Pirelli launches new truck tyre production unit in Brazil

Total investment of 50 million dollars to bolster the production of radial truck tyres for the Brazilian and Latin American markets. Completes investment plan for the Industrial segment, bringing additional and more competitive production capacity. Following 2005's excellent results, Pirelli Tyre continues with its strategy of worldwide growth

Gravata, Milan , 22 March 2006 - Pirelli Tyre today launched a new production unit for radial truck and bus tyres in Gravata , in the Brazilian state of Rio Grande do Sul. The unit is located inside the Group's principle development and production centre for conventional motorcycle tyres worldwide: it covers approximately 573,000 square metres, adds approximately 500 employees , both direct and ancillary, to the existing 1,500 and will have full production capacity of 12,000 tons a year, in addition to the present 64,000.

Of Gravatai's production, 80% will be for the local market and 20% for export, chiefly within Latin America.The new production unit requires total investment of 116 million reais (over 50 million dollars ) and, when fully operatonal, will account for 8% of revenues for Pirelli Tyre in Brazil .

The opening of the production unit in Gravata further strengthens Pirelli's presence in the radial Truck segment and follows the launch in China in the second half of 2005. With these units, Pirelli Tyre completes its investment plan in the Industrial segment, which can now count on new and more competitive production capacity to satisfy growth for the period 2006-2008.

The investment in Gravata is part of the Pirelli Tyre's strategy of worldwide growth , which foresees expansion in emerging markets in the Industrial segment, together with a focus on the Premium Auto and Motorcycle segments. This strategy saw the Company close 2005 with a significant increase in key economic indicators and achieve its profitability target (ROS at 9%), forecast in the 3-year plan for 2006, one year ahead of schedule. In particular, revenues amounted to 3,633 million euros ( +11.7% ), the operating profit was 329 million euros (+ 19.6% ) and the net profit was 198 million euros (+18.6% ).

During the inauguration ceremony, in the presence of the Governor of the State of Rio Grande do Sul , Germano Rigotto , and local authorities, the Chairman of Pirelli Brazil , Giorgio Della Seta , said: "the opening of this new production unit in Brazil is proof of the Pirelli Group's confidence in a country which has hosted us for 77 years. Rio Grande do Sul is a strategic area for us with its qualified labour force, excellent infrastructure and the entrepreneurial spirit of its state and municipal governments, all of which allow Pirelli to achieve its goals in Brazil and at the same time contribute to the region's economic development".

Carlos Redondo , Pirelli Tyre's director for Latin America added: "the region's industrial culture, the presence of already installed infrastructure, favourable market conditions and proximity to the countries of the Mercosul constitute an ideal scenario to guarantee new opportunities for the development of both Pirelli and the territory" .
The new production unit will flank Pirelli's other radial Truck facilities in Italy , Turkey , Egypt and China , as well as the Brazilian plant in Santo Andr.

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