MAD Madesco Sa

FOR IMMEDIATE RELEASE

MADECO S.A. ANNOUNCES

CONSOLIDATED RESULTS FOR THE FOURTH QUARTER OF 2008

(Santiago, Chile, February 24, 2009) Madeco S.A. (“Madeco”) (NYSE ticker: MAD) yesterday announced its consolidated financial results in Chilean GAAP for the fourth quarter which ended December 31, 2008. All figures are expressed in Chilean pesos as of December 31, 2008. Conversions to U.S. dollars made in this report are based on the exchange rate on that date (US$1.00 = Ch$636.45 and UF1.00 = Ch$21,452.57 as of December 31, 2008).

Madeco Highlights

• For the fiscal year 2008 (January to December), the Company reported a net income of Ch$97,184 million, higher than the Ch$21,410 million reported for the same period of 2007. The higher profits are explained by the increased non-operating income of Ch$117,949 million, offset by lower operational income ¹ of Ch$3,671 million and higher charges of income tax, minority interest and others of Ch$38,504 million. From the net income obtained in 2008, Ch$89,565 million were reached as an extraordinary profit due to the sale of the Wire & Cable unit.
• After carrying out successfully the sale of the Wire & Cable unit of Madeco by the end of the third quarter of 2008, the Company and Nexans continue adjusting their differences with respect to the price paid by the French company. Moreover, for these purposes Madeco has left deposits on guarantee (“escrow") of US$37 million in favor of Nexans. Notwithstanding this, the Company believes, supported by its legal and financial advisers, that price adjustments should not have significant effects on the financial statements of the Company.
• By the end of October 2008, the board of directors of the Company accepted the resignation of Mr. Tiberio Dall’Olio as CEO of Madeco. On its replacement, the Board appointed Mr. Cristián Montes, who was serving as CFO of the Company.
• For the fourth quarter of the year, the Company reported a net income of Ch$8,306 million, higher than the Ch$2,355 million reported for the same period of 2007. The non-operating income increased from a charge of Ch$6,221 million to a profit of Ch$20,899 million driven by higher price-level restatement and exchange differences, and higher other non-operating income. On the other hand, operational income ¹ decreased from Ch$4,724 million to a loss of Ch$1,249 million led by decreased gross income, despite lower selling, general and administrative expenses. Income tax, minority interest and others, increased from a positive balance of Ch$3,852 million to a charge Ch$11,344 million between 4Q07 and 4Q08, due to higher profits obtained this quarter.
• Revenues in 4Q08 decreased by 60.7% compared to 4Q07, reaching Ch$59,757 million, explained by the no-consolidation of the Wire & Cable unit and lower sales of the Brass Mills Unit (decreased by Ch$8,448 million). These effects were counterbalanced by higher sales related to the Flexible Packaging and Profile units (increased by Ch$18,913 million and Ch$415 million, respectively). Sales volumes reached 16,807 tonnes for the period, of them 8,367 tonnes, 1,834 tonnes and 6,606 tonnes were obtained in Chile, Argentina and Peru, respectively. 
• Operating income in 4Q08 decreased by Ch$5,973 million compared to 4Q07, reaching a loss of Ch$1,249 million. This reduction was mostly attributable to a lower gross income of Ch$10,055 million (explained by lack of the Wire & Cable unit and to the lower results of the Brass Mills unit), offset by lower selling, general and administrative expenses of Ch$4,082 million (due to sale of the Wire & Cable unit balanced by higher expenses of the Brass Mills and Flexible Packaging units).
• As of the fourth quarter of 2008, cash and cash equivalents amounted to Ch$154,563 million compared to Ch$12,195 million in 4Q07. This is explained by larger net cash flow from investing activities (due to the sale of the Wire & Cable unit) and lower needs to finance working capital.
• In June 2008 the Company paid the schedule bonds, and prepaid all the remaining bonds due, totaling a payment of Ch$23,382 million (historic value). The borrowings to pay this debt were obtained through short-term debt, which were paid during the last quarter of 2008.

1. Highlights of the Income Statement (Exhibit 1 and 2)

Net income for 4Q08 reached Ch$8,306 million higher than the Ch$2,355 million totaled the year before. The larger result is due to a profit in non-operating result (Ch$27,121 million), explained by higher profits from price-level restatement and exchange differences, and increased other non-operating income. Nevertheless, the mentioned gain was offset by; a reduction in operating income (Ch$5,973 million) driven by the lack of the Wire & Cable unit and the lower results from the Brass Mills unit; and higher charges related to income tax, minority interest and other charges (Ch$15,197 million).

Revenues 

Revenues in 4Q08 were Ch$59,757 million, a 60.7% lower than the same quarter of 2007. The reduction in consolidated revenues is principally explained by the no-consolidation of the Wire & Cable unit (due to it was sold in 3Q08) and the lower demand observed by the Brass Mills unit. These effects were offset by the higher sales of the Flexible Packaging unit, in terms of volumes and selling prices. Volumes for the Brass Mills unit showed a reduction of 1,388 tonnes, partially offset by the higher sales of 155 tonnes of the Profiles unit.

Gross Income 

Gross income in 4Q08 was Ch$5,528 million, 64.5% lower than the Ch$15,583 million reported in 4Q07 as a result of a 60.7% decrease in revenues and a 60.3% decrease in cost of sales. The reduction in gross income is explained by the absence of the Wire & Cable unit, and the lower results achieved by the Brass Mills and Profiles units due to the lower demand of it products during 4Q08 and higher unit costs. Those effects were counterbalance by the results of the Flexible Packaging unit. As a percentage of sales, the margin ratio varied from 10.2% to 9.3%.

Operating Income 

Operating income for 4Q08 amounted to a loss of Ch$1,249 million, from a gain of Ch$4,724 million obtained in the same period the year before. The reduction of the operational income is justified by the lack of the Wire & Cable unit and the decreased operational income obtained by the Brass Mills unit, these effects were offset by the higher gains obtained by the Flexible Packaging unit.

Non-Operating Result 

The Company’s non-operating result for 4Q08 amounted to Ch$20,989 million, Ch$27,121 million higher than the loss of Ch$6,621 million reported in 4Q07. This was attributable to an increment in price-level restatement and exchange differences of Ch$13,782 million and higher other non-operating income of Ch$8,645 million (net from expenses). The gain in exchange differences derived from the valuation of the U.S. dollar against the Chilean peso, and the balance between assets and liabilities held by the Company in U.S. dollars during 4Q08.

Income Tax 

During 4Q08, income tax amounted to Ch$10,371 million, compared to the positive balance of Ch$4,492 million in the same period of the year before, as a result of the higher valuation of foreign investments, higher non operational result, offset by a reduced operational income.

Minority Interest 

While in 4Q07 the Company’s minority interest charges (reflecting mainly the portion of earnings/losses corresponding to the participation of minority shareholders in the subsidiaries Alusa, Indalum and Decker) amounted to Ch$674 million, in 4Q08 totalized Ch$1,045 million mainly as result of higher profits obtained mainly by Alusa during the period.

2. Analysis by Business Unit (Exhibits 3 to 6)

The balances that appear on the Wire & Cable unit are explained by how figures are prepared to be presented, i.e. the historical balances accrued as of September 2008 by this former unit of the Company, have the same value as those recorded in December 2008; but for purposes of presentation, the balances of September were adjusted according the variation of the Chilean CPI index, so when the adjusted figures are contrasted with the recorded figures of December, there is a difference between them, that generates the balance mentioned above.

Brass Mills  

Revenues in 4Q08 reached to Ch$15,587 million, 35.1% lower than the Ch$24,035 million reported in 4Q07. This was due to a drop of volumes sold and to lower selling prices due to the fell of the price of the copper in the 4Q08.

Cost of sales showed a reduction of 20.7% as a result of the lesser volume sales. Nonetheless, as percentage of sales the ratio increased from 93.8% to 114.8% as result of the sale of products below its costs due to the abrupt decline in the price of copper in the last quarter of the year. This negative gap is explained because selling prices are usually set at the LME price and costs are estimated using the weighted average cost method that conform to LME price with a lag. These losses were partially offset by hedges taken by the Company.

Gross income decreased by Ch$3,782 million in 4Q08 from a positive balance of Ch$1,482 million in 4Q07, this reduction is explained principally by higher costs of products sold, as was explained before.

Selling, general and administrative expenses rose by 79.2%, from Ch$1,661 million to Ch$2,976 million, explained by increased salaries (due to CPI adjustments) and more marketing and commercial activity.

Operating income totaled a loss of Ch$5,276 million in 4Q08 compare to the loss of Ch$179 million of 4Q07, due to lower gross income and higher selling, general and administrative expenses. Nevertheless, this effect was partially balanced by the reduction of labor intensive and low volume products.

Flexible Packaging 

Revenues rose by 83.0%, from Ch$22,793 million in 4Q07 to Ch$41,706 million in 4Q08 as result of higher volumes sold and higher selling prices. Volume sales increased by 11.2% (or 1,101 tonnes) in 4Q08, explained by a growth of volume sales of Peru (1,305 tonnes), balanced by reduced sales in Chile and Argentina.

Compared to 4Q07 cost of sales rose by 79.3% in 4Q08, from Ch$19,185 million to Ch$34,398 million. The higher cost of sales is explained by higher sales of the period and higher costs of raw materials. As a percentage of sales, the ratio of cost varied from 84.2% to 82.5%.

Gross income grew by 102.5% from Ch$3,608 million in 4Q07 to Ch$7,308 million in 4Q08, mainly due to the good performance of the Peruvian subsidiary (in terms of gross margin and gross income), followed by the results of the Chilean and Argentinean subsidiaries. In the case of Peru, the increased margins are explained by higher sales and to the replacement of lower margin products by high added value products.

Selling, general and administrative expenses amounted to Ch$2,343 million in 4Q08 an increment of 70.8% in contrast with the Ch$1,372 million of 4Q07. As a percentage of sales, SG&A dropped from 6.0% to 5.6% in 4Q08. In addition, the growth of expenses is explained by higher salaries, marketing activity and other general expenses.

Operating income in 4Q08 was Ch$4,965 million compared to Ch$2,236 million in 4Q07, attributable to the good performance of the Peruvian subsidiary (amounting 89.3% of the total business unit’s variation) chased by the Argentinean and Chilean divisions.

Profiles 

Revenues in 4Q08 reached to Ch$8,958 million, 4.9% higher than the Ch$8,543 million reported in 4Q07. This was due to increased volumes sold (155 tonnes or 6.5%) in spite of a reduction of 1.5% in selling prices.

Cost of sales increased by 10.3%, from Ch$6,835 million in 4Q07 to Ch$7,539 million in 4Q08. As percentage of sales, the unit’s costs rise from 80.0% to 84.2%, explained by higher unit costs (lower production of profiles replaced by imports), and to a lesser extent by the addition of the new PVC profiles plant.

Gross income in 4Q08 declined by 16.9% compared to Ch$1,708 million reached in 4Q07, as result of higher costs of sales for the period in comparison with 2007, mitigated by higher volumes of profiles sold.

Selling, general and administrative expenses decreased 9.6%, from Ch$1,744 million to Ch$1,577 million in 4Q08, attributable to lower expenses (consultant fees, travel expenses, etc.), offset by higher marketing and commercial activity of the Company in order to enhance its commercial network by the incorporation of new branches across Chile and the sales of its new PVC division.

Operating income for 4Q08 totaled a loss of Ch$158 million, lower than the loss of Ch$36 million reported in 4Q07, due to the reduced gross income, offset by lower selling, general and administrative expenses.

3. Balance Sheet Analysis (Exhibit 7)

The Company’s assets as of December 31, 2008 amounted to Ch$551,642 million, an increase over the Ch$530,449 million reported as of December 31, 2007.

Current Assets
Amounted to Ch$302,631 million, 2.4% lower than the Ch$309,953 million of December 2007, explained by lower inventories (Ch$91,927 million), accounts receivable (Ch$59,820 million), and recoverable taxes (Ch$10,599 million). This effects were balanced by higher time deposits (Ch$132,003 million) and other current assets (Ch$36,977 million).The increase in time deposits derived from the payment received from Nexans due to the sale of the Wire & Cable unit of the Company. Furthermore, the observed declines in inventories, accounts receivable and taxes are explained by the transfer of the Wire & Cable subsidiaries.

Fixed Assets
Amounted to Ch$115,535 million, a reduction of 36.5% compared to 4Q07, explained by the sale of the Company’s Wire & Cable unit. Lower balances in machinery and equipment, buildings and land, were offset by the reduction in depreciation charge for the period. In addition, this reduction was partially offset by the Company’s investments between 4Q07 and 4Q08.

Other Assets
Recorded Ch$133,476 million compared to the Ch$38,689 million of 4Q07, due to the addition of the shares of Nexans, partially offset by reductions in goodwill and other assets, balances related to the subsidiaries sold to Nexans.

Liabilities  

Total liabilities as of December 31, 2008 amounted to Ch$110,912 million a reduction of 49.2% compared to December 2007.

Bank Debt
As of December 31, 2008, amounted to Ch$49,627 million, representing a reduction of 48.8% (or Ch$47,317 million) in comparison to 2007, due to the payment of the loans related to the former Wire & Cable unit, the scheduled payments of the other business units of the Company (corporate syndicated loan, and Profiles and Flexible Packaging units) and to the lower needs to finance working capital.

Bonds
In early June 2008 the Company paid the schedule bonds and prepaid all the remaining bonds due, totaling Ch$23,636 million. The funds to pay this debt were obtained through short-term borrowings, which were paid in early 4Q08.

Shareholders’ Equity 

As of December 31, 2008 shareholders’ equity amounted Ch$415,179 million, which represent an increase of 44.5% compared to 2007.

Paid Capital
As in December 2007, paid capital in December 2008 totalized Ch$255,184 million.

Share Premium
The share premium, as in the case of paid capital, presented no differences if the amounts of 2008 and 2007 are compared ($ 46,888 million).

Other Reserves (Reserves)
Increased by Ch$30,615 million from a loss of Ch$19,765 million in 4Q07, mainly due to the reduction of balances related to cable subsidiaries that were sold the third quarter of 2008 (approximately Ch$24,808 million) and the effect of the appreciation of foreign investments (implementation of the Chilean accounting bulletin N°64 or BT64).

Retained Earnings / (Accumulated Losses)
Retained earnings for the period totalized Ch$102,256 million higher than the Ch$5,072 million posted in 4Q07 experiencing an increase of Ch$97,184 million. The balance for 2008 was driven by the extraordinary net income obtained from the sale of the Wire & Cable unit, and to a lesser extent by the profits of 2008 (ordinary net income) and the balance of retained earnings.

For further information contact:
Jose Luis Valdes
Investor Relations

Tel. : (56 2) 520-1388
Fax : (56 2) 520-1545
E-mail : ir@madeco.cl
Web Site : www.madeco.cl

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Madeco, previously Manufacturas de Cobre MADECO S.A., was incorporated in 1944 as an open corporation under the laws of the Republic of Chile, and today has operations in Chile, Peru, and Argentina. Madeco is considered, a Latin American leader, in the manufacture of finished and semi-finished products in copper, copper alloys and aluminum. The Company is also a leader in the production of flexible packaging used in packing mass consumption products like foods, sweets and cosmetics.

Readers are warned not to place too much reliance on the future declarations contained in the above text, which are based on the position today. The Company is under no obligation to announce publicly the results of revisions to those declarations about the future which might be made to reflect events or circumstances after today including, but without limitation to changes in the Company’s strategy or in its capital expenses, or to reflect the occurrence of unforeseen events .