***

As an effect of the acquisition by Marco Polo Industrial Holding S.p.A. of Pirelli and the subsequent merger for incorporation of Marco Polo Industrial Holding S.p.A. into Pirelli, following the Purchase Price Allocation (PPA) conducted on the basis of that which is established by the relevant accounting principles, greater amortizations have been booked on the income statement mainly linked to intangible assets identified in the context of that operation. The heading “Ebit adjusted” in the income statement excludes – beyond non-recurring and restructuring charges – also the amortizations related to intangible assets identified in the PPA.

***

Meeting today, the Board of Directors of Pirelli & C. S.p.A. examined and approved the results of the Group for the period ended 30 September 2016. Supported also  by the acceleration during the third quarter, the results for the first nine months of 2016 highlight broad improvements in the principal economic indicators. These are discussed below: -       Revenues of 4,533.1 million euro, following organic growth of 6.6% (like-for-like basis, after excluding an adverse 6.7% forex effect) due to a marked improvement in the price mix (+5.5%) as a result of price rises in emerging markets, increased sales in the Replacement channel and a different geographical and product mix. This organic increase in revenues was founded on the progress of the Consumer business (organic growth of 8.2% over the first nine months, +10% in Q3 alone), due to the performance of the Premium segment and the expansion of sales in mature markets, Apac and MEAI, while the Industrial business (organic growth of 0.3% over the first nine months, +0.1% in Q3) continues to suffer from the weakness of the tyre market in South America and other emerging markets; -       Higher volumes (+1.2% in the first nine months of 2016, +3.7% in Q3), due to strong progress by the Consumer business (+3.1% in the first nine months, +5.5% in Q3) as a result of sustained growth in mature markets and the sales’ recovery in emerging markets. Volumes in the Industrial business (-6.2% in the first nine months, -3.8% in Q3) reflect the noted weakness of the truck and agro markets, especially in South America; -       Further growth in the Premium segment, where the 14.2% rise in volumes (+15.9% in Q3) outpaced the expansion of the entire Premium market (+9.0% in the first nine months and in the third quarter). The organic revenues of this segment rose by 11.7% to 2,443.1 million euro, contributing 64.6% of total Consumer revenues compared with 62.2% in the same period of 2015, on a like-for-like basis; -       Improved profitability due to internal levers, such as work on the price mix, and to the efficiencies achieved in order to tackle forex volatility and the contraction of certain markets, principally on the Industrial business. In particular, the EBITDA margin before restructuring and other non-recurring charges has risen to 19.2%, compared with 19.0% in the same period of 2015 on a like-for-like basis. EBITDA before restructuring and other non-recurring charges amounted to 872.1 million euro (861.9 million euro in the same period of 2015 on a like-for-like basis).  The Adjusted EBIT margin (operating profit before restructuring and other non-recurring charges and the amortisation of certain intangible assets identified in PPA) has risen to 14.4%, compared with 14.1% in the first nine months of 2015 on a like-for-like basis. Adjusted EBIT amounted to 655.0 million euro (638.2 million euro in the first nine months of 2015 on a like-for-like basis); -       Efficiency improvements contributed 68.1 million euro. The efficiencies achieved since the start of 2014 total 254.9 million euro, representing 73% of the 2014-2017 four-year target of 350 million euro; -       In geographical terms, profitability has improved in Europe and NAFTA due to strong growth in the Premium segment. Apac remains the most profitable area, with an EBIT margin of more than 20%.

***

The adverse results from equity investments, -52.7 million euro (-6.2 million euro in the same period of 2015), principally reflect the write-downs and impairment adjustments recorded in relation to Fenice S.r.l. and Prelios S.p.a. In addition to the loss from equity investments, total net income of 22.7 million euro (276.6 million euro in the same period of 2015) reflects the rise in net financial charges by 202.9 million euro due, in the main, to the bank loans arranged in connection with the merger of Pirelli and Marco Polo Industrial Holding S.p.A., as well as to the early repayment of the US Private Placement bond of 150 million dollars. The net cash flow from operations was much improved, from -225.7 million euro in the first nine months of 2015 to -32.5 million euro in the first nine months of 2016, thanks to the management of working capital. Capital investment totalled 238.4 million euro (261.8 million euro in the first nine months of 2015), mainly to increase Premium capacity in Europe, NAFTA and China, as well as to improve the production mix. Total net cash flow – before dividends and the effects of the merger with Marco Polo Industrial Holding - improved to -507.1 million euro, compared with -572.0 million euro in the first nine months of 2015. The net financial position was negative 5,972.4 million euro after the effects of the merger of Pirelli and Marco Polo Industrial Holding, which became effective on 1 June 2016 with retroactive accounting and fiscal effects from 1 January 2016. Excluding the effects of the merger, the net financial position as of 31 December 2015 was 1,199.1 million euro (5,331 million euro inclusive of the data for Marco Polo Industrial Holding). The usual performance of working capital, with inflows from the sale of winter products in Europe and Russia in the fourth quarter which coincide with the sell-out activities in the same markets will lead – together with the finalization of some disposals of financial and real estate holdings - to a natural improvement of the net financial position in the coming months. The total number of employees as of 30 September 2016 was 36,763 (36,753 persons at the end of December 2015). PDF Version (172 KB)

NEW PIRELLI DIGITAL GENERAL MANAGEMENT, ENTRUSTED TO BY LUIGI STACCOLI, CONSTITUTED

PAOLO DAL PINO NOMINATED CEO OF PIRELLI INDUSTRIAL

IPO LAUNCH SEEN BY FIRST HALF 2018

FUTURE GOVERNANCE ALIGNED TO INTERNATIONAL BEST PRACTICE

The Board of Directors of Pirelli & C. S.p.A. met today and was updated on the activities under way with regard to the proposed integration of Pirelli Industrial and Aeolus, acknowledging with favour its progress. The Board then analyzed the guidelines of the industrial plan for the Industrial segment. The Board, further, approved the industrial plan 2016-2018, with vision to 2020, for Pirelli Consumer, the sole global player entirely focused on the Consumer business. The strategy calls for:

1. 1. strengthened leadership in the high profitability Prestige and Premium segments;
2. 2. a business model always more focused on the end consumer (‘Consumer Centric Approach’)
3. 3. oversight of new business opportunities offered by new and sustainable mobility (Cyber Tyre and Vélo);
4. 4. total digitization of industrial, commercial and management processes, more efficient and based on predictive models made possible thanks to the deployment of big data and analytics.

To support this course, the Board adopted an organizational model which calls for: - the constitution of General Management Pirelli Digital, entrusted to Luigi Staccoli, supervising all activities aimed at the digitization of the company; - the aggregation of all technical structures (R&D, homologations, technologies, manufacturing, quality, motorsport) and sales to Original Equipment under the responsibility of General Manager Technology, Maurizio Boiocchi; - the attribution of the management of all commercial structures (marketing, supply chain,  aftermarket sales) and the Business Unit Moto to the Chief Commercial Officer Consumer, Roberto Righi, in support of the ‘Consumer Centric Approach’; - the General Management Operations will be superseded from January 1, 2017. Gregorio Borgo, who has announced his decision to leave the company to pursue a new important professional path, will remain with the company until December 31, 2016 to support the  Ceo, Marco Tronchetti Provera, with the implementation of the new organizational model; - the nomination of Paolo Dal Pino, currently Ceo of the Latin America region, as Chief Executive Officer of Pirelli Industrial; - attribution of responsibility for Human Resources Management given to Gustavo Bracco with the role of Chief Human Resources Officer. The Company extends to Gregorio Borgo its appreciation for the important contribution made to the growth of Pirelli through his 24 years of service. On the basis of these assumptions, the Board shared the desire to accelerate the course to the company’s listing, immediately launching all the necessary actions. It is foreseen that the preliminary phases for the preparation of the IPO (Initial Public Offering) can be completed during the first half of 2017, with the objective of proceeding, in accordance with the best opportunities offered by the market, with the launch of the IPO by the first half of 2018 on the Milan stock exchange or, however, on one of the leading stocks exchanges at the international level. Among the elements underpinning the success of the listing, the Board identified: - the alignment of governance to international best practice, through a Board of Directors and board committees composed of a suitable number of independent directors; - a shareholder structure that, although beginning with a concentrated shareholder structure, which emerged during the Public Tender Offer, foresees an evolution which ensures a suitable free-float level and one able to satisfy the expectations of international investors; - a system of incentives that guarantees the alignment of the interests of management with those of all shareholders. The Board further took note with favour of the decision of the board of Marco Polo International Italy (‘Marco Polo’), which also met today, to share and approve the course decided by Pirelli and the elements underpinning the success of its listing. The Board of Marco Polo confirmed its desire to accelerate the implementation of the shareholders’ agreements signed on March 22, 2015, which have as their basis the creation of value by Pirelli and its relisting. PDF Version (122 KB)

TRACK TEMPERATURES HIGHER THAN AT THE LAST RUSSIAN GP, ONLY SIX MONTHS AGO

JUST UNDER A SECOND SEPARATES THE SOFT FROM THE SUPERSOFT COMPOUND, SETTING THE SCENE FOR MANY STRATEGIC OPTIONS

While track temperatures in the Russian spring were warmer than when the race was last held in autumn six months ago, the essential characteristics of the Sochi circuit remained: rapid evolution, as the ‘green’ track had more rubber laid on it, and a very smooth surface, which kept tyre wear and degradation to a minimum. Most of the drivers used the supersoft tyre already in FP1, which proved to be well suited to the track layout, and was used to set the fastest time in both sessions today. Paul Hembery, Pirelli motorsport director: “Soft and supersoft tyres were seen in both sessions today, and different strategic choices from Mercedes and Ferrari about how those tyres were used. With just under a second between the two compounds, the supersoft seems set to be the qualifying tyre tomorrow, and it will be interesting to see whether or not the medium tyre comes into play during the race weekend at all. We’ve got plenty of data to look at now, but initial indications suggest that a one-stopper could well be possible here: although it’s unlikely to be quickest way. This all depends on track evolution though: a hallmark of Sochi that will continue throughout the weekend.”

FP1 - BEST TIME PER COMPOUND

FP2 - BEST TIME PER COMPOUND

LONGEST STINTS OF THE DAY

Tyre statistics of the day:

* The above number gives the total amount of kilometres driven in FP1 and FP2 today, all drivers combined. ** Per compound, all drivers combined. Minimum prescribed tyre pressures: 23 psi (fronts) 19.5 psi (rears) Pirelli fact of the day: Prior to Sochi’s inauguration in 2014, the Grand Prix of St Petersburg was held twice in 1913 and 1914. The first race was won by Russian driver Georgy Suvorin in a Benz, while Germany’s Willy Scholl won the second race, also in a 35-horsepower Benz. Spotted in the paddock today: Sergey Sirotkin. The 20-year-old Russian, who had been formerly tipped for a Sauber race drive in 2014, drove for Renault in FP1 this morning, setting a respectable 13th-fastest (which was actually faster than his team mate). Currently competing in GP2, he is targeting a return to F1 next season. For more information: please visit our all-new website, which is regularly updated with exclusive in-depth features, news and reviews. To find out more, please visit: www.pirelli.com/global/en-ww/russia-2016-practice

BETWEEN TWO AND THREE PIT STOPS EXPECTED: MEDIUM TYRE EXPECTED TO BE MAIN RACE TYRE

TYRE WEAR AND DEGRADATION REMAINS WITHIN EXPECTATIONS ON CHALLENGING INTERLAGOS CIRCUIT

Mercedes driver Nico Rosberg has set pole for the Brazilian Grand Prix using the Pirelli P Zero Yellow soft tyre, nominated together with the P Zero White medium this weekend. With just over a second separating the two compounds, a number of different strategies are possible for the race tomorrow. Many competitors are expected to stop twice, but a three-stopper is also very possible. With only a small percentage probability of rain at the start of qualifying, the track remained dry throughout all three sessions. Dry weather should be the case for tomorrow’s race as well, with the short lap and heavy traffic around Interlagos making strategy all the more important when it comes to gaining track position. Just a tenth of a second separated the two Mercedes drivers in this morning’s final free practice session and their battle continued throughout qualifying. All the drivers completed Q1 on the soft tyre (with all but two of them having run a set of mediums at the start of the session). Qualifying then continued using only the soft compound, as the drivers prioritised saving the more durable medium for the race. Lewis Hamilton (Mercedes) and Romain Grosjean (Lotus) did not use any medium tyres during the qualifying session at all. Lap times were generally slower than they had been in the equivalent sessions last year, mostly due to the new kerbs at Interlagos, which are much higher than they used to be and do not allow the drivers to go over them. Track temperatures peaked at 50 degrees centigrade for the all-important top 10 shoot out: the hottest seen all weekend. Most drivers completed two runs in Q3, using a set of fresh soft tyres for the final run that decided pole – which went to Rosberg for the fifth consecutive time. Paul Hembery, Pirelli motorsport director: “Although Interlagos takes a lot out of the tyres, which is why we’re expecting two or three stops tomorrow, the wear and degradation levels are where we would expect them to be at during this stage of the weekend. The biggest factor in the lap time has appeared to be the new layout with the kerbs, which the drivers have had to get used to since they experienced them for the first time yesterday. Track temperatures have been warm, but still nothing like the very hot conditions we found last year in qualifying. With quite a clear performance gap between the two compounds and dry weather, we’re set for a few different strategy options tomorrow, which the teams will be calculating carefully tonight.” The Pirelli strategy predictor: With wear and degradation levels lower than one year ago on this circuit, two different two-stop strategies are theoretically the quickest options for the 71-lap race tomorrow, although a three-stop is possible as well, depending on factors such as traffic and track position. A three-stopper would be: start on the soft tyre and then change to soft again on laps 15 and 30, before moving to mediums on lap 46 to the end. The two quickest two-stoppers are: start on soft, change to medium on lap 17, medium again on lap 44. Alternatively: start on medium, change to soft on lap 27 and then medium on lap 44. The time difference between these three strategies is minimal.

SHORT CIRCUIT LAYOUT IN AUSTRIA LEADS TO LOW WEAR AND DEGRADATION, WITH JUST 0,7 SECOND BETWEEN THE TWO COMPOUNDS

COOL WEATHER FOR FREE PRACTICE: RAIN EXPECTED AT SOME POINT DURING THE REMAINDER OF THE WEEKEND

Ferrari driver Sebastian Vettel set best time at the end of free practice with the PZero Red supersoft tyre. Despite skies that threatened rain, both free practice sessions today remained dry, with FP2 – run at the same time as the qualifying and the race – getting underway with 22 degrees of asphalt temperature and lately reaching 25°. The rapid warm-up of the supersoft tyre meant that drivers were able to extract the maximum performance from the compound straight away, even though conditions remained ‘green’ and slippery during the first free practice session in particular, during which only the soft tyre was used. Ferrari driver Kimi Raikkonen was the first to try the supersoft tyre this afternoon, 30 minutes into the hour and a half session. As more drivers switched to the softer compound for race and qualifying simulations, a performance gap of 0.7 second between the two tyres was recorded. Tyre wear and degradation was low during both sessions, and is set to decrease for the rest of the weekend as more rubber is laid down and the cars slide less. However, there is a risk of rain throughout the rest of the weekend – particularly for tomorrow’s qualifying session – that could have a profound effect on race strategy, with the only up to data from the circuit existing from last year, when Austria returned to the championship. As a result, teams sought to maximise the dry running today and run through as many different scenarios as possible, in order to be as best prepared as they can be for any possibility. Paul Hembery, Pirelli Motorsport Director: “It’s a short lap here at the Red Bull Ring, taking less than 70 seconds to complete. We’ve seen the load on the tyres to be quite low, and a performance gap of 0.7 second between the two compounds. The biggest factor though will be the weather: there’s a risk of rain tomorrow and a slightly smaller possibility of rain on race day. This would clearly have a major effect on tactics, so all the signs are for an unpredictable weekend.”

Tyre statistics of the day:

* The above number gives the total amount of kilometres driven in FP1 and FP2 today, all drivers combined. ** Per compound, all drivers combined. Pirelli fact of the day: In the circuit's history as first the Osterreichring and then the A1-Ring, Alain Prost is the most frequent winner of the Austrian Grand Prix. The four-time world champion triumphed on three occasions, winning first for Renault in 1983 and then with McLaren in 1985 and 1986.

• DECIDES TO DISTRIBUTE DIVIDEND OF 0.367 EURO PER ORDINARY SHARE AND 0.431 EURO PER SAVINGS SHARE
• IGOR SECHIN, DIDIER CASIMIRO, ANDREY KOSTIN, IVAN GLASENBERG, PETR LAZAREV AND IGOR SOGLAEV CONFIRMED AS COMPANY DIRECTORS
• NEW AUDIT COMMITTEE NOMINATED
• RENEWS AUTHORIZATION FOR BUY-BACK AND DISPOSITION OF OWN SHARES
• AUTHORIZES STIPULATION OF D&O INSURANCE POLICY
• FAVOURABLE VOTE ON REMUNERATION POLICY

A meeting of the shareholders of Pirelli & C. SpA took place today, in ordinary session, and approved results for 2014, which ended with a consolidated net profit of 332.8 million euro and parent group net profit of 258.0 million euro, decided on the distribution of a dividend of 0.367 euro per ordinary share and 0.431 euro per savings share. The date of dividend payment is May 20^th, 2015 (ex-coupon May 18^th, 2015 and record date May 19^th, 2015). The Shareholders’ Meeting then approved the proposal from Camfin S.p.a. to confirm as members of the Board of Directors Igor Sechin, Didier Casimiro, Andrey Kostin, Ivan Glasenberg, Petr Lazarev and Igor Soglaev. Andrey Kostin and Ivan Glasenberg declared their suitability to qualify as independents. The mandates of the directors nominated will expire at the same time as that of the current Board of Directors that is with the approval of results for the year ending December 31^st, 2016. The board members’ curricula can be found online at the Company’s website www.pirelli.com. The Shareholders’ Meeting also nominated, using the slate system, the Company’s new Audit Committee for the years 2015, 2016 and 2017, which is composed of Francesco Fallacara, nominated chairman, Antonella Carù and Fabio Artoni as standing auditors and Andrea Lorenzatti, Fabio Facchini and Giovanna Oddo as alternate auditors. The chairman of the new audit committee and the alternate auditor were taken from the minority slate (voted by 29,99% of the capital represented at the Shareholders’ Meeting) presented by a group of savings management companies and financial intermediaries, while the other names were taken from the majority slate (voted by 52,97% of the capital represented at the Shareholders’ Meeting) presented by Camfin S.p.A. Compensation of 50,000 euro for the standing auditors and 75,000 euro for the chairman of the audit committee was established. The curricula of the new auditors can be seen online at the Company’s website www.pirelli.com. The Shareholders’ Meeting also authorized the Board of Directors to stipulate a D&O insurance policy and the buy-back and disposition of own shares up to 10% of Company Capital and for a maximum period of 18 months, thus renewing the previous authorization decided on June 12^th, 2014. In this regard it should be noted that, up to today, no shares have been bought under the previous authorization. The Shareholders’ Meeting also voted in favour of the Policy in matters of remuneration with 85% of voting capital at the Shareholders’ Meeting. *** It should be noted that the 2014 Annual Report will be available to the public at the Company’s headquarters in Milan at Viale Piero e Alberto Pirelli 25 and at Borsa Italiana S.p.A. and can also be seen online at www.pirelli.com. and through the authorized storage mechanism. *** The minutes of the Shareholders’ Meeting will be made available to the public in the same manner as above, as well as through the authorized storage mechanism (www.emarketstorage.com) by June 14^th, 2015. 

PDF Version (41,2 KB)

LIMITED DEGRADATION FROM THE START OF THE WEEKEND ON A TRACK SURFACE  HOT ENOUGH TO COOK AN EGG

DIFFERENT TACTICS FOR MERCEDES AND SPLIT STRATEGIES FOR HAMILTON AND ROSBERG: ON THE PODIUM FOR THE SECOND TIME THIS YEAR

Four-time world champion Sebastian Vettel took the first win for Ferrari since Spain in 2013 and his own first victory since Brazil in 2013, using a two-stop strategy in the hottest possible conditions and on very abrasive asphalt to finish in front of both Mercedes drivers. Vettel started on the P Zero White medium tyres and stopped for the mediums again on lap 17, finishing the race on the P Zero Orange hard compound from lap 37. His fourth victory in Malaysia – the 40th of his career – means that he is now the most successful driver in the history of the Malaysian Grand Prix. Mercedes driver Lewis Hamilton, who started from pole, used a three-stop strategy en route to second. His team mate Nico Rosberg adopted a different three-stop strategy to finish third: ending the race on the medium whereas Hamilton’s last stint was on hard. The race got underway in track temperatures of 56 degrees centigrade: similar to the hottest conditions seen throughout last season. Despite driving on a surface hot enough to fry an egg – as proven by Pirelli on its Instagram account – there was no blistering or graining seen on the tyres that finished the race. All the drivers started the race on the medium compound, with the exception of the two McLaren drivers, who started on the hard tyre and got into the points before retiring. An early three-lap safety car period helped to contain tyre degradation but also provided an opportunity to switch to fresh tyres, which was taken up by many of the frontrunners, while the Ferrari of Sebastian Vettel stayed out. The Mercedes of Lewis Hamilton and Nico Rosberg both made an early stop, switching to the hard tyres. Vettel pitted from the lead for his first stop, emerging in third place behind the Mercedes drivers, and then used the speed of the medium tyre to close in on the leader and regain the advantage. The German’s second and final stop for the hard compound fed him back into second place behind Hamilton, setting up a successful run to the finish after his Mercedes rival pitted for the hard tyre one lap later, following a race that revolved around tyre strategy. Toro Rosso’s Max Verstappen used a three-stop strategy to become the youngest ever driver to score points in a Formula One race at 17, comprehensively beating the record previously held by Daniil Kvyat. A three-stop strategy also helped Ferrari’s Kimi Raikkonen to climb to fourth at the finish from the very back, having had to pit on the opening lap after a rear tyre was punctured following contact from another competitor. Pirelli’s motorsport director Paul Hembery said: “I think we did our bit today. We saw a great strategic battle between Ferrari and Mercedes, with two different approaches to the race, which were also influenced by an early safety car period. Despite the highest track temperatures we are likely to see all year, the tyres did not suffer from blistering or graining, enabling a two-stop strategy to be not only possible, but victorious. The different tyre strategies available set up an exciting battle for the race victory and underlined the difference that using the tyres to the best effect can make. Congratulations to Ferrari and Sebastian Vettel for a truly memorable victory.” Fastest times of the day by compound:

Longest stint of the race:

Truth-O-Meter We predicted a three-stopper as being the safest strategy to guard against degradation, although there was theoretically very little time difference between that and two stopper: depending on how much performance can be extracted from the tyres. Our theory proved to be correct, as Ferrari managed degradation sufficiently to make two stops the winning choice. We said that the best two-stopper would be to start on the medium and then stop for the hard on laps 15 and 37. Vettel went one better than our prediction by completing two stints on the medium tyre before switching to the hard for the final stint.

TROPICAL CLIMATE MAKES IT LIKELY FOR 2015 CINTURATO INTERMEDIATE AND FULL WET TYRES TO MAKE THEIR COMPETITIVE DEBUT

FASTER LAP TIMES GIVE EVEN MORE WORK TO THE TYRES IN SEPANG

The Malaysian Grand Prix: an abrasive surface with high heat and humidity makes this race a true test for drivers, cars and tyres. Nearly every afternoon there is an intense downpour, making it likely to see the Cinturato tyres in competitive action for the first time this year. Paul Hembery, Pirelli motorsport director: “The Australian Grand Prix two weeks ago confirmed what we saw in testing: lap times that are two seconds or more faster this year compared to last year, in every session. This exponentially increases the workload on the tyres: something that will be particularly in evidence at Sepang, which has some of the most abrasive asphalt we race on all year and a number of fast corners that take a lot of energy out of the tyres, as well as high ambient temperatures. For all these reasons, we have chosen the two hardest tyres in our range this weekend: P Zero Orange hard and P Zero White medium, as has always been the case in Malaysia since we returned to Formula One in 2011. We should see a return to at least two stops per car in Malaysia – perhaps more if the weather gets in the way ­– after an early safety car meant that unusually most drivers stopped only once in Australia. Wear and degradation is traditionally very high in Sepang, so managing the tyres and the strategy carefully will be key to success.” The biggest challenges for the tyres: Malaysia has got everything it takes to make life difficult for tyres: fast corners with big lateral loads, rough asphalt, high ambient temperatures and a bumpy surface (as the track was originally built on a swamp). As a result, both mechanical and thermal degradation are important factors. The cars tend to run high downforce in Malaysia, adding vertical forces to the varied demands faced by the tyres. Because it rains almost on a daily basis in Sepang, the rubber laid down on the circuit tends to get washed away between each session. This makes the pattern of track evolution quite hard to predict, and also increases the risk of race stoppages and safety cars (the Malaysian Grand Prix has been halted early on more than one occasion). Drainage is a problem, leading to pools of standing water. If it does rain during the race, judging the crossover point could make the difference between winning and losing. This is the point at which it becomes faster to switch from one type of tyre to another. With very little wet running so far this year, teams will prioritise gathering information on crossover points if it rains during free practice: data that could be crucial for the race. The most stressed tyre in Malaysia is the front-left, so this is the one that the drivers will have to watch: especially at the beginning of the race when the cars are fuel-heavy and it is easy to lock up and take life out of the tyres. Last year’s strategy and how the race was won: The top two finishers in Malaysia last year (Lewis Hamilton and Nico Rosberg) used exactly the same three-stop strategy: three stints on the medium tyre followed by a short stint on the hard tyre at the end. They fought closely for the lead, with tyre strategy proving crucial to their battle, while the highest-placed two-stopper was Nico Hulkenberg in fifth. The race lasts 56 laps. Expected performance gap between the two compounds: 1.0-1.2 seconds per lap. Expected weather conditions for the race: Temperatures between 24 and 34 degrees centigrade and 80% humidity, with a high risk of heavy rainfall during the late afternoon. The Pirelli team choose their race numbers: #27, Mario Isola (Pirelli racing manager) “I would choose 27, as it was Gilles Villeneuve’s number when I was first getting into Formula One, at the end of 1980 when I was 11 years old. And from then on, I was constantly badgering my father about racing, until he gave in and bought me a kart, which I raced with number 27. Since then 27 has always been my lucky number.” Who we’re following on Twitter this week: @f1bastard. One of the most irreverent, politically incorrect but hysterically funny accounts on Twitter. Nobody is spared his acerbic insights, which more often than not are painfully true. Worth a visit for those moments when Formula One takes itself too seriously. The tyre choices so far this year:

BARCELONA TEST CONFIRMS INCREASE IN PERFORMANCE OF 2015 CARS: A NUMBER OF DRIVERS INSIDE LAST YEAR’S POLE POSITION

PIRELLI CONFIRMED AS TITLE SPONSOR OF FORMULA 1 GRAN PREMIO DE ESPAÑA and FORMULA 1 MAGYAR NAGYDÍJ 2015

“Once again in Barcelona, as was the case at the first test in Jerez, we had quite cool weather and a sprinkling of rain, but the teams were still able to get through a considerable testing distance, with all the compounds apart from the full wet tried out, although there was very little significant running on the intermediate. Montmeló is well known as a technical and wide-ranging circuit, which makes it an ideal test venue to investigate every aspect of tyre behaviour. It’s still too early to draw too many conclusions about the year ahead, but the lap times already indicate that the cars are even faster this year, with many of the testing times comfortably inside last year’s pole position. The teams were able to work through quite a varied programme, including pit stop procedure, in order to acquaint themselves with the characteristics of the 2015 Pirelli range, and match them to their new cars. This work will continue during the next test in Barcelona, which takes place from next Thursday onwards, and is the final opportunity for the teams to prepare their cars before the first grand prix of the season. At this time, we’re also pleased to announce that as was the case last year, Pirelli will be the Title Sponsor of the Formula 1 Gran Premio de España in May, and the Formula 1 Magyar Nagydíj 2015 in July.” Paul Hembery, Pirelli motorsport director In addition to the usual 2015 tyre range, teams were also able to try out a prototype medium at Barcelona, which is being assessed by Pirelli for development purposes. Any teams that had not used their allocation of ‘winter hard’ prototypes at Jerez were also allowed to carry them over to Barcelona. Each team is allocated a total of 110 sets of tyres for testing purposes throughout 2015; down from 135 sets last year. Fastest laps and tyre choices per day:

After four days of testing a total of 3134 laps were covered, with the performance gains in evidence compared to last year’s Spanish Grand Prix pole time of 1m25.232s. This year’s Pirelli tyres feature a new rear construction, which distributes temperature more evenly and also contributes to a reduction in lap time. One more four-day test session will follow at Barcelona next week from February 26-March 1. Testing statistics: Tyre sets brought to Barcelona: 398 (18 supersoft; 56 soft; 135 medium; 51 hard; 70 intermediate; 44 full wet, 18 prototype medium, 6 winter hard) Tyre sets used: 261 (11 supersoft; 56 soft; 126 medium; 35 hard; 9 intermediate; 0 full wet, 18 prototype medium, 6 winter hard) Longest run per tyre:

Red Bull driver Sebastian Vettel has claimed pole position for the United States Grand Prix, having set a time of 1m36.338s on Pirelli’s P Zero White medium tyre, which is nominated along with the P Zero Orange hard tyre this weekend. It was the 44^th pole of the newly-crowned champion’s career and his eighth of the season.

Qualifying got underway in ambient temperatures of 27 degrees with a strong wind. Williams driver Valtteri Bottas went fastest in Q1 on the medium compound tyres, which all the drivers who completed a second run used by the end of the session. The Lotus drivers both did only one run while all the other teams completed two runs. Both Red Bull drivers used just one set of hard tyres during Q1 and this enabled them to save their allocation of medium tyres for the rest of qualifying and the race.

All the drivers who went through to Q2 used the medium tyres from the beginning of the session, with Vettel leading his team mate Mark Webber by the end of the session as track temperatures fell slightly.

The final top 10 again used the medium tyre only during Q3. Vettel set pole position on his second run, in the closing seconds of the session – having made the difference over his team mate in the last sector of the lap.

The final free practice session this morning was another Red Bull one-two, with Vettel leading Webber. Mercedes’s Lewis Hamilton was third, with the top times coming right at the end of FP3 when the drivers ran qualifying simulations on the medium tyres.

Pirelli’s motorsport director Paul Hembery said: “Our tyre choice here is on the conservative side, which means that getting the tyres up to the right temperature was important. That was not necessarily an easy task today as the track temperature actually fell slightly during the session, which is not the normal pattern we see in qualifying. With variable winds and temperatures throughout the afternoon, it wasn’t a particularly easy session for anybody. The track has still been evolving today, but tyre wear and degradation should not be a considerable factor for the race with either compound. As a result, we will probably see just one pit stop for most runners, as was the case last year.”

The Pirelli mystery strategy predictor:

One stop is theoretically the quickest way to complete the 56-lap United States Grand Prix. The fastest strategy should be to start on the medium, change to the hard on lap 19 and then continue to the finish.

An alternative (resulting in the same overall race time) is to start on the hard tyre, change to the medium on lap 37, and then go to the finish.

Some drivers may try a two-stop strategy, if they feel there is enough speed in the car to make it work. In this case, the fastest strategy is to start on the medium tyre, change to the hard tyre on lap 10, and then change to the hard again on lap 33.

Fastest compounds in FP3:

Top 10 tyre use:

Longest stint of the race:

Truth-O-Meter: The winning four-stop strategy proved to be different to the three-stopper that we had predicted. But the rain that fell at the start of the race altered all the strategy predictions, obliging the teams to do an initial stint on wet weather tyres. Having completed his intermediate stint, Vettel moved onto a new set of medium tyres on lap five, followed by a new set of hard tyres on lap 22, another new set of hards on lap 32 and a final set of medium tyres on lap 42. This was a variation on what we had predicted to be the fastest strategy yesterday: starting on the medium tyre, changing to the hard tyre on lap nine, changing to the hard tyre again on lap 25, with a final stop for the hard tyre on lap 40. Vettel, however, opted for the faster medium for his final stint.

• REVENUES: +18.9% to 3,703.4 MILLION EUROS (3,114.7 MILLION EUROS ON 30 SEPT 2009)

• OPERATING RESULT: +69.7% TO 309.6 MILLION EUROS (182.4 MILLION EUROS ON 30 SEPT 2009)

• NET INCOME OF CONTINUING OPERATIONS 164.1 MILLION EUROS, MORE THAN THREE TIMES THE 50.0 MILLION EUROS OF THE FIRST NINE MONTHS 2009

• TOTAL NET CONSOLIDATED RESULT NEGATIVE FOR 101.5 MILLION EUROS DUE TO THE ACCOUNTING EFFECT OF THE SEPARATION OF PIRELLI RE (NEGATIVE FOR 265.6 MILLION EUROS)

• OPERATING CASH FLOW POSITIVE FOR 119.0 MILLION EUROS (174.6 MILLION EUROS FIRST NINE MONTHS 2009); INVESTMENTS GROW TO 227.3 MILLION EUROS (102.3 MILLION EUROS FIRST NINE MONTHS 2009); NET FINANCIAL POSITION NEGATIVE FOR 704.9 MILLION EUROS (-528.8 MILLION EUROS ON  31 DEC 2009)

PIRELLI TYRE

• REVENUES: +20.3% TO 3,559.1 MILLION EUROS (2,958.6 MILLION EUROS ON 30 SEPT 2009); OPERATING RESULT: +50.1% TO 334.3 MILLION EUROS (222.7 MILLION EUROS FIRST NINE MONTHS 2009), WITH EBIT MARGIN RISING TO 9.4% FROM  7.5%

• REVENUES IN THE THIRD QUARTER: +18.3% TO 1,233.8 MILLION EUROS (1,042.7 MILLION EUROS THIRD QUARTER 2009); OPERATING RESULT: +36.2% TO 117.0 MILLION EUROS (85.9 MILLION THIRD QUARTER 2009), WITH EBIT MARGIN RISING TO 9.5% FROM  8.2%

Milan, 3 November 2010 – The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved the interim financial statements for the nine months ended 30 September 2010. The first nine months of 2010 confirmed the positive performance already recorded in the first half of the year, underscoring a marked improvement in operating results compared with the same period a year earlier. Pirelli & C. SpA Group At the consolidated level, revenues to 30 September 2010 totaled 3,703.4 million euros, an increase of 18.9% compared with 3,114.7 million euros in the first nine months of 2009. In the third quarter, in particular, revenues were 1,276.9 million euros, an increase of 17.3% compared with 1,088.5 million euros in the third quarter 2009. The operating result (EBIT) to 30 September 2010 including restructuring charges of 12.4 million euros (28.1 million 30 September 2009) was 309.6 million euros, an increase of 69.7% from 182.4 million euros in the same period of 2009. The margin as a percentage of revenues, 8.4%, shows a significant improvement from the 5.9% recorded in the first nine months of 2009. In the third quarter, in particular, the operating result (EBIT) including restructuring charges was 116.2 million euros, growing 82.7% from 63.6 million euros in the third quarter of 2009, with the margin as a percentage of revenues rising to 9.1% from 5.8%. The net result excluding discontinued operations was positive 164.1 million euros, more than three times the 50.0 million euros recorded for the first nine months of 2009.  The figure also includes capital gain of 18.4 million euros following the market sale in the third quarter of the entire stake held in Oclaro Inc (formerly Avanex), a company active in second generation photonics. Including the effect of discontinued operations, linked to the separation of Pirelli RE which concluded on October 25th, 2010, the net result was negative 265.6 million euros (202.9 million euros for aligning book value with market value, 32.9 million following reversal of goodwill recognized in the consolidated accounts of Pirelli & C. allocated to Pirelli RE and 0.8 million euro attributable to the  operation’s direct transaction costs, together with Pirelli RE’s negative net result of 29.0 million euros), the total consolidated net result on 30 September 2010 was negative for 101.5 million euros, while the net result attributable to Pirelli & C. SpA was negative for 87.0 million euros (positive for 18.2 million euros on 30 September 2009). Consolidated net equity on 30 September 2010 stood at 2,132.3 million euros compared with 2,494.7 million euros at the end of 2009 and 2,316.3 million euros on 30 June 2010. The consolidated net equity attributable to Pirelli & C. SpA totaled 1,823.2 million euros compared with 2,175.0 million euros at the end of 2009 and 2,004.9 million euros on 30 June 2010. In the first nine months of 2010, net cash flow from operations was positive for 119.0 million euros (positive for 174.6 million euros in the same period of 2009). The group’s net financial position on 30 September 2010 was negative for 704.9 million euros compared with -528.8 million euros at the end of December 2009 (-696.9 million euros on 30 June 2010), with the difference essentially due to the cash out for restructuring (51.8 million euros) and dividends paid (85.1 million euros). On 30 September 2010, group employees totaled 31,050 compared with 29,570 on 31 December 2009 and 30,989 on 30 June 2010. With regard to the separation of Pirelli Real Estate, as approved by the Board of Directors on 4 May 2010 and by shareholders at their meeting on 15 July 2010, the activities of the Pirelli Real Estate group are classified as discontinued operations and in the income statement are booked as a single item, which includes Pirelli Real Estate’s net result, the fair value adjustment of Pirelli Real Estate’s activities and the direct costs attributable to the transaction; this item alone contributes to the group’s net result. For the sake of comparison/For the purposes of homogeneity, the figures for 2009 have been reclassified in the same manner. Pirelli Tyre The revenues of Pirelli Tyre to 30 September 2010 totaled 3,559.1 million euros, an increase of 20.3% compared with 2,958.6 million euros in the same period of 2009. On a like-for-like basis, growth in the first nine months was 16.7%, with a positive contribution coming from both volumes (+8.6%) and the price/mix component (+8.1%), while foreign exchange brought an increase of 3.6%. In the third quarter, in particular, sales totaled 1,233.8 million euros, an increase of 18.3% from 1,042.7 million euros in the third quarter 2009. In the period, the organic growth reached 14.1%, with volumes up 1.8% and the price/mix component up 12.3%. The positive contribution from foreign exchange in the quarter was 4.2%. The operating result for the quarter rose 36.2% to 117 million euros from 85.9 million euros in the third quarter of 2009, with the margin as a percentage of revenues climbing to 9.5% from 8.2%. Overall, there was significant growth in both business segments. In the Consumer segment, the increase in the first nine months of the year was 16.9% (+16.5% in the first quarter, +19.1% in the second quarter and +15.1% in the third quarter). In the Industrial segment, the increase was 28.8% (+28.4% in the first quarter, +32% in the second quarter and +26.1% in the third quarter). The gross operating result (Ebitda) before restructuring costs was 496.9 million euros, an increase of 29.8% compared with 382.8 million euros on 30 September 2009, with a margin as a percentage of sales equal to 14.0% (12.9% on 30 September 2009). In the third quarter, in particular, Ebitda amounted to 173.0 million euros (142.0 million euros in the third quarter 2009), with the Ebitda margin rising to 14.0% compared with 13.6% in the same period in 2009. The operating result (Ebit) before restructuring charges was 346.7 million euros, an increase of 44% from 240.8 million euros in the first nine months of 2009, and a margin as a percentage of revenues of 9.7% (8.1% on 30 September 2009). In the third quarter, in particular, the Ebit margin before restructuring costs was 9.8% compared with 9.0% in the third quarter 2009. The operating result after restructuring charges on 30 September 2010 was 334.3 million euros, an increase of 50.1% compared with 222.7 million euros in the first nine months of 2009, with a margin as a percentage of revenues of 9.4% (7.5% in the same period of 2009). In the third quarter, in particular, the operating result after restructuring charges amounted to 117.0 million euros, an increase of 36.2% compared with 85.9 million euros in the same period in 2009 and a margin as a percentage of sales rising to 9.5% from 8.2% in the third quarter 2009. Net income on 30 September 2010 rose to 176.6 million euros (after financial charges and income from equity investments of 52.3 million euros, and tax burden/fiscal charges of 105.4 million euros) from 90.9 million euros in the same period of 2009. In the third quarter, net income was 66.2 million euros compared with 36.7 million euros in the same period of 2009. In the Consumer (car/light truck and motorcycle tyres) segment, revenues in the first nine months of 2010 totaled 2,463.8 million euros, an increase of 16.9% from 2,108.0 million euros in the same period of 2009, while the operating result from recurring/ordinary activities before restructuring charges was 234.7 million euros (160.5 million euros on 30 September 2009), with a margin as a percentage of revenues of 9.5% (7.6% in the same period of 2009). The increase in sales volume was 7.1%, with the addition of a price/mix increase of 7.0%, accompanied by a consequent organic increase in sales of 14.1%. Foreign exchange had a positive impact of 2.8%. In the third quarter, in particular, revenues totaled 847.1 million euros, an increase of 15.1% compared with 736.0 million euros in the same period of 2009 and an improvement in profitability both in absolute value (operating result before restructuring charges rising to 80.5 million euros from 64.1 million euros) and in terms of percentages (Ebit margin before restructuring charges rose to 9.5% from 8.7%). In the first nine month of the year, the Original Equipment and Replacement channels both showed signs of market recovery with respect to the same period of 2009. In Original Equipment there was growth in all areas, with Europe up 15%, Nafta up 54% and Mercosur up 15%. In the Replacement channel there was a 9% increase in Europe, a 5% increase in Nafta and a 16% increase in Mercosur. In the Industrial (tyres for industrial vehicles and steelcord)i business segment, total revenues amounted to 1,095.3 million euros, an increase of 28.8% compared with 850.6 million euros in the same period of 2009, while the operating result from recurring/ordinary activities before restructuring charges was 112.0 million euros, with a margin as a percentage of revenues of 10.2%, compared with 80.3 million euros on 30 September 2009, and a margin as a percentage of revenues of 9.4%. Organic growth in revenues amounted to 23.3%, sales volumes were 12.3% higher in total compared with the first nine months of 2009, while the rise in the price/mix component reached 11.0% and foreign exchange had a positive impact of 5.5%. In the third quarter, revenues were 386.7 million euros (306.7 million euros in the third quarter 2009) and the operating result from ordinary activities before restructuring charges was 41.0 million euros (30.2 million euros in the third quarter 2009), with an improvement of the margin as a percentage of revenues to 10.6% compared with 9.8% in the third quarter 2009. As for the Industrial segment, the market also recovered in both sales channels when compared to the critical situation in the first nine months of 2009, above all in Mercosur (+58% in Original Equipment and +23% in Replacement). Sales also rose in Europe with Replacement +46% and Original Equipment +22%. The number of employees on 30 September 2010 stood at 29,118, an increase of 1,637 (of which 929 are temporary) compared with 31 December 2009. Outlook for 2010 On 14 October 2010, the Board of Directors once again raised 2010 targets. For the Pirelli & C. Group revenues are expected to reach approximately 4.8 billion euros (considering the reclassification of Pirelli Broadband Solutions as a discontinued operation following the announced sale), the Ebit margin is expected to be above 7.5% with Ebit of approximately 380 million euro and net financial debt below 700 million euros. For Pirelli Tyre, revenues for 2010 are estimated at more than 4.7 billion euros, with an Ebit margin above 8.5% and Ebit of approximately 420 million euros. Significant events since 30 September 2010 Pirelli’s development plans for Argentina were announced on 20 October 2010. These aim to increase production capacity and reinforce Pirelli’s existing leadership in Latin America, where the group’s activities began 100 years ago. The plans call for investment of 100 million dollars by 2013, of which approximately 20 million dollars will be spent in 2010 in order to make technological and qualitative improvements, as well as increase capacity. By the end of the period, output will be above an estimated six millions units per year, an increase of more than one million units from the present five million. On 21 October 2010, Pirelli & C. S.p.A. and Advanced Digital Broadcast Holdings SA (ADB), a company listed in Switzerland, signed an agreement based on which ADB will acquire 100% of Pirelli Broadband Solutions SpA, a company 100%-owned by Pirelli & C. SpA. A total consideration of approximately 30 million euros was agreed upon, net of reserves of 8.6 million euros disbursed by PBS to Pirelli & C. last September. The price negotiated, which will be paid at the closing, consists of 22 million euros in cash and 400,000 ADB shares, equal to approximately 7.2% of capital. The separation of Pirelli & C. Real Estate SpA (Pirelli Re) from Pirelli & C was completed on 25 October 2010. In order to comply with accounting regulations, Pirelli & C. SpA’s separate financial statements  were restated to reflect the loss resulting from the transaction which, based on Pirelli Re’s official stock market price on the above-mentioned closing date (0.4337 euro), rose from 178,813,982.89 euros to 211,312.328.00 euros.  There was, consequently, also a change in net equity of 32,498,345 euros. At the same time, following the assignment of Pirelli Re shares (now Prelios SpA), Pirelli & C. SpA booked a loss of approximately 118.3 million euros in its income statement  equal to the difference between the loss as calculated above and the net book value of Prelios SpA shares. The impact of the transaction on the consolidated financial statements was a negative 219.2 million euros, inclusive of the recognition in the income statement of the above mentioned loss previously recognized at equity in Pirelli & C. SpA’s financial statements and relative to Pirelli RE-Prelios (approximately 32 million euros), as well as the elimination of goodwill allocated to the real estate business (approximately 33 million euros). *** Industrial Plan 2011-2013, Vision 2015 The Industrial Plan 2011-2013, Vision 2015 will be presented tomorrow at a meeting with the financial community. Pirelli & C. SpA’s Chairman, Marco Tronchetti Provera and the group’s top management will be present. Journalists may follow the meeting from the press room at the company’s headquarters.  The event and slide presentation may also be seen via webcast – in real time – at www.pirelli.com in the Investors Relations section. *** Amendments to the Bylaws The Board of Directors approved a number of amendments to the bylaws to update them for the mandatory changes introduced not only by Decree 27/2010, in implementation of Directive 2007/36/CE in Italy aimed at facilitating participation at general meetings by shareholders of listed companies, but also of Decree 39/2010, in implementation of Directive 2006/43/CE, relative to statutory audits of annual and consolidated accounts. Approval of Procedures for Related Party Transactions In accordance with Consob Regulation no. 17221/2010 and having obtained the favourable opinion of the Audit, Risk and Corporate Governance Committee (entirely made up of independent directors), the Board of Directors also approved a set of “Procedure for related party transactions” and has entrusted the Audit, Risk and Corporate Governance Committee with the task of also serving “Committee for related party transactions” with the exception of remuneration issues entrusted to the Remuneration Committee. The new bylaws and the new procedures for related party transactions will be published on the Company website at www.pirelli.com. PDF Version (88KB)

ASSIGNMENT OF PRELIOS SHARES

As previously announced on 21 October 2010, Pirelli & C. S.p.A. announces that the assignment to the ordinary and savings shareholders of Pirelli & C. of 487,231,561 ordinary Prelios (former Pirelli Re) shares held by the company, in a ratio of one Pirelli Re share for each ordinary or savings share of Pirelli & C. held, has begun today.

The extraordinary shareholders’ meeting held on 15 July has resolved upon the reduction of the share capital aimed at implementing the afore mentioned assignment of the Prelios shares, for an amount equal to Euro 178,813,982.89, corresponding to the value of the participation held in Pirelli Re to be assigned, determined on the basis of the official price of the Pirelli Re shares as of 14 July 2010. In accordance with accounting rules, Pirelli & C. has restated the liability arising from the transaction, on the basis of the official price of the Prelios shares as of today (equal to Euro 0.4337), from Euro 178,813,982.89 to Euro 211,312,328, with a change in net equity equal to Euro 32,498,345. At the same time, following the assignment of the Prelios shares, Pirelli & C. has recorded a loss in the income statement equal to about Euro 118.3 million, corresponding to the difference between the value of the liability, restated as indicated above, and the net accounting value (so-called book value) of the Prelios shares. On a consolidated basis, the impact of the assignment will be negative for about Euro 219.2 million, including the transfer to Pirelli & C.’s income statement of Prelios net losses previously recorded in equity on Pirelli & C.’s consolidated balance sheet. The Company announces that, pursuant to Article 9, paragraph 4, letter a), of the Presidential Decree no. 917 of 22 December 1986, the value of Pirelli Re shares to be assigned, for tax purposes (valore normale) – equal to the average price of the Pirelli Re shares during the month preceding the date of assignment – is Euro 0.43877.

PDF Version (46KB)

Pirelli & C and Advanced Digital Broadcast Holdings (ADB), a company quoted on the Swiss stock exchange, today signed an agreement which entails the acquisition by ADB of the entire capital of Pirelli Broadband Solutions SpA (PBS), a company 100%-owned by Pirelli & C. The total consideration was agreed at approximately 30 million euros and is net of reserves of 8.6 million euros disbursed by PBS to Pirelli & C. last September. The price negotiated, which will be transferred at the closing, consists of 22 million euros in cash and 400,000 ADB shares, corresponding to approximately 7.2% of share capital. With regard to these shares, Pirelli & C. has undertaken a lock-up commitment for the first two months following the closing, as well as a put option for Pirelli & C. and a call option for ADB, which can be exercised within two years. The closing is expected to take place once the transaction has been cleared by the relevant Antitrust authority. PBS’s disposal is part of Pirelli’s stated strategy of focusing on its core Tyre business. Its sale to a leading industrial company is intended to ensure the continued growth and development of PBS within the broadband access systems market. Pirelli has been advised by Lazard&C and Labruna Mazziotti Segni. PDF Version (44KB)

ITS SEPARATION FROM PIRELLI & C.

ITALIAN STOCK EXCHANGE: LIST NAME TO CHANGE FROM OCTOBER 25TH

ONE OF THE PRINCIPAL REAL ESTATE MANAGERS IN ITALY AND IN EUROPE,

WITH APPROX. €15.6 BILLION1 IN ASSETS UNDER MANAGEMENT

Pirelli & C. Real Estate S.p.A. announces its change of name to "Prelios S.p.A." after completing its separation from Pirelli & C. (see today's press release issued by Pirelli & C.). Borsa Italiana (the Italian stock exchange) will, therefore, change the company's official list name from October 25th, 2010. Prelios ratifies the company's repositioning as a "pure asset management company", as stated in its business plan, and positions it, both in Italy and Europe, as one of the principal real estate management companies, with approximately €15.6 billion in assets under management, and a distinctive business model in which specialized services serve its property management and real estate enhancement activities. The Group, through its subsidiary Prelios SGR, is also leader in Italy's fund management market with some €6 billion in assets under management, most of which through 21 real estate funds. The new brand The new name of "Prelios S.p.A." was approved by shareholders in their meeting of July 15th, 2010. The new name blends the first three letters of "premium" with the word "helios", Greek for the sun. The new Prelios logo comprises lettering - specially developed for Prelios to communicate solidity and dynamism - combined with a symbol in the form of a "spark" significantly positioned in superscript. The simple and effective Prelios logo underscores how the company born out of Pirelli RE embraces and projects its inheritance towards the future. It represents the excellence, the expertise and the skills that have always been at the root of Pirelli RE’s ability to create value over time. The consequent re-branding is an opportunity to affirm and consolidate the new brand's positioning in the real estate market, while aligning it to the model focused on real estate management. PDF Version (50,3KB)

ARGENTINA 2010 REVENUE SEEN AT 365 MILLION DOLLARS (+55% FROM 2009), TARGET 500 MILLION DOLLARS BY 2013

ANNUAL PRODUCTION CAPACITY TO GROW TO OVER 6 MILLION UNITS A YEAR (FROM 5 MILLION), WITH FOCUS ON SUV AND LIGHT TRUCK SEGMENTS

Pirelli is consolidating its position in Argentina and will invest 100 million dollars at its Merlo facility, in the province of Buenos Aires, by 2013. The development plan for Pirelli in Argentina, where the group’s activities began 100 years ago, was illustrated at a press conference held today in Merlo, with the participation of Argentinian President Cristina Fernández de Kirchner, the Governor of Buenos Aires Province Daniel Scioli, Industry Minister Débora Giorgi, Foreign Affairs Minister Héctor Timerman, Labour Minister, Carlos Tomada, Italian Ambassador to Argentina Guido Walter La Tella, the Mayor of Merlo, Raúl Othacehé, the Chairman and CEO of Pirelli, Marco Tronchetti Provera, the CEO of Pirelli Tyre, Francesco Gori, the CEO of Pirelli Pneus America Latina, Guillermo Kelly, and the Chairman of Pirelli Neumáticos Argentina, Franco Livini. The plan, aimed at increasing production capacity and strengthening Pirelli’s leadership in LatinAmerica, is part of the Company’s international expansion strategy which, in recent years, has seen it progressively increase its direct industrial presence in markets offering the highest rate of growth, as well as competitive costs. Of the 20 production sites that make up Pirelli’s industrial universe, seven facilities are located in South America (one in Argentina, five in Brazil, one in Venezuela) and generate 36% of Pirelli Tyre’s total sales, with an output covering all segments: car, industrial vehicles, motorcycles, agricultural and worksite machinery. The Merlo factory, where Pirelli has operated since 1951, produces over 5 million units annually for the entire car, SUV and light truck range and today accounts for 10% of the group’s total production in Latin America and 20% of car tyre production in the area. Strengthening its presence in Argentina, in particular, guarantees Pirelli an important base from which to satisfy both increasing internal market demand, which will absorb about 50% of production, and demand from significant export markets, principally Brazil and the other South American markets and the USA. Among its clients, the factory counts the major car makers Volkswagen, GM, Fiat, Ford, Peugeot, Iveco and soon also Toyota. The 100 million dollar investment foreseen by 2013, of which about 20 million dollars will be spent this year, will go to technological and quality improvements, as well as increasing capacity, which is estimated to rise to over 6 million units annually by the end of the period, an increase of over one million units from the present 5 million. In particular, the increase in production capacity will entail the doubling of production in the high value added SUV and light truck segments which typify the Argentine auto market. In the context of defining the product compounds and consistent with Pirelli’s strategy of ever greater commitment to the development and production of ‘green performance’ products, in 2011 the Company will install a new process for the production of compounds which will bring the production of low environmental impact tyres to 50% of total production. The production area today covers 48,000 square metres which, by the end of the period, will grow to 60,000 square metres. Overall, the investment plan will generate 300 new jobs over time, reaching a total of 1,200 employees compared with around 1,000 in 2010 and 900 in 2009. By the end of 2010, Pirelli’s sales in the country are expected to grow by 55% to 365 million dollars and the target for 2013 is 500 million dollars. This compares with 235 million dollars last year. After the slowdown in 2009, the Argentine car market is experiencing an increasing dynamism linked to the performance of the internal market where some leading car makers – Ford, Renault, Volkswagen, Toyota, Peugeot, Mercedes and Honda among them – are launching new projects, as well as demand from nearby markets beginning with Brazil which absorbs a large part of local production. According to data released by the national association of car producers (Adefa), moto vehicle production in the first nine months of 2010 exceeded 500,000 units, with a growth of 50% compared with the same period in 2009. At years end, according to sector estimates, production could surpass 650,000 units (513,000 in 2009). Today, car production today represents more than a third of Argentina’s industrial growth and 34% of manufacturing sector exports. Pirelli’s leadership and brand penetration in the Argentine market are proof of consumer appreciation and in 2010, for the third consecutive year, the Company won the ‘Marcas Confiables’ prize. This is awarded to companies with the greatest reliability according to studies carried out annually by the magazine Selecciones. 100 years in Argentina Pirelli’s activities in Argentina began 100 years ago and Pirelli Argentina was born in 1910 when the Group, then involved in the sale of rubber goods made in Milan, participated in the Buenos Aires Expo. At the end of 1917 “Pirelli Platense” began operations. With 24 workers, it was the Pirelli group’s first company in the Americas. In 1921, it began producing cables in the Donato Alvarez plant in Buenos Aires. A leap in scale occurred in 1929. Pirelli had already bought land on the outskirts of the capital to build an electric cable factory: the “La Rosa” plant. In the same year a small rubber factory was acquired and incorporated into the same plant. The “La Rosa” plant was further extended with the construction of a new factory and the broadening of activities to include shoes made of rubber and cloth. Having become Industrias Pirelli Saic in 1948, Pirelli Argentina acquired a factory in Bella Vista, outside Buenos Aires, in 1956 to house all its rubber processing, both for the cable sector and diversified products. In 1968, with the acquisition of 100% of the Coplan company, of which it had held 50% since 1951, Pirelli began the direct in-country production of tyres at Merlo, where the Group’s Argentine plant, after years of expansion and job creation, is still located. The centenary of the Company’s presence in the country will be celebrated today with the inauguration of the exhibition ”Pirelli 100 años de Argentina” and a gala dinner with the participation of the Italian Ambassador to Argentina, Guido Walter La Tella and representatives of the country’s industrial establishment, as well as Pirelli’s top management. PDF Version (60KB)

 REVIEW OF PRELIMIINARY DATA FOR 9 MONTHS ENDED 30 SEPTEMBER 2010

 STRONG GROWTH IN OPERATING RESULTS, UPWARD REVISION OF 2010 GROUP AND PIRELLI TYRE TARGETS

 PIRELLI GROUP: 2010 REVENUE TARGET ABOVE 4.9 BILLION EUROS WITH AN EBIT MARGIN OVER 7.5% (ABOUT 7% FORECAST IN JULY) AND EBIT OF APPROXIMATELY 380 MILLION EUROS

NET FINANCIAL DEBT TARGET IMPROVED TO BELOW 700 MILLION EUROS, COMPARED WITH APPROXIMATELY 700 MILLION EUROS FORECAST IN JULY

PIRELLI TYRE: 2010 REVENUE TARGET ABOVE 4.7 BILLION EURO WITH AN EBIT MARGIN ABOVE 8.5% WITH EBIT APPROXIMATELY 420 MILLION EUROS (AT LEAST 360 MILLION EUROS SEEN IN JULY)

VITTORIO MALACALZA NOMINATED VICE PRESIDENT 

The Board of Directors of Pirelli & C. SpA met today and reviewed preliminary data for the nine months ended 30 September 2010, in view of the definition the new 2011-2013 three-year plan. The positive performance of Pirelli Tyre in the first nine months of the year and the present market context permit a further upward revision of 2010 targets, which had already been raised when first quarter and first half results were announced. In particular, the following is foreseen:

 Pirelli & C. Group 

• revenue above 4.9 billion euros;
• an Ebit margin above 7.5% compared with the prior estimate of approximately 7%, with an ebit of about 380 million euros;
• net financial debt below 700 million euros compared with the earlier forecast of about 700 million euros. 

Pirelli Tyre 

• revenue above 4.7 billion euros;
• Ebit margin over 8.5% with ebit of approximately 420 million euros, higher than the prior ebit forecast of at least 360 million euros.

 Preliminary data for the nine months ended 30 September 2010

 The first nine months of 2010 confirm the positive trend seen in the first half of the year and show a marked improvement in operating results compared with the same period a year earlier.

 In the first nine months of 2010, the Pirelli group registered revenue at the consolidated level of approximately 3.7 billion euros, an increase of 19% compared with the same period in 2009 (3.1 billion euros). The operating result after restructuring charges was over 300 million euros, an increase of over 65% from 30 September 2009 (182.4 million euros). The Ebit margin rose to over 8% from 5.9% in the first nine months of 2009.

 For Pirelli Tyre, volume growth and a positive price/mix contribution, combined with internal efficiencies, more than compensated for the impact of higher raw material costs and other production factors, with a consequent improvement in the operating results.

 In the first nine months of 2010, Pirelli Tyre’s operating result, after restructuring charges, climbed to more than 330 million euros, an increase of approximately 50% from 222.7 million euros on 30 September 2009, and equal to 9.4% (7.5% in the first nine months of 2009) of revenue of approximately 3.5 billion euros (+20% from 2,958.6 million euros on 30 September 2009).

 The group’s net financial debt on 30 September 2010 was approximately 700 million euros compared with 696.9 million euros on 30 June 2010 (528.8 million euros at end December 2009).

 Vittorio Malacalza nominated vice president

 The Board of Directors also proceeded to nominate Vittorio Malacalza as the company’s Vice President, already co-opted during the Board meeting on July 29.

 ***

 Pirelli will present its new three-year plan for the period 2011-2013, with its vision of the scenario to 2015, to the financial community on 4 November 2010.

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140 million euros invested in Izmit facility in the last 10 years, new investment of 30 million euros planned for 2011

With 8 million units produced a year, Izmit is Pirelli’s biggest plant

50,000 tyres will be produced for F1 in 2011

Pirelli, present since 1960, celebrates 50 years’ activity in Turkey

Istanbul, 23 September 2010 – Pirelli today inaugurated the “Factory of Champions” at Izmit, the plant where the group will produce tyres for all the Formula One teams for the 3-year period 2011-2013. The Izmit facility, which this year celebrates 50 years’ activity, has housed the Motorsport tyre production line since 2007 and, in synergy with the Research and Development centre in Milan, will become the heart of Pirelli’s Formula One activities. Producing 8 million tyres for cars, trucks and motorsport each year, Izmit is the Pirelli factory with the greatest unit output of all. The group has invested 140 million euros there over the last 10 years and plans to invest a further 30 million euros in 2011 to support expansion in Turkey and nearby emerging markets. The Formula One tyre division was inaugurated with a press conference at the plant with the participation of Nihat Ergun, Turkey’s Minister for Industry and Commerce, Gianpaolo Scarante, Ambassador of Italy in Turkey, Marco Tronchetti Provera, Chairman and CEO of the Pirelli Group, Francesco Gori, CEO of Pirelli Tyre, Andrea Pirondini, CEO of Turk Pirelli Lastikleri and Metin Ar, Chairman of Turk Pirelli Lastikleri. Pirelli in Turkey Inaugurated in 1960, the Izmit facility produces tyres for the car and industrial segments, as well as Motorsport. It supplies key European markets (including Turkey, ltaly, Germany, France, Spain, Greece, Switzerland, Austria, United Kingdom) and the Middle East, as well as car makers such as Mercedes, Jaguar, Fiat and Renault. The facility, which also houses a steel cord factory in its 25th year of activity, covers an area of 340,000 square metres and employs 1,800 people. Pirelli expects 2010 revenue in Turkey of over 500 million euros, an increase of over 25% compared with 2009, and will strengthen its position further with new investments of 30 million euros in 2011, having already invested 140 million euros in the last 10 years. Turkey and Formula One With the launch of the Formula One division, Pirelli has broadened its offering of automobile sports tyres. In 2011, the Company will produce a total of 200,000 competition tyres, 50,000 of these for Formula One and 70,000 for the GP2 and GP3 championships, for which Pirelli is the sole supplier. The remainder will go to the 60 international automobile road and track competitions for which the Milan-based tyre maker is the exclusive supplier, as well as prestigious single brand championships such as the Ferrari Challenge, Lamborghini Super Trofeo and Trofeo Maserati. In total, Pirelli’s automotive sports range counts 200 types of racing tyres, including rally tyres. Formula One tyres will be produced exclusively at the Izmit plant on the basis of simulation models, compounds and structures developed by Pirelli Research and Development, which counts over 1,000 engineers and technicians. The Formula One line, which covers an area of 15,000 square metres, will run the most advanced sports tyre production machinery. The Izmit facility, in synergy with Pirelli’s centre for the preparation of sports tyres in Burton on Trent (United Kingdom), will also be the centre of all Formula One logistics activities. First tests The new PZero Formula One tyres, developed on the basis of Pirelli’s extensive experience in road and track automobile competitions, have been tested, beginning in mid-August, with success on tracks in Mugello (Italy), Le Castellet (France) and Jerez (Spain) and have recently undergone new tests on the Monza (Italy) circuit. In Mugello and Le Castellet, structures and profiles were tested to guarantee maximum adaptability, continuity and homogeneity of tyre performance. In Jerez and Monza, testing focused on optimization of the compounds, of which there will be six: four “slicks” for dry conditions, one rain tyre and one intermediate for light rain. Track testing was done on a Toyota TF 109, used in last season’s Grand Prix, driven in Jerez by Germany’s Nick Heidfeld. Final testing is expected to take place in Abu Dhabi in November after the Grand Prix. “The tests went beyond my own expectations and I believe Pirelli is at a good point in the development of the tyres,” said Heidfeld. “The Pirelli team, to whom I think I gave some useful advice, has from the beginning been on the right track in terms of supplying all Teams with reliable and safe tyres to ensure a great show and enable each driver to express their own driving style”. Formula One and sustainability In line with the Pirelli Group’s Green Performance strategy, aimed at developing products and solutions that combine maximum performance and safety with respect for the environment, Formula One production was also inspired by criteria of environmental sustainability. In particular, as in all Pirelli competition tyres, the compounds for the PZero are free of highly aromatic oils. Further, the processes used in Izmit are based on energy and water efficiency and the reduction of dangerous emissions like carbon dioxide. Special attention has been given to the re-utilization of production remnants and used tyres. The waste handling protocol calls for the recycling of used F1 tyres for either the generation of new primary material or energy production. Pirelli’s attention to the issue of sustainability is also shown by its recent confirmation in the Dow Jones Sustainability STOXX and Dow Jones Sustainability World indices, where the Company has been the leading company in the “Autoparts and Tires” sector for four consecutive years. Pirelli’s 50 years in Turkey The inauguration of the Formula One division coincides with celebrations for the 50^th anniversary of Turk Pirelli’s activities which will include, among other things, a photographic exhibition which opened yesterday at Istanbul’s Ciragan Palace. The collection of images recounts the history of the Company’s industrial presence in Turkey and its technological evolution. The official opening was attended by local authorities and leading exponents of Turkey’s business and cultural communities, including the director Ferzan Ozpetek and singer Sezene Aksu

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• FIRST HALF OPERATING RESULTS SIGNIFICANTLY IMPROVED OVER THE SAME PERIOD OF 2009
• IN THE SECOND QUARTER PIRELLI TYRE REPORTS RECORD QUARTERLY OPERATING PROFIT
• 2010 TARGETS OF PIRELLI GROUP AND PIRELLI TYRE RAISED AGAIN: 

PIRELLI GROUP: 2010 REVENUE TARGET IMPROVED (EXCLUDING PIRELLI RE) TO 4.8-4.9 BILLION EUROS, COMPARED WITH 4.6-4.7 BILLION EUROS ESTIMATED IN MAY, WITH EBIT MARGIN OF ABOUT 7% (IN MAY TARGET WAS AT LEAST 6.5%);

INVESTMENTS RISING TO MORE THAN 350 MILLION EUROS FROM MORE THAN 300 MILLION EUROS, WITH CONFIRMATION OF THE TARGET FOR A NET FINANCIAL POSITION OF – 700 MILLION EUROS

PIRELLI TYRE: 2010 REVENUE TARGET RAISED, REVENUES EXPECTED TO RISE ORGANICALLY UP TO 15%, COMPARED WITH A TARGET OF MORE THAN 10% ORGANIC GROWTH ESTIMATED IN MAY;

EBIT IN ABSOLUTE VALUE EQUAL TO AT LEAST 360 MILLION EUROS COMPARED WITH  320-330 MILLION EUROS ESTIMATED IN MAY 

• BOND ISSUE APPROVED, TO TAKE PLACE WITHIN 12 MONTHS, POSSIBLY IN MORE THAN ONE INSTALLMENT, OF UP TO 800 MILLION EUROS TO OPTIMIZE THE DEBT STRUCTURE
• CARLO PURI NEGRI RESIGNS. VITTORIO MALACALZA COOPTED TO THE BOARD OF DIRECTORS

PIRELLI & C. GROUP

• REVENUES: +19.8% TO 2,426.5 MILLION EUROS (2,026.2 MILLION EUROS AS OF 30 JUNE 2009)
• EBIT: +62.8% TO 193.4 MILLION EUROS (118.8 MILLION EUROS AS OF 30 JUNE 2009)
• NET INCOME OF CONTINUING OPERATIONS 80.8 MILLION EUROS, MORE THAN DOUBLE COMPARED WITH 30.3 MILLION EUROS IN THE FIRST HALF OF 2009
• TOTAL CONSOLIDATED NET RESULT NEGATIVE FOR 175.6 MILLION EUROS DUE TO ACCOUNTING EFFECT OF THE SEPARATION OF PIRELLI RE (NEGATIVE FOR 256.4 MILLION EUROS)
• OPERATING CASH FLOW POSITIVE FOR 55.6 MILLION EUROS (-18.5 MILLION EUROS IN THE FIRST HALF OF 2009); INVESTMENTS UP TO 135.5 MILLION EUROS (65.4 MILLION EUROS IN THE FIRST HALF OF 2009); NET FINANCIAL POSITION NEGATIVE FOR 696.9 MILLION EUROS (-528.8 MILLION EUROS AS OF 31 DECEMBER 2009)  

PIRELLI TYRE

• REVENUES: +21.4% TO 2,325.3 MILLION EUROS (1,915.9 MILLION EUROS IN THE FIRST HALF OF 2009); OPERATING INCOME: +59% TO 217.3 MILLION EUROS (136.8 MILLION EUROS IN THE FIRST HALF OF 2009), WITH EBIT MARGIN RISING TO 9.3% FROM 7.1%

REVENUES IN THE SECOND QUARTER: +22.9% TO 1,215.3 MILLION EUROS (989.0 MILLION EUROS IN THE SECOND QUARTER OF 2009); OPERATING INCOME: +54% TO 121.8 MILLION EUROS (79.3 MILLION EUROS IN THE SECOND QUARTER OF 2009), WITH EBIT MARGIN RISING TO 10% FROM 8% Milan, 29 July 2009 – The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved the half-year financial statements as of 30 June 2010. The half showed a significant improvement in operating results compared with the corresponding period of the previous year, thanks in particular to growth in sales volumes of Pirelli Tyre, already observed starting from the last months of 2009, and to the continuous benefits deriving from operating efficiency actions started in 2008 and continued in the years that followed. Overall, the group closed the half with revenues of 2,426.5 million euros, up 19.8% compared with the corresponding period of 2009, and operating income post restructuring charges of 193.4 million euros, with an increase of 62.8%. The EBIT margin improved to 8% from 5.9% in the first half of 2009. In the first half, the net result not including businesses classified as ‘discontinued operations’ more than doubled to 80.8 million euros compared with 30.3 million euros in the corresponding period of 2009. The continued growth in volumes and the price/mix component, which more than compensated the rise in the cost of raw materials, allowed Pirelli Tyre to register a significant improvement in operating results. In the second quarter in particular Pirelli Tyre reported the best quarterly operating result in its history, amounting to 121.8 million euros (+54% compared with the same period in 2009), or 10% of sales (8% in the 2009 period), with revenues up 22.9% to 1,215.3 million euros. In the first half, EBIT post restructuring charges reached 217.3 million euros, up 59% compared with 136.8 million euros in the first half of 2009, with a margin of 9.3% (7.1% in the first half of 2009) on sales of 2,325.3 million euros (+21.4% compared with the first half of 2009). On 23 June Pirelli was selected as sole Formula 1 tyre supplier for the 2011-2013 three-year period. Formula 1 will become an important driver to bring out further value from the Pirelli brand and for its commercial and industrial growth, without bringing about changes to the financial plans of the company. For the 2011-2013 period Pirelli also won exclusive supply of the GP2 World Championship Series, which, in addition to the GP3 Series Pirelli supplies already this year, makes Pirelli the official supplier of the most prestigious single-seater world championship competitions. Within the context of the process of focusing on core industrial activities in the tyre sector, the Board of Directors of Pirelli & C. resolved upon, during the first half, a plan for separation of Pirelli RE, approved by the extraordinary shareholders’ meeting of 15 July 2010. The transaction will improve the equity structure and the financial structure of the Pirelli group, will simplify the corporate structure of Pirelli & C., and will allow for a more immediate reading of the industrial strategy and of financial data of the Pirelli group by the market. As per IFRS principles, the ‘discontinued operations’ accounted for in the first half, in addition to the net result of Pirelli RE (a loss of 20.4 million euros in the first half) also include the accounting effects of the separation, referring to alignment to market value as of 30 June 2010 of the assets of Pirelli RE. The accounting effects deriving from that impact, negative for a total of 256.4 million euros, determine a consolidated net result for Pirelli & C. that is negative for 175.6 million euros, compared to a loss of 12.4 million euros in the first half of 2009. The attributable net loss was 165.5 million euros, compared with attributable net profit of 6.3 million euros in the same period of 2009. In the first half, the net consolidated cash flow from operations was positive for 55.6 million euros (negative for 18.5 million euros in the first half of 2009), despite investments that nearly doubled compared with the same period in 2009 (135.5 million euros, compared with 65.4 million euros), particularly within the context of projects for increasing manufacturing capacity. The net financial position of the group as of 30 June 2010 was negative for 696.9 million euros, compared with -528.8 million euros at the end of December 2009 (-678.4 million euros as of 31 March 2010), with a difference essentially attributable to the cash out for restructuring (44.4 million euros) and dividends distributed (85.1 million euros). Due to the separation of Pirelli Real Estate, approved by the Board of Directors on 4 May 2010 and by the shareholders’ meeting of 15 July 2010, the assets of the Pirelli Real Estate group have been considered “discontinued operations” and are represented in the profit and loss statement in a single item, which includes: the net result of Pirelli Real Estate, the fair value adjustment of Pirelli Real Estate assets, and the costs directly linked to the transaction. This item is included only in the net result of the group. For the purposes of comparative representation, 2009 figures have been reclassified in the same way. Pirelli & C. SpA Group At consolidated level, revenues as of 30 June 2010 amounted to 2,426.5 million euros, up 19.8% compared with 2,026.2 million euros in the first half of 2009. In the second quarter, in particular, revenues were 1,264.0 million euros, up 21.9% compared with 1,037 million euros in the second quarter of 2009. EBIT in the first half, including restructuring charges amounting to 7.9 million euros (9.7 million euros as of 30 June 2009), stood at 193.4 million euros, up 62.8% compared with 118.8 million euros in the same period of 2009. The EBIT margin on sales was 8%, showing significant improvement compared with 5.9% in the first half of 2009. In the second quarter, in particular, EBIT including restructuring charges stood at 105.6 million euros, up 51.3% compared with 69.8 million euros in the second quarter of 2009, with the margin on sales rising to 8.4% from 6.7%. Net income excluding discontinued operations stood at 80.8 million euros, more than double  the 30.3 million euros of the first half of 2009. Including the impact of discontinued operations (Pirelli RE), negative for 256.4 million euros (202.9 million euros due to alignment of book value to market value, 32.9 million euros for cancellation of goodwill in the consolidated accounts of Pirelli & C. and allocation of the same to Pirelli RE, and 0.2 million euros for costs directly linked to the transaction, together with the net result of PIrelli RE, a loss of 20.4 million euros), the total consolidated net result was a loss of 175.6 million euros, while the net result attributable to Pirelli & C. SpA was a loss of 165.5 million euros (compared with attributable net income of 6.3 million euros as of 30 June 2009). Consolidated net equity as of 30 June 2010 was 2,316.3 million euros, compared with 2,494.7 million euros at the end of 2009 and 2,596.0 million euros as of 31 March 2010. Consolidated net equity attributable to Pirelli & C. SpA amounted to 2,004.9 million euros compared with 2,175.0 million  euros at the end of 2009 and 2,271.8 million euros as of 31 March 2010. In the half, net cash flow from operations was positive for 55.6 million euros (negative for 18.5 million euros in the first half of 2009), despite investments around double those in the same period of 2009 (135.5 million euros compared with 65.4 million euros previously) in particular for projects to increase manufacturing capacity. The net financial position of the group as of 30 June 2010 was negative for 696.9 million euros compared with -528.8 million euros at the end of December 2009 (-678.4 million euros as of 31 March 2010), with a difference that can be attributed mainly to the cash out for restructuring costs (44.4 million euros) and dividends distributed (85.1 million euros). The group counted 30,989 employees as of 30 June 2010, compared with 29,570 as of 31 December 2009 and 30,054 as of 31 March 2010. Pirelli Tyre Revenues of Pirelli Tyre as of 30 June 2010 amounted to 2,325.3 million euros, up  21.4% compared with 1,915.9 million euros in the same period of 2009. On a like-for-like basis, revenue grew 18.2% in the first half, with a positive contribution both in volumes (+12.3%) and in price/mix (+5.9%). Exchange rate effects determined an increase of 3.2%, mainly due to strengthening of the Brazilian currency compared with the average of the first half of 2009, and, in the second quarter, due to strengthening of the dollar against the euro. In the second quarter, in particular, sales stood at 1,215.3 million euros, up 22.9% compared with 989.0 million euros in the second quarter of 2009. In that period, the organic increase was 17.6%, with volumes up 7.5% and price/mix up 10.1%. The positive contribution of the exchange rate in the quarter amounted to 5.3%. Overall, there was significant growth in both business segments: in the Consumer segment, revenue grew 17.8% (+16.5% in the first quarter and +19.1% in the second quarter), while in the Industrial segment the increase amounted to 30.3% (+28.4% in the first quarter and +32% in the second quarter). EBITDA before restructuring charges stood at 323.9 million euros, up 34.5% compared with 240.8 million euros in the first half of 2009, with a margin on sales of 13.9% (12.6% as of 30 June 2009). In the second quarter in particular, EBITDA amounted to 177.5 million euros (133.0 million euros in the second quarter of 2009), with an improvement in the EBITDA margin to 14.6% from 13.4% in the corresponding period of 2009. EBIT before restructuring charges amounted to 225.2 million euros, up 54% from 146.5 million euros in the first half of 2009, or 9.7% of sales (the EBIT margin was 7.6% as of 30 June 2009). In the second quarter, in particular, the EBIT margin before restructuring charges stood at  10.5%, compared with 8.6% in the second quarter of 2009. EBIT after restructuring charges in the first half amounted to 217.3 million euros, up 59% from 136.8 million euros in the first half of 2009, with a margin on sales of 9.3% compared with 7.1% in the first half of 2009. In the second quarter, in particular, EBIT after restructuring charges amounted to 121.8 million euros, up 54% over 79.3 million euros in the corresponding period of 2009 and with a margin rising to 10% from 8% in the second quarter of 2009. Net profit as of 30 June 2010 amounted to 110.4 million euros (after financial charges of 38.7 million euros and tax of 68.6 million euros), doubled from the 54.2 million euros in the first half of 2009. In the second quarter, net profit was 60.3 million euros compared to 39.6 million euros in the corresponding period of 2009. The net financial position was negative for 1,212.9 million euros, compared with 1,122.5 million euros as of 31 March 2010 (1,027.3 million euros at the end of 2009), following payment of dividends of 156.0 million euros to the parent company. Net cash flow, before the dividends, was negative in the first half for 29.6 million euros (positive for 65.6 million euros in the second quarter). Overall in the half, net operating cash flow was negative for 10.7 million euros, compared with a negative figure of 88 million euros in the first half of 2009. The increase in investments – more than doubled to 132 million euros from 64 million euros in the first half of 2009 and mainly linked to plans to increase manufacturing capacity in Brazil and Romania and to work on the new manufacturing site in Settimo Torinese in Italy – was balanced by improvement in operating results and by more efficient management of working capital even while in a period of growth of the business.   In the Consumer business (Car/Light Truck and Motorcycle tyres), revenues in the half-year period amounted to 1,616.7 million euros, up 17.8% compared with 1,372 million euros in the first half of 2009, while the operating income from ordinary business before restructuring charges stood at 154.2 million euros (96.4 million euros in the first half of 2009), or 9.5% of sales (7% in the corresponding period of 2009). The increase in sales volumes amounted to 10.5%, while there was a positive variation in the price/mix component of 5.0%, with consequent organic growth of sales revenue of 15.5%. The positive variation from exchange rates was 2.3%. In the second quarter, in particular, revenues stood at 835.8 million euros, up 19.1% compared with 701.5 million euros in the corresponding period of 2009 and with improvement in profitability both in terms of absolute value (EBIT before restructuring charges rose to 84.7 million euros from 54.5 million euros) and in percentage terms (the EBIT margin before restructuring charges increased to 10.1% from 7.8%). Both the Original Equipment channel and the Replacement channel reported market growth in the first half compared with the same period in 2009. In Original Equipment, in particular, there was growth in all areas of reference, with Europe up 22%, Nafta +73% and Mercosur +17%; in the Replacement channel +11% in Europe,  +8% in Nafta and 20% growth in Mercosur). In the Industrial business (Industrial Vehicle tyres and Steelcord) revenues amounted to 708.6 million euros overall, up 30.3% compared with 543.9 million euros in the same period of 2009, while EBIT from ordinary business before restructuring charges stood at 71.0 million euros, or 10% of sales, compared with 50.1 million euros in the first half of 2009, with a margin on sales of 9.2%. The organic increase in sales was 24.9%: sales volumes were overall 16.9% greater than in the first half of 2009, the price/mix variation was 8.0%, and the positive impact from exchange rates was 5.4%. Second quarter sales revenue amounted to 379.5 million euros (287.5 million euros in the second quarter of 2009) and EBIT from ordinary business before restructuring charges of 42.4 million euros (31 million euros in the second quarter of 2009), with improvement in the sales margin to 11.2% compared with 10.8% in the second quarter of 2009. In the Industrial segment, market performance recovered in both sales channels compared with the critical scenario in the first half of 2009, in particular in the Mercosur area (+63% in Original Equipment and +23% in Replacement). In Europe growth was also positive: +27% in the Replacement channel and +30% in Original Equipment. Employees as of 30 June 2010 counted 29.048, an increase of 1.567 (of which 1.023 temporary) compared with 31 December 2009. Pirelli Eco TechnologyPirelli Eco Technology, the company in the group operating in sustainable mobility, reported revenue growth in the first half of 24% to 35.1 million euros, with  a contribution of 14.9 million euros from particulate filters (3,457 filter systems sold in the first half of the year, compared with 1,948 in the first six months of 2009) and 20.2 million euros from Gecam white diesel fuel. EBIT was negative for 3.5 million euros compared with a negative EBIT of 5.5 million euros in the same period of 2009, and the company reported a net loss of 5 million euros (6.6 million euros in the first half of 2009).   The business, which during the first half of the year was under pressure from an increase in excise duties and a contraction in volumes from Gecam, focused on development and growth of the Retrofit particulate filter line (Feelpure filter systems). Production of silicon carbide filters in China is set to begin in the fourth quarter of this year. The net financial position, which was negative for 37.2 million euros, was significantly improved over the - 47.2 million euro figure as of 31 December 2009. Pirelli RE In the first half of 2010, Pirelli RE continued its trend of improving all the main business and financial indicators, compared with the same period in 2009. At operating level, EBIT reached 17.9 million euros (compared with -9.2 million euros in the first half of 2009), while EBIT from service activities stood at 11.2 million euros (-3.2 million euros in the same period of 2009). The consolidated attributable net result was a loss of 20.9 million euros, less than half the loss of 42.3 million euros in the first half of 2009. This figure was influenced in particular by real estate writedowns amounting to about 18.3 million euros, while in the first half of 2009 the balance between writedowns and revaluations had been negative for about 4.8 million euros. Based on these results, the company confirmed all its business and financial targets for year end. For further information on the performance of Pirelli RE please refer to the company’s press release of 28 July 2010. Board approves bond issue up to maximum 800 million euros In order to optimize the debt structure of the group through diversification of sources of financing and lengthening of the average duration of debt, the Board of Directors approved the issue of non-convertible bonds up to a maximum par value of 800 million euros, to be placed, possibly in more than one transaction, on the Eurobond market and listed on the Luxembourg Stock Exchange, or another regulated market. Final terms of the transactions will be determined and communicated to the market at the time of pricing, on the basis of market conditions. The bond issue can take place within 12 months of the board resolution and the bonds, of a duration of not more than 10 years, may be placed  exclusively with qualified Italian and/or non-Italian investors (with the exception of investors in the United States of America, Canada, and Japan). Vittorio Malacalza coopted to the Board  The Board of Directors took note of the resignation of Director and Vice Chairman Carlo Puri Negri, thanking him for the contribution he made to the company over the years. The Board also proceeded to coopt Vittorio Malacalza . The curriculum vitae of Vittorio Malacalza will be available on the website www.pirelli.com. Prospects for the current year   The positive performance of Pirelli Tyre in the first half of the year, and the current market scenario, allow for a further improvement of targets for the current year, following the improvement of targets in May, on occasion of the presentation of the results of the first quarter of 2010. For the Pirelli group, excluding Pirelli RE, revenues are forecast between 4.8 billion euros and 4.9 billion euros, up from 4.6-4.7 billion euros estimated in May, with an EBIT margin improving to about 7% compared with the previous estimate of at least 6.5%. The investment plans for development of manufacturing capacity are expected to increase to more than 350 million euros, compared with more than 300 million euros estimated previously, with confirmation of the target of a negative net financial position of about 700 million euros. For Pirelli Tyre, in particular, the results obtained in the first half show significant growth in volumes which, associated with skill in use of the price/mix factor and industrial efficiencies, allow for countering the rise in the cost of raw materials, also considering the trend in exchange rates between the euro and the other major currencies. If the markets maintain their positive trend, it is possible to forecast organic growth of sales revenue of up to 15%, improved over the organic growth of more than 10% foreseen in May, and EBIT in absolute value of at least 360 million euros, compared with 320-330 million euros previously forecast. Pirelli will present the new  2011-2013 three-year plan to the financial community in November. Events subsequent to 30 June 2010 On 15 July 2010 the Shareholders’ meeting of Pirelli & C. SpA resolved in an extraordinary session to cancel the par value of ordinary and savings shares, and a reverse stock split (which began on 26 July 2010) in the ratio of 1 ordinary or savings share for each 11 shares of the same category held, and related amendments to the By-laws. In the same Shareholders’ meeting, the shareholders also approved, following amendment of art. 5 of the By-laws, the separation of Pirelli RE from the Pirelli group through proportional assignment to ordinary and savings shareholders of Pirelli & C. of 487,231,561 ordinary shares of Pirelli RE held by the company. To this end, reduction of the share capital for the amount of Euro 178,813,982.89 was approved, corresponding to the value of the Pirelli RE stake being assigned, determined on the basis of the official Pirelli RE share price as of 14 July 2010. It is expected that the assignment of the Pirelli RE shares, in the ratio of one ordinary Pirelli RE share for each ordinary or savings share of Pirelli & C. held after the reverse stock split, will occur by the end of October, once the terms provided by applicable law have elapsed.

***

Conference call Results of the period ended on 30 June 2010 will be illustrated today at 5 p.m. Milan time during a conference call, in which the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera, and the top management of the group will intervene. Journalists will be able to follow the presentation by telephone, without the possibility to ask questions, by calling the number +39.06.3348.5042. The presentation will also be available via webcast – in real time – on the website www.pirelli.com in the Investor Relations section, where it will be possible to consult the slides. The half-year financial statements as of 30 June 2010 will be available to the public at the company’s headquarters and at Borsa Italiana SpA, and published on the company’s website (www.pirelli.com), by the end of the day on 6 August 2010.

***

The Manager mandated to draft corporate accounting documents of Pirelli & C. S.p.A., Francesco Tanzi, declares – as per art. 154-bis,

comma 2 of the Testo Unico della Finanza – that the accounting information contained in this press release corresponds to the documented results, books and accounting registers.

^***

This Press Release is not an offer for the purchase of bonds in the United States. The bonds have not, and will not, be registered as per the United States Securities Act del 1933, as modified (“Securities Act”), or in the terms of any financial regulation in any of the states of the United States, or on behalf or to the benefit of a "U.S. person", as per the definition given by Regulation S of the Securities Act, unless within the limits of applicable exceptions, i.e., an operation not subject to registration requirements under the Securities Act. This Press Release is not a public offer of financial products in Italy, as per art. 1, para. 1, letter. t), of Legislative Decree N°58 of 24 February 1998 . This Press Release is exclusively aimed at subjects (i) outside the United Kingdom; (ii) with professional credentials in maters pertaining to financial investments, as per art. 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as modified (“Order”) or (iii) covered by the definition of art. 49, second para. from a) to d) of the Order or (iv) those to whom this Press Release may be sent without violating the terms of article 21 of the Financial Services and Markets Act 2000 (collectively identified as “relevant persons”). This Press Release is aimed solely at such relevant persons who may not pass it on to others. All forms of investment referred to by this Press Release is exclusively reserved to relevant persons and may only be effected by relevant persons. This Press Release is not an offer of sale or an invitation to invest in financial products. Moreover, bonds may not be sold in any country or jurisdiction in which such an offer might be considered illegal. No action has or will be taken to permit a public offer of  the bonds under any jurisdiction, including in Italy. This Press Release (and the information contained herein) is not for publication, either directly or indirectly, in the United States of America. PDF Version (95KB) > Presentation 1H 2010 Results > Webcast >

The Tyres Will Be Developed At Pirelli’s Research Centre In Milan And Produced At The Izmit Factory In Turkey, Where Pirelli’s Other Competition Tyres Are Currently Made

The Formula One Project Has No Impact On Pirelli’s Existing Financial Strategy

Milan, 24 June 2010 - The chairman of the Pirelli Group, Marco Tronchetti Provera, and Pirelli Tyre’s managing director, Francesco Gori, today presented to the media the company’s plans for supplying tyres to Formula One for the three-year period between 2011-2013. The company’s programme includes the creation of a dedicated team for the development and production of Formula One tyres. The Team of internal Pirelli human resources, will be made up of engineers and researchers who have accumulated experience at the highest levels of motorsport: creating winning products for rallying, Superbike, the Rolex Sports Car Series in North America and GT racing, as well as various one-make series. This ensures that the other divisions of the company remain focused on the ongoing business. In order to meet the Formula One teams’ requirements in terms of reliability, safety and performance, Pirelli’s engineers are already working on simulation models and tyre compounds that will be most suited to the rigours of Grand Prix racing. The Pirelli Formula One team will be an international group of people based in Milan, the home of Pirelli Tyre’s research and development department. This division has traditionally been at the heart of Pirelli’s cutting-edge technology and is formed of 1000 research engineers, working in five development centres all over the world. Pirelli Tyre allocates each year between 3 and 4% of its revenues, the highest level in the tyre industry worldwide, to research. Motorsport activities have benefited for many years from the innovations introduced to high-performance tyres by Pirelli’s Research and Development. The Formula One tyres will be produced in the motorsport department of Pirelli’s Izmit factory in Turkey, which is entirely dedicated to competition tyres. As established by the FIA (Fédération Internationale de l’Automobile), the Pirelli Formula 1 supply agreement includes development of six different types of tyre for the whole season. Four of these will be slick tyres – with different compounds to suit various dry asphalt surfaces – and one will be a rain tyre, for heavy precipitation. Finally there will be an intermediate tyre, for damp conditions and light rain. In co-operation with the teams, Pirelli is also ready to develop technical evolutions to the current tyres for the future, regarding in particular the wheel size. Today’s economic climate has enforced a realistic and collaborative approach to share out the production and logistical costs associated with supplying tyres to Formula One teams fairly. Pirelli will also invest in communications activities to leverage the technological and production values associated with Formula One, utilising resources and budget that have already been set aside for this specific purpose. Formula One will become an important showcase for the Pirelli brand along with its commercial and industrial growth, without impacting on the company’s existing financial strategy in any way. In the coming years, Formula One is expected to attract around two billion television viewers per season, with important media coverage in emerging markets as well. Pirelli’s business development and growth strategy, which is concentrated in these areas, will benefit hugely from the global visibility offered by Formula One, helping to promote the brand and maximise return on the marketing investment.

Pirelli – which has supplied tyres exclusively for the GP3 championship this year – will also supply the GP2 championship from 2011, becoming the sole provider of tyres for the most prestigious single-seater championships in global motorsport.

The Milan-based firm is already present in the World Rally Championship, the World Superbike Championship, the Rolex Sports Car Series in North America, the Motocross World Championship and several other national championships for both cars and bikes.

Milan, 23 June 2010 -  Pirelli will supply tyres to the Formula One World Championship for a three-year period between 2011 and 2013. The FIA (Fédération Internationale de l’Automobile), the Teams, represented by FOTA (the Formula One Teams Association), and Formula One’s organising body, represented by FOM (Formula One Management) have chosen Pirelli as their exclusive supplier, based on the specific proposals from the Italian company to guarantee technical and operational stability to the competitors. Following current Formula One regulations laid down by world motorsport’s governing body, the FIA, the new contract ensures that Pirelli will provide teams with six different types of tyre for the season: four slicks, with different compounds for various types of dry surfaces, one rain tyre for heavy rain, and one intermediate tyre for damp conditions or light rain. The current economic climate has led to a realistic and collaborative approach with all the teams, ensuring that manufacturing and logistical costs are shared fairly. Pirelli’s return to Formula One also has a firm eye on the future, as in full collaboration with all the teams, research into innovative new tyre developments is a vital part of this exciting programme. Pirelli is also proud to announce that it will supply the GP2 World Series – the acknowledged stepping-stone to Formula One – for the three-year period between 2011-2013. Pirelli’s latest participation at the highest levels of single-seater racing make a welcome addition to the celebrated Italian firm’s other motorsport activities including, from this year, a tyre supply agreement for the inaugural GP3 series. Pirelli will consequently become the single supplier to all the most prestigious racing championships in the world from 2011. Pirelli is planning to make important investments in corporate communications, in order to make the most of the high profile and cutting-edge technology that go hand in hand with supplying Formula One, using resources and budget that has already been set aside for this purpose. This communications campaign will principally help to support Pirelli’s increasing profile in emerging markets: Latin America, the Middle East and Asia Pacific, which are all areas frequently visted by Formula One. Consequently Formula One will become a vital calling card for the Pirelli brand, helping its commercial and industrial expansion without disrupting the company’s long-term financial strategy. The global visibility guaranteed through extensive media interest in Formula One, together with dynamic plans to leverage Pirelli’s involvement in an activity central to the company’s core business, represents a unique opportunity for the brand to maximise its return on investment. This new Formula One agreement crowns Pirelli’s historic involvement in world motorsport, which dates back to 1907 when the Italian fim won the epic Paris-Peking road race. Pirelli currently exclusively supplies some of the most important World Championships for both cars and bikes, such as the GP3 series, the World Rally Championship, the Rolex Sports Car Series in North America, the World Superbike Championship, and the Motocross World Championship. On top of this, Pirelli also supplies more than 70 other national and international championships. The last Grand Prix victory claimed by Pirelli was the 1991 Canadian Grand Prix, with Nelson Piquet driving for Benetton.

Pirelli will be available to provide further details on the tyre supply agreement at a press conference to be held during the weekend at the Grand Prix of Europe in Valencia. The date and time of the press conference will be posted on www.pirelli.com. 

More information, as well as photographs and videos, are available at: http://www.pirelli.com/web/media/press_area/default.page. 

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FIRST QUARTER SHOWS SIGNIFICANT IMPROVEMENT

• THANKS TO THE GOOD PERFORMANCE OF PIRELLI TYRE, 2010 GROUP REVENUE TARGET RAISED, NOW FORECAST BETWEEN 4.9 AND 5 BILLION EUROS COMPARED WITH 4.7-4.8 BILLION EUROS PREVIOUSLY FORECAST, WITH EBIT OF AT LEAST 6.5%;

NET FINANCIAL POSITION TARGET CONFIRMED NEGATIVE FOR 700 MILLION EUROS

• PIRELLI TYRE: 2010 REVENUE TARGET RAISED, FORECAST TO GROW MORE THAN 10% COMPARED WITH +6%/+8% FORECAST PREVIOUSLY;

EBIT FLOOR IN ABSOLUTE VALUE AT LEAST IN LINE WITH PREVIOUS PROFITABILITY TARGET (320-330 MILLION EUROS)

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FINANCIAL RESULTS AS OF 31 MARCH 2010

PIRELLI & C. SPA

• REVENUES: 1,212.0 MILLION EUROS, +16.2%  COMPARED WITH 1,043.0 MILLION EUROS AS OF 31 MARCH 2009

• EBIT: 91.7 MILLION EUROS, DOUBLE (+95.9%) THE FIGURE OF 46.8 MILLION EUROS AS OF 31 MARCH 2009, UP TO 7.6% AS A PERCENTAGE OF REVENUES FROM 4.5 %

• TOTAL CONSOLIDATED NET PROFIT: 38.9 MILLION EUROS (1.1 MILLION EUROS AS OF 31 MARCH 2009).  ATTRIBUTABLE CONSOLIDATED NET PROFIT: 39.2 MILLION EUROS (9.5 MILLION EUROS AS OF 31 MARCH 2009)

• NET FINANCIAL POSITION NEGATIVE FOR  678.4 MILLION EUROS (528.8 MILLION EUROS AT THE END OF 2009)

PIRELLI TYRE

• REVENUES 1,110.0 MILLION EUROS, +19.8% COMPARED WITH 926.9 MILLION EUROS AS OF 31 MARCH 2009

• EBIT 95.5 MILLION EUROS, +66% COMPARED WITH 57.5 MILLION EUROS AS OF 31 MARCH 2009, UP TO 8.6% AS A PERCENTAGE OF REVENUES FROM 6.2%

Milan, 4 May 2010 – The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved the intermediate report on operations as of 31 March 2010. Overall, the Group closed the quarter with significantly improved operating indicators, showing revenues up 16.2% to 1,212.0 million euros and an EBIT margin of 7.6% (4.5% at the end of the first quarter of 2009). Net profit stood at 38.9 million euros, compared with 1.1 million euros in the first quarter of 2009. In the tyre sector, in particular, the recovery in volumes already underway in the last months of 2009 was confirmed during the first three months of 2010 in all geographical areas and in the various segments and sales channels, allowing Pirelli Tyre to close the quarter with sales growing 19.8% to 1,110 million euros and EBIT post restructuring charges of 95.5 million euros, with the EBIT margin rising to 8.6% from 6.2% in the first three months of 2009. Net operating cash flow was particularly improved compared with the first quarter of 2009, with net working capital nearly cutting in half the amount of cash absorbed, compared with in the first three months of 2009. Pirelli Eco Technology, the company operating in the field of sustainable mobility, reported revenue growth of 37% to 19.6 million euros in the quarter, and operating breakeven (-0,8 million euros compared with an operating loss of  2.8 million euros in the first quarter of 2009). In real estate, Pirelli RE reported strong improvement in all its main economic indicators compared with the same period in 2009, confirming the validity of the business model adopted and the efficiency actions carried out. The attributable net result was a return to profit of 0.4 million euros (-15.8 million euros in March 2009) and given the first quarter performance, the company confirmed all the targets already communicated to the market for year end, at operating and financial level. Pirelli & C. SpA Group At consolidated level, revenues as of 31 March 2010 amounted to 1,212.0 million euros, up 16.2% compared with  1,043.0 million euros in the first quarter of 2009 (+15.3% organic increase, net of exchange rate effects). EBIT, amounting to 91.7 million euros, practically doubled (+95.9%) from 46.8 million euros in the first quarter of 2009 and showed a margin on revenues rising to 7.6% from 4.5%  in the corresponding period of 2009. Total consolidated net profit stood at 38.9 million euros, compared with 1.1 million euros in the first quarter of 2009, while consolidated net profit attributable to Pirelli & C. SpA amounted to 39.2 million euros compared with 9.5 million euros in the same period of 2009. Consolidated net equity as of 31 March 2010 stood at  2,596.0 million euros compared with 2,494.7 million euros at the end of 2009. Consolidated net equity attributable to Pirelli & C. SpA amounted to  2,271.8 million euros compared with 2,175.0 million euros at the end of 2009. The net financial position of the Group as of 31 March 2010 was negative for 678.4 million euros, compared with a negative net financial position of 1,278.9 million euros at the end of the first quarter of 2009 and a negative net financial position of 528.8 million euros at the end of 2009. The difference compared with this latter figure was due to the normal seasonal effect of variation of working capital in the businesses. There were 30,054 employees of the Group, compared with 29,570 on 31 December 2009. Pirelli Tyre Pirelli Tyre revenues as of 31 March 2010 amounted to 1,110.0 million euros, up 19.8% from 926.9 million euros in the same period of 2009. Net of exchange rate effects, which in the quarter had a positive impact of 1%, the organic variation was an increase of 18.8%, with a positive change in volumes of 17.4% (-18.1% in the corresponding period of 2009) and a positive price/mix variation of 1.4%. EBIT before restructuring charges amounted to 98.1 million euros (8.8% of revenues), a 60.8% increase over the 61.0 million euros (6.6% of revenues) of the first quarter of 2009, while  EBIT post restructuring charges stood at 95.5 million euros (8.6% of revenues), up 66% over the 57.5 million euro (6.2% of revenues) figure in the first quarter of 2009. The result benefited from significant growth in sales volumes in both business areas (+14.9% Consumer and +24.1% Industrial), the price/mix component holding well, and efficiencies in industrial activities. The progressive impact of rising raw materials costs, in particular of natural rubber, was softened by reducing stock and effects of this will thus be felt only from the second quarter. Net profit as of 31 March 2010 amounted to 50.1 million euros, significantly improved over the 14.6 million euro result in the first quarter of 2009. The net financial position was negative for 1,122.5 million euros, with an increase limited to 95.2 million euros despite a negative seasonal phase, compared with 1,027.3 million euros at the end of 2009 (-1,521.8 million euros as of 31 March 2009), thanks to positive net working capital management which nearly halved the amount of cash absorbed compared with the first quarter of 2009. In the Consumer business (Car/Light Truck and Motorcycle tyres), revenues amounted to 780.9 million euros compared with 670.5 million euros, up 16.5%, with a positive contribution of 14.9% in volumes terms, of 1.2% in terms of price/mix, and of 0.4% from exchange rate effects. EBIT before restructuring charges stood at 69.5 million euros compared with 41.9 million euros in the corresponding period of 2009, with the margin on revenus up to 8.9% from 6.2% in the first quarter of 2009. The quarter was characterized by significant rates of recovery in all geographic areas of reference both in the Original Equipment channel and in the Replacement channel, compared with the first three months of 2009. In the Industrial business (tyres for Industrial Vehicles and Steelcord) revenues amounted to  329.1 million euros overall, up 28.4% compared with 256.4 million euros in the first quarter of 2009 (with a positive variation of 24.1% in sales volumes, 1.8% in price/mix and 2.5% in exchange rate effects). EBIT stood at 28.6 million euros, 50% higher than the 19.1 million euro figure of the first quarter of 2009, with the EBIT margin rising to 8.7% from 7.5% in the first three months of 2009. In the Industrial segment the market also recovered in both sales channels compared with the first quarter of 2009, in particular in the Mercosur area (+65% in Original Equipment and +26% in Replacement). Pirelli Eco Technology Pirelli Eco Technology, the company in the Group operating in the sustainable mobility industry, reported in the quarter an increase in revenues of 37% to 19.6 million euros. The particulate filters business contributed to the figure with 9.1 million euros, more than double the 3.7 million euros in revenues in the first quarter of 2009, while 10.5 million euros was from sales of Gecam white diesel fuel,  essentially in line with the 10.6 million euros in revenues in the same period of 2009. EBIT was essentially at break-even level (-0.8 million euros compared with a negative 2.8 million euros in the first quarter of 2009) and a financial position improved to debt of 42.0 million euros from a negative 47 million euros at the end of 2009, in line with the targets the company set for itself for 2010 which foresee double digit revenue growth, operating break-even and positive cashflow generation. Pirelli RE For further information on the performance of Pirelli RE please refer to the specific press release distributed today. Prospects for the current year Taking into account the positive performance of Pirelli Tyre in the first quarter and the current market scenario, it is possible to forecast for the Group revenues for the full year of between 4.9 billion euros and 5 billion euros, improved with respect to the 4.7 – 4.8 billion euros indicated at the time of the presentation of 2009 results, and an EBIT margin of at least 6.5%, with confirmation of a negative net financial position of about 700 million euros, after payment of 81.1 million euros in dividends on 2009 fiscal year accounts. For Pirelli Tyre, in particular, the year to date has been characterized by exceptional growth in volumes in the first quarter and by a strong increase in the cost of raw materials starting in the second quarter. Rising cost competitiveness deriving from restructuring actions, price increases as expected, and the positive contribution of the product mix deriving from “green” products (Cinturato P7, Snowcontrol II, Scorpion Verde) in the Consumer business, allow the company to foresee, if markets maintain their positive trend, 2010 revenue growth of more than 10% and EBIT floor, in absolute value, in line with the profitability target indicated at the time of presentation of the 2009 results (320-330 million euros). As already announced at the time of presentation of 2009 results, Pirelli will present a new 2011-2013 three-year plan to the financial community before the end of 2010. Conference call Results of the period ended on 31 March 2010 will be illustrated tomorrow, 5 May 2010, at 12 p.m. during a conference call, in which the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera, and the top management will intervene. Journalists will be able to follow the presentation by telephone, without the possibility to ask questions, by calling the number +39.06.3348.5042. The presentation will also be available via webcast – in real time – on the website www.pirelli.com in the Investor Relations section, where it will be possible to consult the slides. The intermediary financial statements as of 31 March 2010 will be available to the public at the Company’s headquarters and at Borsa Italiana SpA, and published on the Company’s website www.pirelli.com, by the end of the day on 14 May 2010.

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The Manager mandated to draft corporate accounting documents of Pirelli & C. S.p.A., Francesco Tanzi, declares – as per art. 154-bis, comma 2 of the Testo Unico della Finanza – that the accounting information contained in this press release corresponds to the documented results, books and accounting registers.

Pirelli Press Office – Tel. +39 02 64424270 – pressoffice@pirelli.com

Pirelli Investor Relations – Tel. +39 02 64422949 – ir@pirelli.com

• 2009 FINANCIAL STATEMENTS APPROVED

• DIVIDEND DISTRIBUTION OF 0.0145 EUROS PER ORDINARY SHARE AND 0.0406 EUROS PER SAVINGS SHARE APPROVED
  • THRESHOLD FOR PRESENTATION OF LISTS FOR BOARD OF STATUTORY AUDITORS REDUCED TO 1.5% OF SHARE CAPITAL
• Milan, 21 April 2010 – The Shareholders of Pirelli & C. SpA met today in an ordinary and an extraordinary session. In the ordinary session, the Shareholders’ meeting approved the 2009 financial statements, resolving upon distribution of a dividend of 0.0145 euros per ordinary share and 0.0406 euros per savings share. The dividend per share attributed to savings shares includes the 2009 dividend (0.0203 euros) and, as foreseen by the By-laws, what was not assigned for the 2008 fiscal year (0.0203 euros). The  payment date will be 27 May 2010 (coupon 24 May 2010). The Shareholders’ meeting, in its extraordinary session, resolved to reduce to 1.5% of share capital the threshold foreseen by the By-laws for presentation of lists for renewal of the Board of Statutory Auditors. The threshold approved is lower than the one established by Consob for this year (2% of capital), confirming the importance the Company gives to the real possibility of participation in corporate governance bodies by minority shareholders. In line with certain laws recently approved, the Shareholders’ meeting also voted to introduce into the By-laws the possibility for the Company to call the shareholders’ meetings approving the financial statements within 180 days of the end of the fiscal year, in lieu of the current 120 days.

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  The annual financial report of Pirelli & C. SpA including the Company’s balance sheet and the consolidated balance sheet as of 31 December 2009, as well as further documentation foreseen by laws in force, is available to the public, at the headquarters in Milan, Viale Piero e Alberto Pirelli 25, and at Borsa Italiana SpA. The Sustainability report and the corporate governance report and ownership structure for 2009 have been published together with the afore-mentioned documents. This same documentation is available on the website www.pirelli.com. Minutes of the meeting will be made available to the public with the same means within the deadline established by governing laws and regulations.
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The Archives are enriched by the private papers of Alberto Pirelli, son of the company’s founder, and Leopoldo Pirelli, with documents relating to important events from Italian and international business history, such as the negotiations on the reform of the by-laws of Italian industry association Confindustria

Among the works exhibited are the painting “La ricerca scientifica” (Scientific Research) by Renato Guttuso and the related mosaic created for Pirelli in 1961; “Meo the Cat” by Bruno Munari; the first Pirelli Calendar from 1964 and a series of industrial design highlights

The Historic Archives also contain illustrations by Bob Noorda, Alberto Manzi and the entire collection of the Pirelli magazine with articles by Montale, Moravia, Saba, Gadda and Eco

Milan, 14 April 2010 – Pirelli presented the Pirelli Foundation and opened its Historic Archives, the “heart” of the foundation, to the city of Milan. The presentation took place today in the presence of Pirelli Chairman Marco Tronchetti Provera; Pirelli Deputy Chairman Alberto Pirelli; Honorary Chairwoman of the Foundation Cecilia Pirelli; and Foundation Director Antonio Calabrò. The Pirelli Foundation was created last year to promote and divulge knowledge of the cultural, historic and documentary patrimony of the Pirelli Group, which is an integral part of the entrepreneurial and social history of Italy as well as the history of ideas, with an international scope. Among the aims of the Foundation is the promotion of cultural initiatives bearing affinity with and relevance to Pirelli’s business culture. The Historic Archives contain documents, manuscripts, videos, objects, works of art and photographs that recount 138 years of industrial and cultural history of the company, from its founding in 1872 to today. Among the materials are illustrations by Marcello Dudovich from the early nineteen hundreds, and the entire collection of Pirelli magazines from 1948 to 1972 with articles signed by, among others, Eugenio Montale, Alberto Moravia, Umberto Saba, Carlo Emilio Gadda, and Umberto Eco. All the materials kept in the Archives, which since 1972 have been under the protection of the Archival Superintendency due to their historic interest, are now available to students, researches and in general, the public interested in business history and culture. The Foundation also recently acquired the personal documents of Alberto Pirelli, son of company founder Giovanni Battista Pirelli, and those of his son Leopoldo Pirelli. In the private archives of Alberto Pirelli are documents witnessing to years of service to Italy, as a diplomat as well as an expert of international finance and economics, from participation to negotiations on reparations and damage from World War I to numerous roles held in important organizations in Italy and internationally. Leopoldo Pirelli’s manuscripts reconstruct his activity as chairman of Pirelli from 1965 to 1999, as well as in leading positions in organization representing business owners, such as his leadership of the “Pirelli Commission” for reform of the by-laws of Confindustria. At the inauguration some of the more important pieces of the Archives were presented, including works of art, design items, documents, images and advertising campaigns. In particular, for the first time the painting entitled “La ricerca scientifica”, or “Scientific Research”, by Renato Guttuso commissioned by Pirelli for the 1961 International Expo of Turin during celebrations for the one hundred year anniversary of the unification of Italy was exhibited to the public. The large painting (three meters by five meters), recently restored, was a reference for the similar mosaic, depicting men and women intent on studying the world, created by the Maestri Mosaicisti dell’Accademia delle Belle Arti di Ravenna (Mosaic Masters of the Arts Academy of Ravenna). Today, both the painting and the mosaic can be admired on the walls of the Pirelli Foundation. The collection of historic advertising campaigns on display is also particularly noteworthy. Among the works exhibited are sketches in perfect Futurist style elaborated by Ballie in 1913 for the Italian Touring Club magazine, while the sinuous drawings by Giuseppe Riccobaldi – with the acrobat balancing on a tyre – recall the colorful Art Nouveau style of 1917. There are advertising sketches from the 1930s by Salemme, Renzo Bassi, Nino Nanni and Bertoglio for the Pirelli “Stella Bianca” tyre from the late Futurist period, the “giant order” with an exaggerated tyre emerging in the foreground, almost blocking the scenery. Giorgio Tabet (1930) and Jeanne Grignani (1954) put their signatures to the sketches of the Pirelli raincoats, articles from the apparel collection that included rubber boots among the most famed products of the time, now revived and reproposed under the brand name PZero. During the period following the second world war, Armando Testa (1955) lent his genius to another campaign associating the “Stelvio” tyre “clawing the asphalt” to a lion, and the “Atlante” tyre to a surreal elephant. Riccardo Manzi (1960-1961) and Bob Noorda (1957) complete the picture of graphic innovations of the sketches exhibited, emphasizing the technical versatility that animated the new range of “Cinturato” tyres. The photographic images of the Pirelli factories by Gabriele Basilico, Luca Comerio e Carlo Furgeri Gilbert, add to the drawings, telling the day-to-day story of the workers and the factories in the world of Pirelli. Photographs by Antonio Brivo at the Monza Gran Prix in 1932, of Alfredo Bovet, winner of the Milan-San Remo cycling race the same year and Juan Manuel Fangio in an automobile race in Argentina (1949), as well as the image of the Pirelli aerostatic ball (1912) and various automobile photos from the 1930s and 1940s with the elongated P on their tyres, all testify to Pirelli’s many victories in sports. Some children’s toys made over the years by Pirelli welcome visitors to the Foundation. Among these are “Meo the Cat”, designed by Bruno Munari in 1949, which become a cult object in the 1950s, both in its original version and in a reproduction about one meter and a half tall. There is also a monkey called “Zizì”, which won the Golden Compass award in 1954 for its particular design, and “Tentenna the Bear”, a toy made out of rubber manufactured by Pirelli on license from Rempel, from the 1950s. There are items behind glass such as a copy of the first Pirelli Calendar, shot by Robert Freeman for 1964, and various products that make up the industrial history of the Group: a gas mask from 1939, some 1966 tennis balls, a hot water bottle and a diving mask from the 1970s. The red patent leather shoes with spiked heels worn by Carl Lewis in the celebrated Pirelli advertisement “Pirelli is nothing without control” from 1994 can be appreciated alongside the latest innovative Pirelli tyres: Cinturato P7 for automobiles, Diablo Rosso Corsa for motorcycles and Regional tyres for trucks, all created with the latest manufacturing techniques and with particular attention to their “green” characteristics. On the monitors in the exhibition hall some of the 300 films and old “carosello” cartoons are projected, enriching the video collection of the Pirelli Historic Archives. These range from the caveman cartoon “Mammut Babbut e Figliut”, which became a cult film in the 1960s, to Fangio handling the curves at the Monza racetrack in “Extraordinario!”. In the collection are film footage of a visit by King Victor Emanuel III to the Bicocca factory in 1927, and the movie “La Fabbrica Sospesa” (the Suspended Factory) by Silvio Soldini from 1985.There are also the backstage videos from the latest Pirelli Calendars, showing the particular sets used for production of the most famous calendar in the world. The Foundation and Historic Archives, more than two and a half kilometers of shelves contained inside cupboards, are housed in Building 134, a two-story building at the entrance of the Pirelli headquarters at Bicocca in Milan. The building, recently restored and modernized, maintains all the fascination of the industrial architecture that connotated one of the most celebrated Milanese factories, the heart of Pirelli since 1908, which rose around the antique residence of Bicocca degli Arcimboldi, still a landmark, a few meters from the Foundation. An interactive Surface working area with multi-touch screens allowing access to documents, photographs and drawings kept by the Foundation using simple IT paths and tags, is also available to visitors to the exhibition and to the entire Pirelli Historic Archives. The Archives will be open to the public and to researchers from Monday through Friday on appointment, from 9 a.m. to 5:30 p.m. with access from Viale Sarca 222. Starting today, the website of the Pirelli Foundation will be online at: www.fondazionepirelli.org, with all information needed for consultation and highlights of materials in the Historic Archives.