particularly good in the Utilities business, recording nine-month organic growth of 11.6%, and in the Industrial business, with nine-month organic growth of 4.1%, in sharp acceleration in the third quarter, mainly due to performance achieved in priority segments, above all OG&P and renewable energy. Among the more significant contracts secured in the third quarter was the project awarded to Prysmian by Qatar General Electricity & Water Corporation (Kahramaa) to build the country's first submarine power connection serving the capital Doha. This new project, which follows others in progress in Qatar, the United Arab Emirates and other areas in the Middle East, ranks Prysmian as a strategic partner in the high voltage sector in a key region with major plans to develop new energy infrastructure. The telecom cables business reported a steady increase in demand for optical fibre cables in different areas of the globe, with good sales growth and a further increase in profitability.

Although the current turmoil in financial markets and in commodity prices makes it more difficult to forecast long-term investment plans in the energy and telecoms sector, the results achieved in the first nine months confirm the Group's ability to maintain a high level of earnings thanks to the significant contribution of its higher value-added businesses - explains Valerio Battista, Chief Executive Officer -. With the new contracts secured in the third quarter, our order book now covers submarine cable production capacity until second half of 2010, while orders for high voltage underground cables already cover most of 2009 production capacity. If we add the performance in industrial and optical cables, we are able to confirm earnings growth expected for full year 2008, with adjusted EBITDA rising over Euro 550 million.

Adjusted EBITDA amounted to Euro 428 million in the first nine months of 2008, up 5.7% from Euro 405 million in the corresponding period of 2007, with margin on sales rising from 10.5% to 10.8%. The Group's strategy - focussing on more profitable businesses with long-term investment cycles - allowed to achieve this increase in margin despite the adverse macroeconomic conditions, resulting in a further contraction in the third quarter, which affected profitability in the Trade & Installer and Power Distribution business. Margins in the first nine months of 2008, and particularly in the third quarter, have also been negatively impacted by the high price of non-metal raw materials (insulating plastics). The high valued-added businesses of high voltage and submarine cables, industrial cables for the OG&P, renewable energy and other priority sectors, and optical fibre cables have generated around 50% of adjusted EBITDA in the twelve months to 30 September 2008, confirming a sustainable profitability growth trend also in the third quarter of 2008.

EBITDA reached Euro 414 million in the first nine months of 2008. In the corresponding period of 2007 EBITDA amounted to Euro 439 million, having benefited from Euro 34 million in net non-recurring income compared with Euro 14 million in net non-recurring expenses in the first nine months of 2008.

Adjusted operating income rose by 6.8% in the first nine months of 2008 to Euro 381 million, up from Euro 356 million in the corresponding period of 2007. The margin on sales also improved from 9.2% to 9.6%. Operating income amounted to Euro 366 million compared with Euro 390 million in the first nine months of 2007, which had benefited from Euro 34 million in net non-recurring income compared with Euro 15 million in net non-recurring expenses in the corresponding period of 2008.

Net finance charges improved slightly, from Euro 77 million in the first nine months of 2007 to Euro 75 million in the first nine months of 2008, despite non-recurring finance costs of Euro 22 million compared with Euro 14 million in the corresponding period of 2007. The reduction in finance costs is due to lower average net debt in the period and a reduction in borrowing costs thanks to the new financing agreement effective from May 2007.

Net income amounted to Euro 233 million compared with Euro 238 million in the first nine months of 2007, basically because of the impact on operating results of the non-recurring expenses mentioned above. Adjusted net income, before Euro 32 million in non-recurring expenses, increased by 19.4% in the first nine months of 2008 to Euro 265 million from Euro 222 million in the corresponding period of 2007.

Cash flow from operations (before changes in net working capital) amounted to Euro 417 million in the first nine months of 2008 (Euro 400 million in the corresponding period of 2007), confirming the strong cash-generation. The Free cash flow (before dividends) was Euro 96 million in the first nine months of 2008 compared with Euro 61 million in the corresponding period of 2007, thanks to efficient management of net working capital and despite larger investments in higher margin businesses. The Free cash flow generated in the last twelve months (October 2007 - September 2008) amounted to Euro 280 million, posting a strong improvement on the full year 2007 (Euro 245 million), despite the beneficial effect in 2007 of the closure of the copper rod factory in UK (Euro 50 million positive effects) and the higher level of operating investments in 2008.

At the end of September 2008, the net financial position amounted to Euro 746 million, improving from Euro 899 million at 30 September 2007. The Group can count on a particularly solid financial structure, with the ratio Net financial position / Adj EBITDA expected to improve further by year end from 1.4x recorded in 2007. The Group's financial structure based on two long-term financing agreements expiring in mid-2012. Including the undrawn committed credit lines and the available cash the Group's financial resources exceed Euro 900 million at the end of September 2008, which is expected to increase further by year end.


BUSINESS PERFORMANCE AND RESULTS

Energy Cables and Systems (in millions of Euro)

Sales to third parties by the Energy Cables and Systems business rose to Euro 3,529 million, reporting 4.4% organic growth. Adjusted operating income increased by 6.2% to Euro 344 million from Euro 323 million in the first nine months of 2007, with margin on sales at 9.7% up from 9.3%.

Utilities
Sales to third parties in the Utilities business rose to Euro 1,512 million, reporting organic growth of 11.6%. Growth was particularly concentrated in the high voltage underground and submarine cables and accessories segments, demonstrating once more Prysmian's leading capabilities as an integrated turnkey systems supplier: from design to installation, monitoring and maintenance. A major step forward was taken in recent months in the development of one of the biggest and most complex submarine power interconnection in the world: in fact, Prysmian finished laying Pole 1 of the SAPEI submarine cable link at a depth of over 1,600 metres, confirming its technological leadership in this sector. Profitability also confirmed the growing trend thanks to stronger contribution of higher margin business, such as extra-high voltage cables and network components. Adjusted operating margin on sales climbed to 13.1% from 11.3% in the corresponding period of 2007.

Trade & Installers
Sales to third parties in the Trade & Installers business amounted to Euro 1,317 million. Despite the contracting demand, due above all to the impact of the construction industry crisis, Prysmian managed to retain its market share, thus limiting the drop in volumes and negative impact on earnings. Markets such as North America, Spain and the UK largely confirmed the first-half downturn, which from the third quarter extended to other European markets although with milder effect. Other key markets like South America and Australia carried on performing well. Prysmian has further increased its exposure to high value-added products such as LS0H/Afumex, fire-resistant cables and to the demand for cables related to non-residential applications, avoiding as far as possible competition on markets most affected by price pressures. Adjusted operating margin on sales slightly declined to 6.9% from 7.7% in the first nine months of 2007.

Industrial
Industrial cables sales to third parties amounted to Euro 627 million in the first nine months of 2008, reporting organic growth of 4.1%. Worth noting is how the trend in sales has accelerated, with organic growth rising from +7.4% in the second quarter to +13.3% in the third quarter. The drivers of this growth were cables for the OG&P industry, cables for the renewable energy sector and other segments identified as priority ones, such as shipping and cables for infrastructure. These strategic business confirmed a sustainable profitability growth also in the current weak environment. Adjusted operating margin on sales rose to 8.9% in the first nine months of 2008 from 8.5% in the corresponding period of 2007.

Telecom Cables and Systems

Sales to third parties by the Telecom Cables and Systems business amounted to Euro 425 million, reporting 5.5% organic growth, accelerating to 6.2% in the third quarter. Adjusted operating income amounted to Euro 39 million, up 16.1% from Euro 33 million in the corresponding period of 2007. Adjusted operating margin on sales rose to 8.9% from 7.8%.

Prysmian continued to achieve a good performance in the optical cables market, which kept speed of growth thanks to continued recovery in demand in Europe, a strong increase in volumes in North America as well as sales growth in Australia.


SALES AND RESULTS BY GEOGRAPHICAL AREA

(*) EMEA: Europe, Middle East and Africa

The Group's sales in EMEA (Europe, Middle East and Africa) reported 5.0% organic growth in the first nine months of 2008, mainly thanks to the development of high voltage and submarine projects, as well as the positive performance of industrial cables. EMEA accounted for 70% of total sales.

Sales in North America reported 3.6% organic growth, particularly due to strong development of the high voltage and telecom businesses which made up for a contraction in demand in other areas of business such as power distribution. Sales in North America accounted for 12% of total sales in the first nine months of 2008.

Sales in Latin America reported 2.8% organic growth, with almost all business areas performing well. The region accounted for 9% of total sales in the first nine months of 2008.

Sales in Asia and Oceania reported 3.3% organic growth and accounted for 9% of total sales in the first nine months of 2008.

BUSINESS OUTLOOK

The first nine months of the year confirm a period of sharp economic slowdown, which worsened in the third quarter and is expected to deteriorate further in the last quarter of the year. The real estate market crisis in the United States has generated great instability in the global banking system with clear signs of a decline in consumption and investments in North America followed by Europe. Given this economic scenario, the Group expects demand to decrease further in the Trade & Installers and Power Distribution businesses, while confirming growing demand for high voltage underground and submarine cables for power transmission and cables for industrial applications such as OG&P and renewable energy, as well as a positive trend in demand for optical fibre cables by telecom operators.
Based on the positive results achieved in the first nine months, combined with the strong order book in the higher value-added businesses, operating profitability growth is confirmed for the full-year and, in particular, adjusted EBITDA is expected to rise above Euro 550 million (Euro 529 million in 2007).
The Group also intends to continue its investment plans in higher value-added businesses, thus further enhancing its presence in the most profitable and high-growth segments.

SHARE BUY-BACK

On 7 October 2008, the Board of Directors granted the Chief Executive Officer and Chief Financial Officer separate powers to purchase up to four million of the Company's shares by 31 December 2008. The Company has bought back 1,835,000 of its shares since the start of this programme.

The Quarterly report at 30 September 2008 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.

This document may contain forward-looking statements relating to future events and operating, economic and financial results of the Prysmian Group. These forecasts are, by their very nature, risky and uncertain since they depend on the occurrence of future events and developments. The actual results may differ significantly from those stated owing to a series of factors.

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