***

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

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

www.pirelli.com

Published on: 22 August 2018, 19:20 CET

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.

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)

***

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.

***

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

Milan, 29 January 2010 – Pirelli & C., Pirelli RE and Fimit communicate that they have suspended the joint feasibility study for industrial integration with Fimit announced last November. At  present the path of integration, due to its importance and complexity, is not compatible in terms of time frame with the Pirelli RE real estate development plan already underway, and with the reorganization process at Fimit. The Pirelli Group, coherently with what it has announced to the market, in any case will continue in the process of focusing the business on industrial activities, moving ahead with the plan for separation of the real estate assets, which should foreseeably be completed by year end, once the specific plan, with terms and conditions defined, has been reviewed and approved by the appropriate corporate entities of all companies concerned.

***

EIB The task of the EIB, the European Union’s financing institution, is to contribute to the integration, balanced development and economic and social cohesion of the Member States by financing sound investment. Thanks to its Statute and shareholders, the 27 Member States, including Romania, the EIB has an AAA-rating and therefore it can borrow funds on the capital markets on favorable terms, which it passes on via the loans that it grants to its clients and final beneficiaries. Since 1990 the EIB’s lending in Romania has amounted to some EUR 7 billion, for financing investment projects associated with Romania’s integration into the EU. PIRELLI GROUP Pirelli & C. SpA is the company listed on the Italian stock exchange at the head of a multinational group active in more than 160 countries, with industrial experience of more than 135 years. In the tyre sector is Pirelli Tyre, the fifth largest manufacturer worldwide in terms of revenue and leader in the high end of the market, with 23 factories located around the world. In the real estate sector the Group is present with Pirelli RE with businesses mainly in Italy and Germany. Thanks to its focus on technology and research, in recent years the Group has started up initiatives in industries with a high innovation content, such as sustainable mobility and renewable energy, with Pirelli Eco Technology and Pirelli Ambiente. In broadband access the Group operates with Pirelli Broadband Solutions.

All Activities Directly Supporting The Core Business Regrouped Under The New "Tyre And Parts" Department, Headed By Francesco Gori

Milan, 16 September 2009 - The Board of Directors of Pirelli, which met today, reviewed and approved a new organizational structure for the Group. Coherently with the strategy and aim of the 2009-2011 industrial plan to focus on the core business, the company decided to simplify its organizational structure and regroup all activities directly supporting the core business under a new "Tyre and Parts" Department, to be headed by Francesco Gori, who also maintains his role as CEO and Managing Director of Pirelli Tyre.

The reorganization will allow for significant downsizing of the corporate level structures, with savings, once the reorganization is completed, of at least 10 million euros on an annual basis starting in 2010, and regrouping of operating activities necessary for growth of the core business: tyres (Pirelli Tyre) and filters (Pirelli Eco Technology) within the new Department, thus ensuring one single management of corporate processes. This Department will incorporate the activities of Purchasing, Administration and Control, Pirelli Labs, Advertising and Events, Human Resources, Health, Safety & Environment (which also reports to the Group General Counsel), and the Service Centers for information technology and administrative activities. 

In addition to the new Department, the following will report directly to the Chairman:

The following will also report directly to the Chairman: Maurizio Sala, as Group Controller (also in charge of Administration and Control for Pirelli Tyre); Human Resources, headed by Fabrizio Rutschmann, for HR strategy and senior management HR; Internal Audit, headed by Maurizio Bonzi; Pirelli Broadband Solutions; Pirelli Ambiente and PZero.

In line with the focus on industrial activities, the reorganization includes closing the Operations Department, headed by Claudio De Conto, who managed with skill and authority the roles and functions assigned to him in recent years. Claudio De Conto, who participated in mapping out the above-indicated Group reorganization, will now focus his activity, as CEO Finance, on Pirelli Real Estate. Together with the other CEO of Pirelli RE, Giulio Malfatto, Claudio De Conto will continue to manage the positive turnaround process underway.

Second Quarter Operating Results Improved Over The First Quarter;

Operating Trend In Line With Overall Targets Of 2009-2011 Industrial Plan;

Target For Financial Position Improves: Net Debt Forecast For Year End At Approximately 800 Million Euros

New Model Of Risk Monitoring And Management Introduced: Broadens Functions And Number Of Components Of Internal Control And Corporate Governance Committee; Compliance Function Introduced, Separate From Internal Audit Function; Risk Officer Instated 

***
Pirelli & C. Group

•  Revenues: 2,137.6  Million Euros  (2,454.8 Million Euros As Of 30 June 2008)

•  Ebit 101.1 Million Euros (180.9 Million Euros As Of 30 June 2008) After Restructuring Charges Of 21.2 Million Euros; Incidence On Revenues Of 4.7% In Line With Industrial Plan Targets

•  Attributable Consolidated Net Result: 6.3 Million Euros (-36.2 Million Euros As Of 30 June 2008; 
  Total Consolidated Net Result Negative For 12.4 Million Euros (-9.5 Million Euros As Of 30 June 2008), Positive Net Of Further 19.8 Million Euro Writedown Of Telecom Italia Stake

•  Net Financial Position Negative For 1,107.6 Million Euros,
  Improved From 1,278.9 Million Euros As Of 31 March 2009

***

Pirelli Tyre

•  Revenues 1,915.9 Million Euros (-9.3% On A Like-For-Like Basis, Net Of Exchange Rate Effects, Compared With First Half 2008);
  Ebit Before Restructuring Costs: 146.5 Million Euros, Or 7.6% Of Revenues;
      

• Second Quarter Revenues Up 6.7% Compared With The First Quarter Of 2009;
  Second Quarter Ebit Margin Before Restructuring Charges Rose To 8.6% From 8.1% In The Second Quarter Of 2008
   

Milan, 29 July 2009 - The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved the intermediate financial statements as of 30 June 2009.

The Pirelli & C. Group closed the second quarter of 2009 with a progressive improvement in overall operating results compared with the first quarter, especially due to restructuring measures begun last year and continued in the first half of 2009 in order to contrast a scenario characterized still today by a slowdown in the automotive industry and in real estate, where the Group operates. The benefits deriving from these measures allowed the Group to close the first half with positive operating indicators overall in line with forecasts made in the 2009-2011 industrial plan, even if down from a year ago, when the economic crisis had not yet made a significant impact on the industries in which the Group operates.
Overall, the Group closed the half with revenues of 2,137.6 million euros and EBIT of 101.1 million euros, with an EBIT margin of 4.7%, after 21.2 million euros of restructuring charges. The attributable consolidated net result was positive for 6.3 million euros, while the total net consolidated result was negative for 12.4 million euros, weighed down in part by the further writedown of the stake in Telecom Italia following alignment of its book value to the market price on 30 June 2009 (0.99 euros per share), with a negative impact of 19.8 million euros.

The Group's net financial position as of 30 June 2009 was negative for 1,107.6 million euros, an improvement over the -1,278.9 million euros on 31 March 2009 (-823 million euros on 30 June 2008), thanks to the first positive effects of measures taken on Pirelli Tyre working capital, as well as to income of about 46 million euros from sale of Telecom Italia shares last April, and of 25 million euros from the sale of the second tranche of Alcatel-Lucent Submarine Networks shares.

Pirelli Tyre, after a first quarter conditioned by a marked contraction of the Industrial segment in both sales channels (orginal equipment and replacement) and accentuation of the crisis in orginal equipment in the Consumer segment, began to benefit in the second quarter from the positive impact of falling raw materials prices, from efficiencies carried out thanks to restructuring measures underway, and from the first signals of recovery in the market, though still in a scenario characterized by negative growth in major markets. Restructuring begun in Europe is proceeding with the expected results, and will be fundamental in the future as well, in order to guarantee competitiveness through optimization of industrial, product and structural costs.

From an operational point of view, all this brought in the second quarter results which, though in absolute value terms lower than a year ago, show improved profitability: the EBITDA margin stood at 13.4% in the second quarter compared with 12.4% in the second quarter of 2008, and the EBIT margin before charges stood at 8.6% compared with 8.1% in the second quarter of 2008. Overall the first half of 2009 closed with sales down by 9.3% on a like-for-like basis compared with the corresponding period of 2008, and profitability (the ratio between EBIT and sales, or EBIT margin), equal to 7.1%, in line with the targets in the industrial plan for 2009.

Particularly thanks to greater efficiency in management of working capital, the second quarter also registered positive operating cashflow of 130 million euros compared with the first quarter, and the net financial position, negative, improved from 1,521.8 million euros on 31 March 2009 to 1,467.0 million euros at the end of the first half of 2009, after payment of dividends of 67 million euros in April (64 million euros of which to the parent company), and restructuring charges of 8 million euros.
In the first half, finally, efficiencies on the cost of labor, the use of materials, and purchasing processes, in addition to advantages obtained from the lower cost of raw materials including exchange rate effects, made it possible to include 45% of the 2009 industrial plan target of 200 million euros of cost-cutting (at same exchange rate levels) for Pirelli Tyre, already in the current financial statements.

Pirelli Eco Technology, the Group company operating in sustainable mobility, continued in the half to develop its particulate filters business, strengthening its commercial presence internationally. During the period, the company obtained homologation for its filters in China, where it began selling the filters, and received provisory approval for its first homologation in Germany, which became definitive in mid July for Euro 3 light commercial vehicles.

Sales volumes rose to 1,948 units from 396 in the corresponding period of 2008, despite delays in the application of existing regulations regarding limitation of polluting traffic, as well as long homologation procedures. The operating result continued to be negative due to start-up costs for the factory in Romania, structuring the commercial side of the business, and pre-marketing in markets of reference.

Pirelli RE is completing the reorganization begun last year in a context which continues to be difficult for the real estate sector, including in light of the reduced credit capacity. The company has nonetheless managed to complete real estate transactions at values that are generally in line with appraised values. The new management has outlined a strategic approach designed to further recover efficiency and achieve a greater balance between ordinary revenues and structural costs including by confirming the strategic importance of the Pirelli RE SGR and the real estate services provided by the Pirelli RE group. Measures in the first half of the year have helped save around 29 million euros in overheads, ahead of the annual target of 50 million euros which has nonetheless been raised to 55/60 million euros, while the service business, including holding company costs, are close to break-even (with an EBIT of -3.2 million euros). The company confirms the target of 1 billion euros in asset sales by the end of 2009, involving receipt of its related share of benefit.

Following the close of the first half, Pirelli RE also concluded a capital increase of approximately 400 million euros which was totally subscribed by the market and which made it possible to strengthen the capital structure and increase the flexibility needed to achieve the targets indicated in the Industrial Plan. As part of the strengthening of the capital structure, the company also reached an agreement with a pool of banks for the provision of a credit facility for a total of 320 million euros expiring in July 2012 which will make 470 million euros in committed credit facilities whose average residual duration will increase from the current level of 9 months to 29 months available.

In other businesses the good performance of Pirelli Broadband Solutions should be noted; partly thanks to a process of diversificiation towards new operators and new markets, the company closed the period with revenues up nearly 15%, net income of 4.1 million euros and a positive net financial position of 31.9 million euros, in line with March 2009 and improved over the December 2008 figure.

Pirelli & C. SpA Group

At consolidated level, revenues as of 30 June 2009 amounted to 2,137.6 million euros, down 12.9% compared with 2,454.8 million euros in the first half of 2008. In the second quarter, in particular, revenues amounted to 1,094.6 million euros, up 4.9% from 1,043.0 million euros in the first quarter of 2009; in the second quarter of 2008 revenues amounted to 1,256.9 million euros.

EBIT including restructuring charges amounted to 101.1 million euros, or 4.7% of revenues, in line with 2009-2011 industrial plan targets, and compared with a first half 2008 result of 180.9 million euros. Restructuring charges in the half amounted to 21.2 million euros (of which 9.7 million euros for Pirelli Tyre and 11.5 million euros for Pirelli Real Estate) in line with the figure as of 30 June 2008. In the second quarter, in particular, EBIT including restructuring charges was equal to 54.3 million euros, compared with 65.8 million euros in the second quarter of 2008, but 16% higher than in the first quarter of 2009.

Consolidated attributable net income of Pirelli & C. SpA was positive for 6.3 million euros, compared with a negative result of 36.2 million euros in the first half of 2008, while the total consolidated net result was negative for 12.4 milion euros (-9.5 million euros as of 30 June 2008). The results were influenced by (in addition to operating results of the various businesses) the writedown of the Telecom Italia stake, whose book value was aligned to its market value on 30 June (0.99 euros per share), with a negative impact of 19.8 million euros.

Consolidated shareholders' equity as of 30 June 2009 was 2,369.6 million euros compared with  2,374.4 million euros at the end of 2008 and 2,302.4 million euros as of 31 March 2009. Consolidated net shareholders' equity attributable to Pirelli & C. SpA amounted to 2,202.1 million euros compared with 2,171.8 million euros at the end of 2008 and  2,129 million euros as of 31 March 2009.

The net financial position of the Group on 30 June 2009 was negative for 1,107.6 million euros, an improvement over the negative net financial position of 1,278.9 million euros as of 31 March 2009 (negative for 823 million euros as of 30 June 2008), thanks to the first positive effects of measures  on the working capital of Pirelli Tyre, as well as income of about 46 million euros from the sale of  Telecom Italia shares last April, and 25 million euros from the sale of a second tranche Alcatel Lucent Submarine Networks shares.

Employees of the Group counted  29,525, compared with 31,056 as of 31 December 2008 and 29,662 as of 31 March 2009.

Pirelli Tyre

Revenues of Pirelli Tyre as of 30 June 2009 amounted to 1,915.9 million euros, down 11.6% from 2,166.3 million euros in the corresponding period of 2008. Net of the effect of exchange rates, a negative effect of 2.3%, the organic variation amounted to a 9.3% decline, with a negative variation in volumes of 15.7% and a positive price/mix variation of 6.4%.

In the second quarter, in particular, sales amounted to 989 million euros, an increase of 6.7% over the 926 million euros of the first quarter of 2009. Thanks to the slower decline in sales in the quarter, in addition, the organic decline in sales compared with the same period of 2008 amounted to 7.7%, compared with 11.2% in the first quarter, both due to a less negative decline in volumes (-13.3% in the second quarter compared with -18.1% in the first quarter) and thanks to the positive price/mix variant (+5.6%).

EBITDA before restructuring charges stood at 240.8 million euros (286.5 million euros in the first half of 2008), or 12.6% of revenues. In the second quarter, in particular, EBITDA amounted to 133.0 million euros (135.5 million euros in the second quarter of 2008), with an improvement in the EBITDA margin to 13.4% compared with 12.4% in the corresponding period of 2008.

EBIT before restructuring charges stood at 146.5 million euros compared with 191.0 million euros in the first half of 2008, or 7.6% of revenues. In the second quarter, in particular, the EBIT margin before restructuring charges stood at 8.6% compared with 8.1% in the second quarter of 2008.

EBIT after restructuring charges amounted to 136.8 million euros compared with 186.0 million euros in the first half of 2008, or 7.1% of revenues, in line with the targets in the 2009-2011 industrial plan.

Net income as of 30 June 2009 amounted to 54.2 million compared with 101.7 million euros in the first half of 2008.

The net financial position was negative for 1,467.0 million euros, an improvement over the -1,521.8 million euros as of 31 March 2009 (-1,266.8 million euros at the end of 2008). Net of dividends of 67 million euros paid in April (of which 64 million euros to the parent company) and restructuring charges of 8 million euros, the second quarter registered cash generation of 130 million euros compared with the first quarter, mainly due to greater efficiency in management of working capital. The variation in cash generation in the first half of 2009 registered overall an absorption of cash of 97 million euros, particularly concentrated in the seasonal nature of working capital which, in any case, rose less than in the first half of 2008 both because of business volumes and, above all, because of an already significant reduction in the level of stock thanks to improvement in rotation in the second quarter. Outgoing cash (47 million euros) related to restructuring actions reported in the 2008 results also weighed on the overall financial position in the first half of 2009.

In the Consumer business (Car/Light Truck and Motorcycle tyres), revenues in the half amounted to 1,372 million euros, with an 8.2% decline (-6.4% organic decline, net of exchange rate effects) compared with the first half of 2008 (1,494.3 million euros), while the operating result before restructuring charges amounted to 96.5 million euros, or 7% of revenues, compared with 126.3 million euros in the corresponding period of 2008.
In the second quarter, in particular, revenues amounted to 701.5 million euros, down 6% (net of exchange rate effects, an organic decline of 4.7%) compared with the corresponding period of 2008, but with an improvement in profitability both in absolute value (EBIT before restructuring charges up to 54.6 million euros from 53.8 million euros) and in percentage terms (EBIT margin before restructuring charges rising to 7.8% from 7.2%). The improvement was due to lower raw materials costs, to the price/mix component, to actions optimizing the industrial structure, and to an improvement in the mix of sales channels.

In the Industrial business (Industrial Vehicle tyres and Steelcord) revenues amounted overall to 543.9 million euros, down 19.1% compared with the corresponding period in 2008 (672 million euros), while EBIT before restructuring charges amounted to 50.1 million euros, or 9.2% of revenues, compared with 64.7 million euros in the first half of 2008, or 9.6% of revenues.
The Industrial business, more cyclical because it is correlated with macroeconomic trends generally as well as specific areas such public works and large construction projects, saw a slowdown in both sales channels in the half. The strategic positioning of Pirelli Tyre, focused on fast growing economies both for production and for sales, made it possible to maintain relatively good levels of profitability, in the presence of unfavorable trends in sales volumes, down 23.1% and in part counterbalanced by the positive variation in price/mix (+7.4%) which, net of a negative exchange rate effect of 3.4%, meant an organic decline in sales of 15.7%.
Second quarter sales amounted to 287.5 million euros (343.4 million euros in the second quarter of 2008) with EBIT before restructuring charges of 31.0 milioni (34,5 milioni nel secondo trimestre 2008), up as a percentage of revenues to 10.8% from 10% in the second quarter of 2008, again thanks to lower raw materials costs, growth in price/mix (+6.8%), and a focus on business lines in emerging markets less exposed to the global crisis.

Employees as of 30 June 2009 counted 27,241, down by 1,360 compared with 31 December 2008, in line with the restructuring plan illustrated on the occasion of the presentation of the three-year plan last February.

Pirelli Eco Technology

Pirelli Eco Technology closed the first half of 2009 with revenues of 28.3 million euros compared with 33.4 million euros in the corresponding period of 2008. EBIT was negative for 5.5 million euros, compared with a negative figure of 3.9 million euros in the first half of 2008, while the net result  was a loss of 6.6 million euros (-4.7 million euros in the first half of 2008). 

The results registered in the half were attributable both to a decline in revenues from white diesel fuel Gecam - which had a decline in average unit sales due to a fall in the price of diesel - and to structural costs linked to expansion of the particulate filters business and the start-up of a a new manufacturing site in Romania, where the new Bumbesti Jiu factory will allow the company to serve already active markets, as well as markets where homologation is underway or expected. Among the factors influencing the business in the first half were delays in operational execution of existing laws limiting polluting traffic, and in the extension of homologations of systems to different categories of vehicles.

In the first six months of 2009, the company completed the process of homologation of particulate filters in China. In addition, temporary homologation was obtained in Germany for Euro 3 light commercial vehicles, after which in July definitive homologation was obtained. In the next few months, homologation is expected to be extended to the Euro 1 and Euro 2 applications, with consequent full commercial launch.

The slowdown in demand in markets of reference correlated both with the macroeconomic trend and with the above-mentioned delay in application of regulations, will have an impact on 2009 results which should close with EBIT close to break-even (indicated last February as more than 10% of revenues, expected to be greater than 100 million euros).

Pirelli RE

Assets under management had a market value of 16.8 billion euros ( ) as of 30 June 2009, of which 15.1 billion euros in real estate (15.4 billion euros as of 31 December 2008) and 1.7 billion euros in non performing loans (1.9 billion euros as of 31 December 2008).

Real estate sales amounted to 351.9 million euros in the half year (527.6 million euros in the first half of 2008).   The sales margin was 15% (20.7% in the first half of 2008).  Taking account of contracts already exchanged, offers received and negotiations in progress, Pirelli RE confirms the target of 1 billion euros in asset sales by the end of 2009, involving receipt of its related share of benefit. 

Consolidated revenues were 115.8 million euros (192.8 million euros in the first half of 2008):  the 2008 figure benefited from around 49 million euros in revenues from the sale of just one asset in Poland.

EBIT, including net income from investments but before restructuring costs and asset writedowns/revaluations, reported an improvement in the second quarter on the first quarter (-8.2 million euros versus -14.7 million euros). Despite this improvement, the overall first half figure was a negative 22.9 million euros compared with a positive 37.7 million euros in the first half of 2008, representing a shortfall of 60.6 million euros.

Part of this difference is due to more than 30 million euros in non-recurring income from which the company benefited in 2008 on the sale of just one asset in Poland and for indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund.  In addition, the fair value measurement of hedging derivatives had a positive impact of 10.9 million euros on the income statement in the first half of 2008, but a negative one of 7.4 million euros in the first half of 2009 due to movements in interest rates.

When EBIT including net income from investments before restructuring costs and writedowns/revaluations is summed with income from shareholder loans, first-half EBIT comes down to a loss of 9.2 million euros.  Two-thirds of this loss is attributable to the results of funds and vehicle companies (-6 million euros), while one-third is attributable to the service business (-3.2 million euros, including holding company costs):  net of the non-recurring income mentioned earlier, the latter business improved its results by more than 12 million euros on the first half of 2008 thanks to cuts in overheads.

The net balance of revaluations and writedowns is a negative 4.8 million euros in the first half of the year. The revaluations are the result of formalizing the "hold" strategy already announced for most of the residential real estate in Germany and for selected prestige assets in Italy, involving their medium-term retention in the portfolio: the carrying amount of these assets has been revalued under IAS 40 with a positive economic impact of 45.5 million euros. However, these revaluations have been more than offset by writedowns of 50.3 million euros against other portfolios (of which 28.1 million euros relating to the investment in the German Highstreet portfolio).

Attributable net income (loss) was -42.3 million euros (+9 million euros in the first half of 2008, when discontinued operations contributed a positive 4.4 million euros), after booking gross losses of 16.3 million euros for restructuring costs and the negative balance for revaluations/writedowns.

Real estate NAV amounted to 1.2 billion euros, staying in line with the figure at 31 December 2008:  this value is the difference between the Pirelli RE share of the market value of participated assets (3.9 billion euros) and its share of the net bank debt of funds and vehicle companies (2.7 billion euros).

Attributable shareholders' equity was 302.3 million euros as of 30 June 2009 compared with 317.1 million euros as of 31 March 2009 (361.7 million euros as of 31 December 2008). Taking account of the capital increase completed at the start of July, the half-year figure would increase to 701.6 million euros.

The net financial position reports net debt of 337.3 million euros as of 30 June 2009 compared with net debt of 309.3 million euros as of 31 March 2009 and of 289.5 million euros as of 31 December 2008.  The net financial position, excluding shareholder loans granted, reports net debt of 828.5 million euros compared with 898.4 million euros as of 31 March 2009 and 861.8 million euros as of 31 December 2008.  Taking account of the capital increase completed at the start of July, the half-year figure would come down to -429.2 million euros.

Gearing (given as the ratio between net financial position, excluding shareholder loans granted, and shareholdlers' equity) was 2.69 at the end of June compared with 2.81 as of 31 March 2009 (2.35 on 31 December 2008). Taking account of the capital increase completed at the start of July, the half-year figure would come down to 0.61.

Other businesses

Pirelli Broadband Solutions, the company in the group operating in broadband access solutions, registered revenues as of 30 June 2009 amounting to 72.8 million euros, up 14.8% compared with the first six months of 2008 (63.4 million euros). Net income stood at 4.1 million euros compared with net income of 0.2 million euros in the corresponding period of 2008. The improvement was linked to greater sales volumes, anticyclical trends in the market the company operates in, and a continuous process of diversification towards other operators and markets, in particular in South America. The net financial positiion was a positive one of 31.9 million euros, further improved over the positive figure of 15 million euros as of 31 December 2008, and compared with a negative figure of 26.7 million euros in the first half of 2008.

Prospects for the current year

The Group's results in the first half of 2009 were in line with overall targets announced at the time of presentation of the 2009-2011 industrial plan on 11 February. In particular, revenues of approximately 4.3 billion euros are expected for the year, as well as an EBIT margin of 4.5%-5%. The net financial position at the end of 2009, forecast at the time of presentation of the industrial plan to be negative for about 1 billion euros, is now expected to stand at about 800 million euros of net debt, in part due to the full success of the Pirelli RE capital increase.

Relevant facts which occurred after 30 June 2009

• On 23 July 2009 Pirelli RE's capital increase, resolved upon by the extraordinary shareholders' meeting of 17 April 2009, came to a successful conclusion. All the 798,574,545 new-issue ordinary shares were underwritten, corresponding to a total value of 399,287,272.50 euros. Pirelli RE's new share capital is 420,585,888.50 euros, divided into 841,171,777 ordinary shares with a par value of 0.50 euros each. At the close of the capital increase, Pirelli & C. therefore owns 487,798,972 shares, corresponding to around 57.99% of Pirelli RE's share capital. The value of the portion underwritten by third party shareholders amounted 167,411,002.50 euros.
• As part of measures to redefine the structure of the Company's financing, the Board of Directors of Pirelli RE approved the terms of an agreement with a pool of eight leading financial institutions for the provision of a credit facility for a total of 320 million euros expiring in July 2012.  Once this agreement is finalized, Pirelli RE will have available 470 million euros in committed credit facilities compared with a current level of 380 million euros, with an average residual duration that will increase from the current 9 months to 29 months.
• During the month of July 2009, 84,767,885 ordinary shares of Telecom Italia SpA were sold on the market, for a total of approximately 87.4 million euros. As of today, therefore, the Pirelli Group holds 39,155,300 ordinary shares of Telecom Italia SpA, or 0.29% of the voting share capital.
  
  
  Corporate governance
  Acceleration of economic change, complexity of management, and recent regulatory evolution in corporate governance and internal auditing, call for a structured process of corporate risk management that allows for rapid and complete identification and adoption of appropriate measures to prevent such risk, avoid it, and manage it, in ways that anticipate risk and are proactive, rather than simply reactive. It is therefore opportune to identify risk before it presents itself, and adopt corporate decisions and instruments best suited to avoid it, reducing the impact and, more in general, "governing" it. For this purpose, in line with best practices, the Board of Directors of Pirelli & C. introduced a new model for monitoring and management of risk, first of all redefining functions and composition of the Committee for Internal Control and Corporate Governance. This committee, renamed for the purpose "Committee for Internal Control, Risk, and Corporate Governance," also has the duty to assist the Board in identifying, evaluating and managing the most significant risks.
  In addition, the figure of Risk Officer was created, in charge of collection and analysis of information on existing and prospective risk the Group is exposed to. The aim is to acquire full awareness of risks that are existing or potential as a consequence of management decisions on corporate operations, as well as to identify the best instruments for containment and, in general, "management" of risk.
  Finally, a Group Compliance function was introduced, separately from the Internal Audit function. Group Compliance will collaborate with the other Group functions in order to guarantee constant alignment of internal regulations, process and in general, corporate activities, with applicable rules.
  In addition to the three board members already serving (Carlo Secchi, Carlo Angelici, and Franco Bruni), directors Cristiano Antonelli and Luigi Roth will also join the new Committee for Internal Control, Risk, and Corporate Governance. The Board of Directors also resolved to increase the Remuneration Committee, adding  Umberto Paolucci in addition to the three members already serving (Berardino Libonati, Alberto Bombassei, and Giampiero Pesenti). The Committees will continue to be exclusively composed of independent directors.
  Following the scheme of risk analysis and management introduced by Pirelli & C., the unit Pirelli Real Estate will also instate a Risk Committee within the Board of Directors, composed of Claudio De Conto, Giulio Malfatto, Claudio Recchi and Dario Trevisan.
  The measures adopted confirm the attention that the Pirelli Group is giving to its corporate governance, which always makes national and international best practices its own.
  Finally, it should be noted that in the proceedings pending before the Milan Tribunal that involve two former heads of the security department of the company, Pirelli was admitted by the judge as "parte civile" (damaged party) vis a vis all those charged with crimes for which Pirelli is a damaged or offended party: the company's role as parte civile was admitted in particular with regard to the crimes of embezzlement and money laundering. Against the company, meanwhile, only the "Avvocatura dello Stato" (state legal representative) was admitted as parte civile, in the interest of the prime minister's office and the offices of the ministries of public officials involved in the proceedings for corruption. The company also took note of the request, by the parties asserted to be damaged by the behaviour of its former employees, of the citation as "civil responsible party". This legal action has its basis in the Italian legal codes whereby the employer, regardless of his fault, must respond financially to illegal deeds committed by his employees. Pirelli, therefore, would be called to respond only in terms of objective liability. The company is pursuing the civil cases opened vis a vis suppliers of security services involved in the investigation, asking for return of payments for services recognized as not performed, or else illegal.
  Conference call
  The results of operations as of 30 June 2009 will be illustrated today at 6:00 p.m. during a conference call in which the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera, 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.
   
  • PDF Version(244KB)
   

  Related News

  • The board of directors approves financial statements as of 31 March 2009

PIRELLI TYRE  AIMS FOR 10% REVENUE GROWTH IN BRAZIL IN THE 2009-2011 PERIOD

PIRELLI  ABSOLUTE LEADER IN SOUTH AMERICA
IN THE TYRE INDUSTRY

THE GROUP IS PRESENT IN BRAZIL WITH 5 FACTORIES AND A RESEARCH CENTER FOR DEVELOPMENT AND PRODUCTION OF TYRES FOR THE CARS, MOTORCYCLES, AND INDUSTRIAL AND AGRICULTURAL VEHICLES OF THE MAIN WORLDWIDE MANUFACTURERS

IN THE 2004-2007 PERIOD THE COMPANY INVESTED APPROXIMATELY 300 MILLION DOLLARS IN BRAZIL, WITH 25% GROWTH IN MANUFACTURING CAPACITY AND 21% GROWTH IN SALES REVENUE

THE PIRELLI GROUP EMPLOYS MORE THAN 9,600 PEOPLE IN BRAZIL AND IS INVOLVED IN NUMEROUS SOCIAL, CULTURAL AND SPORTS INITIATIVES

PIRELLI CELEBRATES 80 YEARS OF PRESENCE IN BRAZIL WITH AN EXHIBITION AND EVENT

The Pirelli Group strengthens its presence in South America and continues to invest in Brazil, where this year it celebrates 80 years of industrial and commercial presence. New development plans were illustrated during a press conference held at the manufacturing site of Santo André, in the State of Sao Paulo, and attended by the Brazilian Minister of Development, Industry and Foreign Trade, Miguel Jorge, representatives of local institutional authorities, the General Consul of Italy in Brazil, Marco Marsilli, the Director of Istituto nazionale per il Commercio Estero (Italian board of foreign trade) in Sao Paulo,  Giovanni Sacchi, the Chairman of the Pirelli Group, Marco Tronchetti Provera, the CEO and Managing Director of Pirelli Tyre, Francesco Gori, and the CEO of Pirelli Pneus América Latina, Guillermo Kelly.

Investments and increase of manufacturing capacity

Coherently with the 2009-2011 industrial plan, in the three-year period the Group will invest 200 million dollars in Brazil on top of the 100 million dollars already invested last year. This strategy of strengthening in the area will consolidate the leadership of the Pirelli Group in South American markets.

The new investments will allow for a 20% increase in manufacturing of tyres for cars and motorcycles. The 300 million dollars of total investments in the 2008-2011 period will be targeted one third to research and development and the remainder to increasing manufacturing capacity.

In the 2004-2007 period, the Group already invested approximately 300 million dollars in Brazilian factories for technological innovation of the facilities, renewal of the product portfolio, as well as to increase manufacturing capacity, up in the period by more than 25% overall in all the main market segments: car, motorcycle, and industrial, agricultural and off road vehicles.

Between 2005 and 2008, sales of Pirelli in South America grew by a total of 21%, surpassing in 2008 for the first time the threshold of two billion dollars. Brazil's contribution to this result amounted to more than 60%, with more than 1.2 billion dollars.

Pirelli Tyre's growth target in Brazil in the 2009-2011 three-year period is for a total increase in revenues of 10% compared with 2008, despite a 2009 which, as already announced, will be affected by the strong crisis in demand worldwide.

Pirelli in South America

Brazil, where Pirelli has been present since 1929, is one of the fundamental countries for the Group's growth strategy. This country represents the first automobile and industrial vehicle market in the South American continent, one of the largest markets in the world. Brazil hosts the major automakers, motorcycle manufacturers, and industrial vehicle producers of South America and many of the top manufacturers worldwide.

The strong presence in this market appears particularly strategic in the current phase of world economic crisis, both because the area, driven in particular by the emerging economy of Brazil, has been less affected by the fall in demand, and because it offers a more efficient cost structure and a competitive base for exports.
  
The industrial and technological heart of Pirelli in South America is the Santo André plant, which became part of the Group 80 years ago and which employs 2,200 people in production of tyres for cars, motorcycles and industrial vehicles. Over the course of time, the industrial and commercial presence and importance of the Group has grown consistently, to the point where today Pirelli is absolute leader in Brazil and in all of South America.

Thanks in part to the Research and Development Center of Santo André, Pirelli's factories in Brazil are a point of reference for the automobile, motorcycle, and industrial vehicle industries, both for South and for North America. At its Brazilian sites Pirelli in fact produces tyres destined for all manufacturers present in the area including Fiat, Chrysler, New Holland, Iveco, Volkswagen, Audi, General Motors, Ford, Peugeot, Daimler, Honda, Suzuki, Yamaha, Mitsubishi, Toyota, Mazda, Scania, and Volvo.

The technological and industrial hub of Santo André is one of the centers of excellence, at worldwide level not only of the Pirelli Group but of the entire tyre industry. In particular, the research center of Santo André works in a network with Pirelli's other centers operating in Italy, Germany, the UK, the US and China, utilizing the support of Pirelli Labs. The Proving Ground in Sumaré that extends over 200,000 square meters and has become the reference point for tyre tests and for tests of vehicles of all segments (automobile, motorcycle, agricultural and industrial, SUVs etc.) completes the Santo André hub of excellence.

In 2008 South America represented 33% of overall sales revenue of Pirelli Tyre, equal to more than 4.1 billion euros (more than 6 billion dollars). The position of absolute leadership in South America is expressed both in the original equipment channel, and in all the main replacement markets, in particular in Brazil, where Pirelli can count on a distribution network of more than 600 exclusive points of sale.

Approximately 90% of the South American production of Pirelli Tyre is concentrated in Brazil, of which more than 35% is destined for export, including towards NAFTA area markets (the United States, Canada, and Mexico) for products with high technological content.
 
Currently, out of the 23 factories overall in the Pirelli Tyre Group, 7 are in the South American continent and are destined for production of tyres for cars, industrial vehicles, motorcycles, agricultural equipment and earth-moving and construction equipment. Five factories are in Brazil (Feira de Santana in the North of the country, Santo André, Sumaré and Campinas in the state of Sao Paulo, Gravataì in the South), one in Venezuela, near Caracas, and one in Argentina, near Buenos Aires. The headquarters of Pirelli in South America is in the city of Sao Paulo. 

Overall, employees of Pirelli Tyre in South America count about 11,400 of which more than 9,600 in Brazil.

Social, cultural and communications activities of Pirelli in Brazil

The eighty year anniversary of Pirelli in Brazil is being celebrated with an exhibition and event entitled "80 years of history. A way to leadership " which reflects back on the history of the Group in Brazil in all areas Pirelli is involved in. Industry, first of all, but also sports, communications and social and cultural activities, which have left their mark on the collective memory of the nation and have often crossed over into other countries. Such is the case of the famed advertisement depicting Ronaldo on the Corcovado, and of the Calendar, often set in Brazil and which will again have Brazil as its backdrop in the forthcoming edition.
The photographs of ‘The Cal 2010', taken by American photographer Terry Richardson, were shot in May in Trancoso, in the state of Bahia.

Coherently with the philosophy of the Group, which operates everywhere in the world and interacts and integrates with local communities, in Brazil too Pirelli promotes numerous initiatives in support of culture, social work and healthcare, education, training, and sports.

In the area of social welfare, the initiatives sustained by Pirelli in collaboration with local and central governing authorities cover various areas. In particular, the Group supports many projects helping recuperate and reinsert into society hundreds of disadvantaged children and adolescents all over the country, as well as programs in education, professional training, and civic education. There are many projects in healthcare, such as vaccination campaigns against epidemics typical of the tropical area, and information and sensitivity campaigns.

In Brazil, Pirelli's research focuses on sustainable development, in line with the Green Performance targets announced in the 2009-2011 industrial plan. In particular, the Group has a commitment with local authorities to acquire all the natural rubber produced with eco-sustainable methods in the  Xapuri region, thus contributing not only to preservation of the region's environment, but also to economic development of the native populations according to local traditional culture. Pirelli also supports the national Brazilian program for recycling used tyres.

In addition to sponsorship of motor sports, often as single supplier (in total, 17 championships, including the Brazilian Superbike, rally and Gt3), Pirelli has also sponsored the Palmeiras soccer team, one of the top soccer clubs in the country, 4 times champion in Brazil and once in South America. Until the ‘80s, Pirelli was active in sports with the Clube Atlético Pirelli which counted many successes both at home and internationally in volleyball, boxing, judo and cycling.
 

• PDF Version (183KB)

• 2008 Financial Statements Approved
• New Board of Statutory Auditors Appointed

Milan, 21 April 2009 - The Shareholders' meeting of Pirelli & C. SpA met today in ordinary and extraordinary sessions.

In the ordinary session, the Shareholders' meeting approved the 2008 financial statements, which did not foresee distribution of dividends.

The Shareholders' meeting also appointed, through the list system, a new Board of Statutory Auditors for the Company for fiscal years 2009, 2010 and 2011, composed of: Enrico Laghi (whom the Shareholders' meeting also appointed Chairman), Paolo Domenico Sfameni and Paolo Gualtieri, standing statutory auditors, and Luigi Guerra and Franco Ghiringhelli, alternate statutory auditors. The components of the new Board of Statutory Auditors were selected from the only list presented, by participants of the Pirelli & C. SpA Shareholders' Pact. Their compensation was confirmed at 41,500 euros for standing statutory auditors and 62.000 euros for the Chairman of the Board of Statutory Auditors. CVs of the new statutory auditors are available on the Company's website (www.pirelli.com).

In the extraordinary session, the Shareholders' meeting resolved upon definitive reduction of revaluation reserves in the measure utilized to cover the 2008 fiscal year result.
 

- REVENUES: 1,043.0 MILLION EUROS  (1,197.9 MILLION EUROS AS OF 31 MARCH 2008)

- EBIT: 46.8 MILLION EUROS, EBIT MARGIN 4.5%, IN LINE WITH TARGETS OF THE INDUSTRIAL PLAN

- TOTAL CONSOLIDATED NET INCOME: 1.1 MILLION EUROS. ATTRIBUTABLE CONSOLIDATED NET INCOME: 9.5 MILLION EUROS

- NET FINANCIAL POSITION: NEGATIVE FOR 1,278.9 MILLION EUROS (1,027.7 MILLION EUROS AT END 2008): AFFECTED BY SEASONAL FACTORS AND CASH-OUT LINKED TO RESTRUCTURING

- PIRELLI TYRE: REVENUES 926.9 MILLION EUROS (1,076.9 MILLION EUROS AS OF 31 MARCH 2008); EBIT 57.5 MILLION EUROS, EBIT MARGIN 6.2%

- PIRELLI RE: FIRST QUARTER OPERATING RESULTS STILL NEGATIVE, BUT IMPROVED OVER THE LAST QUARTER OF 2008

- LAUNCH OF NEW INCENTIVES PLAN: NEW RULES WITH "PARTICIPATION IN RISK" ON BONUSES FOR SENIOR MANAGEMENT

Milan, 21 April 2009 - The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved the interim financial report as of 31 March 2009.

The restructuring measures launched last year have made it possible to limit the impact from the protracted crisis, and to close the first quarter of 2009 with results showing improvement over the fourth quarter of 2008, even if in decline compared with the corresponding period of last year, due to the economic slowdown in the automotive industry and in the real estate sector, where the Group operates. Overall, the Group closed the quarter with operating indicators in line with 2009-2011 industrial plan targets, as presented last 11 February, with revenues equal to 1,043.0 million euros and an EBIT margin of 4.5%. Net income, a positive figure of 1.1 million euros, was substantially at breakeven point.

In the tyre business, in the first quarter Pirelli Tyre finalized part of the restructuring actions already communicated, in order to face the difficult market context, in a process of improving its industrial footprint and adjusting the fixed cost structure to the changed scenario. The first three months of 2009 showed signs of improvement over the last quarter of 2008, though the high level of raw materials costs continued into the period, with benefits from the decline in these costs to be produced starting in the second quarter of 2009 together with benefits linked to a decrease in warehouse stock, already significantly underway.

Thanks to actions aiming for greater penetration in the domestic and international markets, Pirelli Eco Technology, the Group company operating in the area of sustainable mobility, registered during the quarter growing sales volume of particulate filters with respect to the corresponding period of 2008, even if the result was still influenced by structural costs for expansion of the business.

In real estate, Pirelli RE continued with the reorganization begun last year in order to face a changed scenario. The Company closed the first quarter of 2009 with operating results that were still negative, but improved over the last quarter of 2008, though the sector continues to be hit by the crisis that started last year. In support of the new business model, and in order to allow the Company to express in the period covered by the 2009-2011 industrial plan the real implicit value of its assets, last 17 April the extraordinary Shareholders' meeting approved a 400 million euro capital increase.

In the other businesses, the good performance of Pirelli Broadband Solutions was noteworthy, closing the period with a profit and with revenue growth of over 50%.

Coherently with what was announced at the time of presentation of the Group's 2009-2011 industrial plan, during the quarter the Group continued in the direction of focus on and strengthening of the core businesses, including through redefining its asset portfolio. This included the agreement reached with Alcatel-Lucent on 24 March 2009 for the sale to it of a stake held in Alcatel-Lucent Submarine Networks, a company operating in submarine systems for telecommunications, for a total value of 56 million euros.



Pirelli & C. SpA Group

At consolidated level, revenues amounted to 1,043.0 million euros as of 31 March 2009, down 12.9% compared with 1,197.9 million euros in the first quarter of 2008 ( the organic variation, net of exchange rate effects, was -10.5%).

EBIT, amounting to 46.8 million euros, compared to a result of 115.1 million euros in the first quarter of 2008, with EBIT margin 4.5%, in line with the target foreseen by the 2009-2011 Group industrial plan. Total consolidated net income stood at 1.1 million euros compared with 62.4 million euros in the first quarter of 2008, while consolidated net income attributable to Pirelli & C. SpA amounted to 9.5 million euros compared with 33.8 million euros in the corresponding period of 2008. The results were influenced, in particular, by a lesser contribution from the real estate business to the results from investments, in part counter-balanced by the capital gain of 11.2 million euros linked to the sale of the stake in Alcatel-Lucent Submarine Networks.

Consolidated net equity as of 31 March 2009 was 2,302.4 million euros, compared with 2,374.4 million euros at the end of 2008. Consolidated net equity attributable to Pirelli & C. SpA amounted to 2,129 million euros compared with 2,171.8 million at end 2008.

The net financial position of the Group as of 31 March 2009 was negative for 1,278.9 million euros, compared with a negative position of 851.1 million euros at the end of the first quarter of 2008 and a negative financial position of 1,027.7 million euros at the end of 2008. The difference compared with the latter figure was related to the normal seasonal effect of the change in working capital in the businesses and to the cash-out of 45.8 million euros for restructuring.

Employees of the Group counted  29,662 compared with 31,056 as of 31 December 2008.

It should be recalled that the photonics business and the Integrated Facility Management business of Pirelli RE, sold during the course of the year, are considered "discontinued operations" and thus contribute only to the net result. For homogeneous representation, the comparison with 2008 figures is based on a  like-for-like perimeter.



Pirelli Tyre

Revenues of Pirelli Tyre as of 31 March 2009 amounted to 926.9 million euros, down 13.9% from  1,076.9 million euros in the corresponding period of 2008. Net of exchange rate effects, which were negative for 2.7%, the organic change was a decrease of 11.2%, with a negative variation in volumes of 18.1% and a positive price/mix variation of 6.9%.

EBIT before restructuring charges stood at 61.0 million euros (6.6% of revenues) compared with 102.8 million euros in the first quarter of 2008, with a 40.7% decline reflecting the still high level of manufacturing costs registered in the period and the impact on sales volumes due to the negative market scenario. EBIT after restructuring charges amounted to 57.5 million euros (6.2% of revenues) compared with 100.3 million euros in the first quarter of 2008.

Net income as of 31 March 2009 amounted to 14.6 million euros compared with 57.7 million euros in the first quarter of 2008.

The net financial position was negative for 1,521.8 million euros compared with negative positions of 1,266.8 million euros and 843.8 million euros, respectively, at end 2008 and at the end of the first quarter of 2008. The increase was mainly due to absorption of cash (227 million euros), particularly concentrated in the seasonal nature of working capital which, in any case, registered lower growth compared with the first quarter of 2008 both in terms of volumes of activity and, above all, in terms of an already significant reduction in levels of stock, which should improve rotation levels in the second quarter. The financial position was also affected by the cash-out (39 million euros) linked to restructuring actions already determined in 2008, as well as a positive balance of 11 million euros from the sale of the Central Tyre distribution business in the UK for 15 million euros, net of completion of the purchase of minority stakes in the Turkish subsidiaries, with a further payout of 4 million euros.

In the Consumer business (Car/Light Truck and Motorcycle tyres), revenues amounted to 670.5 million euros, a decline of 10.4% (-8.1% organic decline, net of exchange rate effects) compared with the first quarter of 2008 (748.3 million euros), while EBIT before restructuring charges was 41.9 million euros, with EBIT margin 6.2%, compared with 72.5 million euros in the corresponding period in 2008.
The original equipment channel, particularly in the first two months of the year, suffered from a contraction in demand in the automobile sector already registered starting in the second half of 2008 and exacerbated in the fourth quarter of 2008, also following a cutback in production decided on by auto manufacturers in order to reduce the levels of stock. In the month of March there were signs of recovery, with less negative rates in some countries and positive growth rates in others, in part thanks to the positive effect of government incentives for auto sales.
For the replacement channel, the market contraction was more limited.
During the quarter, the Company presented the Cinturato P7, the first ecological high performance tyre for the top segment of the market. The P7 completes the family of Cinturato green products, launched last year with the models (P4 and P6) destined for mid range cars.

In the Industrial business (tyres for Industrial Vehicles and Steelcord) revenues amounted to a total of 256.4 million euros, down 22% compared with the corresponding period in 2008 (328.6 million euros), while EBIT stood at 19.1 million euros, with EBIT margin of 7.5%, compared with 30.2 million euros in the first quarter of 2008.
The Industrial segment, more cyclical since it is closely aligned with macroeconomic performance in general and certain specific industries such as public works and large construction projects, registered a slowdown in both sales channels. The strategic positioning of Pirelli Tyre, with 87% of total production in low cost areas and 75% of sales in emerging markets, allowed the Company to maintain in any case good levels of relative profitability, if in the presence of costs of manufacturing factors and an unfavorable sales volume trend, down 25.7% and counterbalanced in part by the positive price/mix variant (+7.2%) which, net of a negative exchange rate variation of 3.5%, brought about an organic decline in sales of 18.5%.




Pirelli Eco Technology

Pirelli Eco Technology closed the first quarter of 2009 with revenues of 14.3 million euros compared with 16.6 million euros in the corresponding period of 2008. EBIT was negative for 2.8 million euros, slightly worse than the negative figure of 2.1 million euros in the first quarter of 2008, while the net result was negative for 3.4 million euros (-2.2 million euros in the first quarter of 2008). 

The slowdown in results registered in the quarter was attributable both to lower revenues from white diesel fuel Gecam and to structural costs related to expansion of the particulate filters business. In the first three months of 2009 the Company sold 903 Feelpure filter systems compared with 122 systems sold in the corresponding period of 2008, with sales concentrated essentially in Italy and the Netherlands, countries where these systems obtained homologation in 2008.
The homologation processes underway in Germany and in China are moving towards their final phases, after which the company will enter markets with high growth potential. To this end, during the quarter the Group definitively launched its manufacturing site in Bumbesti Jiu, in Romania, which will allow it to serve both the markets that are already active and those where homologation is expected, with benefits foreseen in particular in the second half of the year.

During the quarter, Pirelli Eco Technology began installation of particulate filters on public transportation buses in Piedmont and by the end of September 2009 the Company, with the support of the Piedmont Region as part of its air quality improvement program, will install the filters on 879 regional vehicles.




Pirelli RE

The economic performance in the first quarter of 2009, though still negative, was improving compared with the last quarter of 2008.

Total rents as of 31 March 2009 amounted to 201.5 million euros, in line with expectations (143.1 million euros in the first quarter of 2008, with a perimeter that did not include the Highstreet portfolio). The Pirelli RE pro-quota share of rents equaled 47.3 million euros (compared with 38.1 million euros in 2008).

Real estate sales amounted to 174.8 million euros (199.8 million euros in the first quarter of 2008): the Pirelli RE pro-quota share of sales equaled 50.5 million euros (compared with 66.9  million euros in 2008). The sales margin was 17% (in the first quarter of 2008 it was 26%).

Consolidated revenues stood at 53.8 million euros, compared with 74.7 million euros as of 31 March 2008.

EBIT including income from investments amounted to -14.7 million euros, compared with 22.5 million euros in the first quarter of 2008, excluding restructuring costs and writedowns.

In terms of EBIT, the decline with respect to 2008 (24.9 million euros) was composed of savings obtained on the structure (10.0 million euros), more than compensated for by main negative components such as: the presence in 2008 of an indemnity received vis a vis the commitment to cede management of the Berenice fund (17.0 million euros); the presence in 2008 of extraordinary items (3.5 million euros); worse results of consolidated vehicle companies mainly due to a decline in sales (5.6 million euros); a lower result of the Non Performing Loans services platform (5.8 million euros).

In terms of income from investments, the decline (equal to 12.3 million euros) was attributable for 10.0 million euros to results of the vehicles and funds linked mainly to lower sales margins, and for about 2.3 million euros for adjustment to fair value of interest rate hedging instruments.

Attributable net income stood at -15.8 million euros (+11.6 million euros in the first quarter of 2008, when discontinued operations had brought a benefit of 0.7 million euros).
Attributable net equity as of 31 March 2009 amounted to 317.1 million euros compared with 361.7 million euros as of 31 December 2008. The decrease of 44.6 million euros can be mainly linked to the attributable net result (-15.8 million euros) and to the variation in reserves for interest rate hedging (-25.1 million euros).

The net financial position as of 31 March 2008 was negative for 309.3 million euros, compared with 289.5 million euros as of 31 December 2008 (negative for 300.3 million euros as of 31 March 2008). The financial position excluding shareholder loan credits was negative for 898.4 million euros, compared with 861.8 million euros at 31 December 2008 (negative for 807.8 million euros on 31 March 2008).

Total net capital investedby Pirelli RE amounted to 1.3 billion euros of which 0.2 billion for NPLs and 1.1 billion for real estate (of which 73% in Italy and 27% in Germany).

It should be recalled, with regard to the first quarter of 2008, that the figures have been redetermined, for a correct representation, on a like-for-like perimeter. The Integrated Facility Management business, sold in 2008, has been considered "discontinued operations", helping to determine only the attributable net result and not the operating result.



Other businesses

Pirelli Broadband Solutions, the company in the Group operating in the field of solutions for broadband access, reported revenues of 44 million euros as of 31 March 2009, up 55.5% compared with the first three months of 2008 (28.3 million euros). EBIT was positive for 2.5 million euros compared with a positive result of 1.1 million euros as of 31 March 2008, while net income was positive for 2.8 million euros compared with a negative result of 1 million euros in the like period of 2008. The improvement was related to greater sales volumes and the positive effect of the product mix sold.

Prospects for the current year 

The results for the first quarter of 2009 are in line with the targets announced at the time of the presentation of the 2009-2011 industrial plan on 11 February. In particular revenues of 4.3 billion euros are expected, with an increase in the weight of the component linked to environmental businesses to 25% from 19% at the end of 2008. The ROS ratio is forecast at 4.5%-5%. The net financial position at the end of the year is expected to be negative for about one billion euros, essentially in line with the end 2008 level.

New management incentive plan

The Board of Directors, following a positive opinion expressed by the Remuneration Committee, approved a new incentive plan for approximately 80 senior managers.

In line with the economic scenario, management level has been involved in the restructuring program of the Group. Revision of the structure has determined, over the last 12 months, a reduction of the number of managers by about 20%. For 2008, in addition, a policy of zero incentives was applied, as well as a block on retribution policy for 2009 internationally. These actions have determined an average contraction of about 20% in total managers' remuneration.

The aim of the new plan is to ensure a stronger and more direct link between retribution of Pirelli managers and their ability to produce value and results, in the short term, but especially in the medium and long term. The new system of incentives in the Pirelli Group in fact, links their compensation to reaching the economic and financial targets announced in the 2009-2011 industrial plan.

The incentive mechanism, in particular, foresees that participants waive 50% of their annual incentive pay, which will be invested, and will allow for a bonus to be paid in March 2012 only if the three-year results are reached. If not, the value invested will be cut significantly. The three-year incentive in support of the industrial plan will not produce any payment until March 2012; with the new plan put into effect today, the variable portion of compensation directly linked to results will on average amount to more than 40% of total remuneration of management, reaching 64% for top management. About 75% of the variable compensation will thus be exclusively linked to reaching the three-year goals.

The plan also foresees a link with Total Shareholder Return, in order to ensure greater alignment between the performance of management and the expectations of shareholders.
The economic targets of the plan, finally, include the cost of the incentivation.



Relevant facts which occurred after 31 March 2009

- Redemption of bonds maturing

On 7 April 2009 the 150 million euro bond issued by Pirelli & C. SpA in 1999 at a fixed rate of 5.125% was redeemed.

- Change in management at Pirelli RE
 On 8 April 2009 Carlo A. Puri Negri left the post of Executive Vice President of Pirelli RE. At the same time, Giulio Malfatto entered the Group with the role of Managing Director of Pirelli RE, with responsibility for the business, while Claudio De Conto, Managing Director Finance maintains responsibilities for supervision and direction in financial areas.

-Sale of Telecom Italia shares

In the month of April, 44.7 million Telecom Italia shares were sold on the market for about 47 million euros.



Conference call

The results of operations as of 31 March 2009 will be illustrated today at 5:30 p.m. during a conference call in which the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera, 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.

Section 1 - standing Statutory Auditors
1. Enrico Laghi
2. Paolo Domenico Sfameni
3. Paolo Gualtieri

Section 2 - alternate Statutory Auditors
1. Luigi Guerra
2. Franco Ghiringhelli

The documentation called for by governing law, presented together with the list, will be made available to the public at the offices of the Company and of Borsa Italiana SpA, and published on the internet site www.pirelli.comtoday.

The Company also notes that, in accordance with governing law, the deadline for presentation of lists of candidates for appointment of the members of the Board of Statutory Auditors is thus extended to 10 April 2009, and the minimum threshold of participation required for presentation of lists is reduced to 1% of ordinary shares.

Shareholders intending to file minority lists before the new deadline indicated above must present, together with the documentation required by the By-laws and governing laws and regulations, a declaration attesting to the absence of relations linking them to the participants of the Pirelli & C. SpA shareholders' pact which presented the majority list.
 

The transaction was carried out following Pirelli's exercise of a put option agreed on between the two companies in 2004, at the time of the agreement where Alcatel acquired certain Pirelli assets in submarine systems. The sale, for an overall value of 56 million euros, will occur in three tranches by the end of 2009.

Pirelli's withdrawal from the business is coherent with the strategy of focusing on its core business as announced by the Group on the occasion of the presentation of the 2009-2011 industrial plan.

Pirelli
Pirelli & C. SpA  is the company listed on the Italian stock exchange that is parent company of a multinational  group active in more than 160 countries with industrial experience of more than 135 years. In the tyre industry, Pirelli Tyre is the fifth largest manufacturer in the world in revenue terms and is a leader in high end segments, with 23 factories in 12 countries around the world. In real estate, Pirelli RE has businesses primarily in Italy and Germany. Thanks to a focus on technology and research, in the last few years the Group has started up initiatives with high innovation content, such as in sustainable mobility and renewable energy, with Pirelli Eco Technology and Pirelli Ambiente. Pirelli Broadband Solutions offers broadband access solutions, while Pirelli Labs is the advanced research center at the services of all Pirelli's businesses.

Preliminary agreement for three-year sponsorship signed today by
Giuseppe Cattaneo, CEO of Pirelli China, and Lv Feng of CSL

Beijing, 20 March 2009 - Starting this year and for the next three years, Pirelli will become the institutional sponsor of the Chinese Super League (CSL), the top professional football championship league in China, organized by the Chinese Football Association (CFA). The Championship will thus be called the "Pirelli Super League".

The preliminary agreement for sponsorship of the CSL was signed today by Giuseppe Cattaneo, CEO of Pirelli China, and by Lv Feng of CSL.

Officially created in 2004 from the evolution of the previous A1 championship, the Chinese Super League will represent the professional sports event with the largest following in the country thanks to the growing popularity of football, among the sports that now count the greatest numbers in China in terms of both players and fans. Last year there were more than 150 million television viewers, while fans physically present at each match reached a number close to 15,000.

CSL today includes 16 teams which play 30 matches between March and November. The season kickoff will take place tomorrow at the Hanghai stadium in Zhengzhou, with a major live television event with the presence of 20,000 fans.

Pirelli, which has had an industrial presence in China since 2005, when the first part of its factory was inaugurated in the Shandong Province, today counts two manufacturing lines in China which produce tyres for cars and trucks in the city of Yanzhou. Pirelli is present in China with a series of initiatives that contribute to its brand awareness, such as the presentation of the 2008 Pirelli Calendar in Shanghai, and other cultural initiatives. The company desires, with this sponsorship, to strengthen its image through sports.

Pirelli has a long tradition in the world of sports. In football, in particular, Pirelli has a relationship going back more than ten years with Inter, is the partner of Swiss team Basel, and has made sponsorship agreements in the past with the Palmeiras Brazilian team and the Argentine club Velez Sarsfield.

Pirelli specializes in high performance tyres and is the brand of choice for car manufacturers such as Ferrari, Maserati and Lamborghini. The link between powerful performance and football makes CSL a natural partner for Pirelli.

Pirelli intends to support Chinese football through this sponsorship, accompanying its evolution and offering international know-how in an active partnership. The company thus confirms its strategy of greater integration in the Chinese community and social fabric.

 "China is one of the markets leading the world economy. Sponsorship of the CSL is a great opportunity for a company like ours with an important industrial presence and a relationship with the local community which over time has become more and more deeply rooted. The popularity of football, and its power to bring people together, make it the ideal vehicle to contribute to bringing the Pirelli brand into the hearts and homes of Chinese people," said Marco Tronchetti Provera, Chairman of the Pirelli Group.

CSL said Pirelli was the ideal partner. "We are delighted to welcome such a world-renowned company as title sponsor of CSL" said Mr. Nan Yong, the Vice President of CFA. "With today's announcement, Pirelli Super League - CFA will provide beautiful football games over next three years, to the continued delight of fans in China".
 

• Revenues Stable at 4,660.2 million euros ( -0.1% on a Like-For-Like Basis Net of The Exchange Rate Effect)
   
• Ebit before Restructuring Charges: 187.4 Million Euros (364 Million Euros in 2007); Ebit after Restructuring Charges 43.2 Million Euros
   
• Net Result: -412.5 Million Euros (+323.6 Million Euros In 2007) after Restructuring Charges Of 144.2 Million Euros, Writedowns of Real Estate Assets of 136 Million Euros, Writedowns Of Equity Participations of 263 Million Euros  (173 Million Euros for Telecom Italia)
   
• Attributable Net Result: -347.5 Million Euros (+164.5 Million Euros in 2007)
   
• Net Financial Position Negative for 1,027.7 Million Euros, Stable Compared with 30 September 2008
   
• Pirelli Tyre: Ebit before Restructuring Charges 250.7 Million Euros and Positive Net Result of 25.6 Million Euros

Milan, 10 March 2009 -  The Board of Directors of Pirelli & C. SpA, which met today, reviewed and approved 2008 draft financial statements.

The fiscal year was heavily conditioned by the international financial crisis, which determined a marked slowdown in the world economy with a harsh impact on the automotive and real estate industries. In order to confront that scenario, the group launched profound restructuring actions during the course of the year, accelerating in the fourth quarter when faced with prospects which for 2009 as well impose measures that can guarantee efficiency and competitiveness.

Overall, the Group closed the year with revenues essentially stable on a like-for-like basis and net of exchange rate effects, and declining EBIT, though still positive even after restructuring charges, compared with 2007. The net result, a loss of 412.5 million euros, reflected restructuring charges of 144.2 million euros, writedowns of real estate assets for 136 million euros, and writedowns of listed financial assets for 263 million euros, of which 173 million euros for the Telecom Italia stake.

In the core tyre business, Pirelli Tyre, notwithstanding a heavily negative scenario, closed 2008 with slightly higher revenues on a like-for-like basis and net of exchange rate effects, and a net profit, though significantly lower than in the previous year. Margins were affected by the increase in raw materials prices, which in 2008 brought greater costs of about 200 million euros, as well as the crisis in the automobile industry, which hurt the original equipment channel. In order to contrast that scenario, the company initiated restructuring actions to strengthen the competitiveness of the industrial footprint in Europe and reduce costs of central structures.

In real estate, the market suffered from a year of serious international crisis. Falling prices, a slowdown in transactions, and the credit crunch penalized all companies in the industry. In order to confront the changed scenario, Pirelli RE announced at the end of last year a process of cost cutting and reorganization focused on the two territorial macro areas of Italy and Germany/Poland, less exposed to the volatility of the real estate market, to relaunch the businesses and bring value to the high-quality assets in the portfolio.

Pirelli & C. SpA Group

At consolidated level, revenues as of 31 December 2008 amounted to 4,660.2 million euros, in line with (-0.1%) on a like-for-like basis, and net of exchange rate effects (-3% including those effects) compared with the 4,780 million euros of 2007 without considering revenues relating to deconsolidation of real estate assets of DGAG. Including the DGAG effect, revenues as of 31 December 2007 amounted to 6,075.6 million euros. Revenues generated from "green" products accounted for 19% of the Group total at year end.

EBITDA before restructuring charges stood at 396.1 million euros, compared with 572.8 million euros in 2007.

EBIT before restructuring charges was 187.4 million euros compared with 364 million euros in 2007.

The decline in EBIT before restructuring charges compared with 2007, net of the change in consolidation perimeter (-21.4 million euros for the DGAG effect) and net of writedowns of real property of Pirelli RE (-9 million euros), was 146.2 million euros and was mainly due to the performance of Pirelli Tyre (-107.4 million euros was the change in EBIT before restructuring charges compared with 2007) and of Pirelli RE (-29.7 million euros), which suffered from the difficult market scenario (declining volumes in Europe and North America together with significant growth in manufacturing factor costs for tyres, and a slowdown in transactions for the real estate business).

EBIT amounted to 43.2 million euros including restructuring charges for the full year, which amounted to 144.2 million euros and were due to rationalization of staff and of the manufacturing base in Europe for Pirelli Tyre, and of rationalization of structures for Pirelli RE.

In 2008 the Group, taking into account the negative performance of financial markets, adjusted its book value of equity participations in listed companies with writedowns of 263 million euros, of which 173 million euros relating to the stake in Telecom Italia, 66 million euros for RCS Mediagroup and 24 million euros for Avanex.
The slowdown in the real estate market triggered real estate writedowns by Pirelli RE of a total of 136 million euros.

These dynamics affected EBIT including income from equity participations, which was negative for 323.3 million euros compared with +512.6 million euros in 2007.

The net result of operational business activities was negative for 475.9 million euros, compared with a positive value of 255.8 million euros at the end of 2007. The result of business operations sold was positive for 63.4 million euros and included the sale of Pirelli Real Estate Facility (+74.6 million euros), and the sale of the photonics business (-11.2 million euros).

The total net result was a loss of 412.5 million euros, compared with a net profit of 323.6 million euros in 2007. The net result attributable to Pirelli & C. SpA was a loss of 347.5 million euros compared with an attributable net profit of 164.5 million euros in 2007.

Consolidated net equity as of 31 December 2008 was 2,374.4 million euros, compared with  3,804.1 million euros at the end of 2007. Net equity attributable to Pirelli & C. SpA on the same date was 2,171.8 million euros (0.405 euros per share) compared with 2,980.2 million euros (0.555 euros per share) at the end of 2007.

The net financial position of the Group as of 31 December 2008 was negative for 1,027.7 million euros. The 2008 figure was affected by, in particular, the repurchase of 38.9% of Pirelli Tyre (835.5 million euros) and the repurchase of Turkish minorities (43.3 million euros) as part of a strategy to strengthen the tyre business, as well as the payment of dividends (168 million euros). At the end of 2007 the net financial position was positive for 302.1 million euros. The net financial position at corporate level as of 31 December  2008 was positive for 537 million euros. As of 31 December 2008, a total of 785 million euros of committed credit lines was available, which, together with balance sheet liquidity (370 million euros), allow the group not to have a need to refinance for the next two years.

In 2008 the Group confirmed its attention to research and development, where spending amounted to 156 million euros, with an incidence on sales of 3.3%.

Employees of the Group as of 31 December 2008 counted 30,980 compared with 30,813 as of 31 December 2007.

Parent company Pirelli & C. SpA closed the fiscal year with a loss of 189.5 million euros affected directly or indirectly by the writedowns on listed equity participations for 263 million euros. Thus it is not foreseen that any dividend will be distributed. The loss will be covered through the use of existing reserves.

It should be noted that the photonics business and that of Integrated Facility Management of Pirelli RE, sold during the year, are considered "discontinued operations" and thus contribute only to the net result. For homogeneity of representation, the comparison with 2007 data is done on a like-for-like basis.

Pirelli Tyre

Revenues of Pirelli Tyre as of 31 December 2008 amounted to 4,100.2 million euros, down 1.5% compared with 2007 (4,161.7 million euros). The organic variation (net of exchange rate effects) was a 1.3% increase, thanks to good performance of the price/product mix component (+7.3%), deriving from a continuing focus on the highest product segments and price increases that compensated for a decline in volumes (-6% compared with 2007).

EBITDA before restructuring charges was 441.2 million euros, down 19.6% compared with 548.6 million euros in 2007. EBIT before restructuring charges stood at 250.7 million euros, down 30% compared with 358.1 million euros in 2007.
The reduction in EBIT compared with 2007, notwithstanding good commercial performance in terms of price/mix, was due to a market scenario that was unfavourable in volume terms in Europe and North America, combined with a strong increase in costs of manufacturing factors, in particular of raw materials, up 195 million euros compared with 2007 (150 million euros in the second half).
Restructuring actions begun in Europe in order to effectively confront this scenario and strengthen the competitive footprint brought about charges of 100 million euros in 2008, of which 68 million euros in the last quarter of the year. Considering restructuring charges, 2008 EBIT amounted to 150.7 million euros.

The dynamics described, together with greater financial charges, affected net profit, which amounted to 25.6 million euros as of 31 December 2008, compared with 210.5 million euros at the end of 2007.

The net financial position was negative for 1,266.8 million euros, compared with a negative 559.6 million euros at the end of 2007. The change was mainly related to the payment of dividends (93 million euros), consolidation of net debt of Speed (409 million euros) following the merger with Pirelli Tyre which took place at year end, the purchase of minorities in Turkey (43 million euros) and absorption of cash (161 million euros) deriving from ordinary business activity.

In the Consumer business (Car/Light Truck and Motorcycle Tyres), revenues stood at 2,801 million euros overall, - 2.1% compared with 2007 due to the negative performance of volumes (-5.8% mainly in Europe and in North America. In this context Pirelli Tyre focused on higher product segments with a consequent positive variation of price/mix (+6.5% at annual level), which compensated for the negative trend in volumes. Net of exchange rate effects, organic growth of Consumer revenue stood at +0.7%. Operating income from ordinary operations was 139 million euros compared with 253 million euros in 2007, affected by the above-mentioned decline in volumes and the strong increase in raw materials costs.

In the Industrial business (Tyres for Industrial Vehicles and Steelcord) revenues were  1,299 million euros overall, in line with 2007 (1,300 million euros). The decline in volumes was greater in the Industrial segment (-6.6% compared with 2007) in consideration of the highly cyclical nature of the business (greater correlation with macroeconomic trends and with those of certain specific sectors, such as public works, large construction projects, etc.); this performance was more than compensated by the positive variation in price/mix (+9.1% compared with 2007) with consequent revenue growth in organic terms (net of exchange rate effects) of 2.5%. Operating income from ordinary operations amounted to 112 million euros, slightly higher than the 106 million euros in 2007 thanks to the positive strategic positioning of Pirelli Tyre with 87% of overall production in low cost areas and 75% of sales in emerging markets.

Net investments amounted to 285 million euros (262 million euros in 2007) and, coherently with the Group's strategy and market demand, were utilized for developing innovative processes, increasing production in China and Romania, and developing new "green performance" products.

Pirelli Tyre maintained relatively flat its costs for Research and Development (145 million euros compared with 148 million euros in 2007), keeping its focus on all ongoing activities in product and process innovation.

The headcount of Pirelli Tyre as of 31 December 2008 was 28,601 compared with 27,224 at the end of 2007. The increase was a consequence of investments made by the Group in areas such as Brazil, China and Romania.

Pirelli RE

At the end of 2008 assets under management of Pirelli RE had a market value of 17.3  billion euros, of which 15.4 billion euros in properties (12.6 billion euros as of 31 December 2007) and 1.9 billion euros in non-performing loans - NPL (2.4 billion euros as of 31 December 2007).
The increase in properties, from 12.6 billion to 15.4 billion euros was due to acquisitions (of approximately 5 billion euros, of which the Highstreet portfolio accounts for 4.6 billion euros), the transfer of management of the Berenice and Teodora funds to another fund manager (-1 billion euros), property writedowns (-0.6 billion euros), sales (-0.9 billion euros) and other changes (+0.3 billion euros).

Rents totalled 669.2 million euros (535.8 million euros in 2007), of which Pirelli RE's portion was 164.9 million euros compared with 158.3 million euros in 2007.
Real estate sales in 2008 amounted to 864.9 million euros (1,804.9 million euros in 2007), of which the Pirelli RE portion was 361.8 million euros (526.8 million euros in 2007). The sales margin was 19% (22% in 2007).

Consolidated revenues amounted to 365.1 million euros, compared with 334.1 million euros as of 31 December 2007  (net of DGAG).

EBIT including net income from equity participations, before restructuring costs and property writedowns/revaluations, was negative for 59.7 million euros compared with a positive 83.6 million euros in 2007 (net of DGAG). The decrease of 143.3 million euros comprised 29.7 million euros in lower EBIT and for 113.6 million euros in lower income from equity participations (mainly attributable to 74 million euros in lower sales volumes, 21.6 million euros in lower success fees from capital activities  and 18 million euros in fair value adjustments on interest rate hedging instruments).
Restructuring carried out in 2008 cost 44.2 million euros; writedowns booked in 2008 amounted to 135.8 million euros, compared with 67.5 million euros in revaluations in 2007; EBIT including net income from equity participations was therefore a negative 239.7 million euros (compared with a positive 151.1 million euros in 2007, net of DGAG).

Consolidated net income amounted to a negative 195 million euros (compared with a positive 162.8 million euros in 2007, net of DGAG), including 74.6 million euros deriving from discontinued operations, following the sale of the equity participation in Integrated Facility Management.

The NAV of real estate assets attributable to Pirelli RE amounted to 0.8 billion euros, the balance between its pro-quota portion of the market value of the assets held by Pirelli RE (3.8 billion euros) and its portion of the net financial positions of the same, equal to 3 billion euros.

Attributable net equity as of 31 December 2008 amounted to 361.7 million euros, compared with 715.7 million euros at the end of 2007: the reduction mainly reflected the net consolidated loss (-195.0 million euros), the distribution of dividends (-85.1 million euros) and the decrease in the reserve for interest rate hedges (-54.4 million euros).

The net financial position at the end of 2008 was negative for 289.5 million euros, improved by 34.3 million euros since 30 September 2008 (negative for 289.7 million euros as of 31 December 2007). The adjusted net financial position (excluding shareholder loans to companies in which minority shareholding were held) was negative for 861.8 million euros, improved from 934.5 million euros as of 30 September 2008 (816.1 million euros as of 31 December 2007). The gearing ratio went from 1.52 at the end of September 2008 to 2.35 on 31 December 2008 (1.13 at the end of the previous year).
The total net financial position of real estate funds and vehicle companies invested in by Pirelli RE as of 31 December 2008 amounted to 11.3 billion euros, of which 10.1 billion euros of bank debt and 1.2 billion euros of shareholder loans. The total net financial position of the NPLs amounted to 1.7 billion euros.

Pirelli RE's total share of the financial position of the funds and investment vehicles was 3.6 billion euros (of which 0.4 billion euros of shareholder loans relating to real estate and 0.2 billion euros in shareholder loans relating to NPLs). Bank debt of 3 billion euros was comprised of 2.6 billion euros for real estate and 0.4 billion euros for NPLs. This debt, which has an average residual life of 3.6 years, is secured against the properties and NPLs underlying the loans.

The Group had, excluding temporary workers, 1,473 employees as of 31 December 2008 (2,956 at the end of 2007, of whom 1,168 working in businesses sold in the year, primarily the Integrated Facility Management joint venture sold on 23 December).

It should be noted that the activities of Integrated Facility Management, sold during the course of the year, are considered "discontinued operations" and thus contribute only to the net result. For homogeneity of representation, the comparison with 2007 data is on a like-for-like basis.

Other businesses

In 2008 revenues of Pirelli Broadband Solutions, the company in the Group that operates in solutions for broadband access, amounted to 124.6 million euros, up 10.8% compared with 112.5 million euros in 2007. EBITDA was positive for 4.8 million euros, compared with 1.9 million euros in 2007, while EBIT was positive for 3.9 million euros, decidedly stronger than the 0.9 million euros of 2007. Net profit stood at 2 million euros (after financial charges of 2.6 million euros), compared with a loss of 2.6 million euros in 2007.  

Pirelli & C. Eco Technology, the company in the Group which operates in the area of sustainable mobility - especially particulate filters - had 2008 revenues of 62.9 million euros compared with  67.4 million euros in 2007. EBIT was negative for 11.8 million euros (-3.8 million euros in 2007) and included the increase in structural costs due to internationalization of the retrofit filters business and costs sustained for the start-up of the particulate filter factory in Romania. In 2008 activities relating to development and marketing of post-treatment diesel filter systems greatly intensified.

For Pirelli & C. Ambiente sales revenue amounted to 5.1 million euros compared with 2.7 million euros in 2007, with negative EBIT of 2.6 million euros (3.6 million euros in 2007). In the photovoltaic sector, where the company operates with its venture Solar Utility, the company had volumes of current initiatives and those under development for generators of total power of about 50Mw, of which 3.1Mw finished and 9Mw being built in 2009.

Direction and co-ordination of Pirelli & C. Real Estate SpA
The Board of Directors, having reconsidered its previous assessments, found that - including following recent changes made to the organizational structure and the nature of operations which call for increased involvement in business activities and functions of the subsidiary Pirelli & C. Real Estate SpA - there is now a direction and co-ordination activity exercised by Pirelli & C. vis a vis the subsidiary, pursuant to article 2497 et seq of the Italian Civil Code. This matter was already evaluated during the Board meeting of Pirelli & C. Real Estate SpA.

Shareholders' meeting

The Board of Directors resolved to call the Shareholders' meeting for approval of the financial statements for the 2008 fiscal year on 20 April (first call) and 21 April (second call).

The ordinary Shareholders' meeting will additionally be called upon to resolve upon appointment of the Board of Statutory Auditors according to a list system.

Prospects for the current year

In a macroeconomic scenario that continues to present critical elements and uncertainties, the Pirelli Group has already begun, and will continue to develop, the necessary measures to increase its competitiveness and to improve efficiency. For 2009, as announced on occasion of the presentation of the 2009-2011 industrial plan on 11 February, Pirelli expects revenues of about 4.3 billion euros, of which 25% linked to environmental businesses, up from 19% at the end of 2008. ROS is targeted at 4.5%-5%. The net financial position at the end of the year is expected to be negative for about one billion euros, essentially in line with the level at the end of 2008.

Noteworthy events which occurred after 31 December 2008

Technology collaboration with Brembo and Magneti Marelli

On 27 January Pirelli announced the start of technological collaboration with Brembo and Magneti Marelli for development of cutting edge solutions for the Italian and international automotive industry. The skills and excellence of the three groups will allow for significant synergies to be realized and for development of applications, in particular in the field of automobile safety and for reduction of environmental impact, in line with the evolution of international regulations and with new European Union C02 emissions limits to start in 2012.

Presentation of the 2009-2011 industrial plan

On 11 February the Pirelli Group presented guidelines for its 2009-2011 industrial plan. The goal in the three-year period is a transformation that brings the Group to greater focus on its core businesses (Pirelli Tyre and the particulate filters of Pirelli Eco Technology), to be a "green performer" in its business sectors and to have the financial flexibility to sustain growth.

Proposed capital increase of Pirelli RE

On 5 March the Board of Directors of Pirelli RE confirmed the resolutions adopted in February by approving an operation designed to strengthen the capital structure and to support its new business model, with a proposal to make a divisible increase in share capital for cash payment, to be offered in pre-emption to shareholders, for a maximum amount of 400 million euros.
As for the terms of the increase, it is envisaged that the shareholders' meeting will give the Board a mandate to set, among other things, the issue price with reference to the theoretical "ex rights" price (TERP) of Pirelli RE ordinary shares, and the stock's performance in view of prevailing market conditions, as well as the market practice for similar transactions. Furthermore the issue price of the new shares may not be less than their nominal value, as provided for by law.
On 10 February the parent company, Pirelli & C., expressed its full support for the capital increase, committing itself to underwriting its share of the rights and declaring its willingness to underwrite any shares which, at the end of the offer process, are not underwritten. Pirelli & C. will fulfil its commitment by converting part of its loans to Pirelli RE into equity.
It is foreseeable that the transaction will be completed in the first half of the current year, assuming that it receives the approval of the extraordinary shareholders' meeting called together with the ordinary shareholders' meeting, which, among other things, will resolve upon approval of the financial statements as of 31 December 2008, and that the required authorizations are also obtained from the relevant authorities. The legally required documentation will be published within the necessary deadline.

Bonds maturing in the 18 months after 31 December 2008
On 7 April 2009, the 150 million euro bond loan issued by Pirelli & C. SpA in 1999 at a fixed rate of 5.125% will mature.

The Manager mandated to draft corporate accounting documents of Pirelli & C. S.p.A., Claudio De Conto, 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.
                                                                   ***

The 2008 financial results will not be discussed on a conference call with analysts and investors, given that the preliminary 2008 figures and relating business dynamics were already illustrated to the financial markets on 11 February on occasion of the presentation of the 2009-2011 Industrial Plan. This press release and presentation of 2008 financial results will be available on the website www.pirelli.com.

The company also points out that, consistent with the financial rigor foreseen by the guidelines of the recent 2009-2011 industrial plan, any possible future transaction of a strategic nature would not comport any recourse to the market.
 

• Consolidated Revenues In Line With 2007,
  Positive Operating Result, Though Down Compared With 2007 Figure Due To Higher Raw Materials Costs, Falling Demand And Restructuring Expenses;
  Net Financial Position In Line With Q3 2008;
  Negative 2008 Economic Result For Pirelli Re, Mainly Due To Writedowns And Restructuring

2009-2011 Industrial Plan

•  The Group Restructures And Reorganizes Its Businesses;
  Transformation Process For The Three-Year Period Launched, With
  Focus On Core Businesses (Tyres And Particulate Filters);
• Technology And Innovation Push;
  The Group Aims To Be A "Green Performer"
• Reorganization of Pirelli Re Accelerated:
  Capital Increase Proposed For A Maximum Of 400 Million Euros
  Pirelli To Underwrite Pro-Quota, Available To Take Up Any
  Shares Not Underwritten;
  Concentration Of Italian Real Estate Management And Services Under The Group's Asset Management Company ("Sgr");
  In The Three-Year Period Possible Strategic Partnerships For Pirelli Re For Management Of Italian And German Real Estate Patrimony
   
   

Milan, 11 February 2009 - The Board of Directors of Pirelli & C SpA and the Board of Directors of Pirelli & C. Real Estate SpA:

o reviewed the preliminary unaudited 2008 financial statements;

o approved the 2009-2011 industrial plan

The Board of Directors of Pirelli RE also reviewed a proposal for a capital increase to strengthen the equity structure and sustain the new business model, and took note of the full agreement on the transaction expressed by the Board of Directors of Pirelli & C.

Consolidated preliminary 2008 data, Pirelli & C SpA Group

For the Pirelli Group, the 2008 fiscal year was heavily conditioned by the international financial crisis, which determined a major slowdown in the world economy with a severe impact on both the automotive industry and the real estate sector.

In order to confront that negative scenario, during the year the group began a profound restructuring action. In particular, in the fourth quarter, in consideration of economic prospects for 2009 as well, which impose measures that can guarantee conditions of maximum efficiency and competitiveness, the group felt it was opportune to accelerate these measures, with consequent further effects on economic results.

Taking into account the impact of this restructuring, the group closed the year with a slight decline in revenues, a positive operating result, though lower than in 2007, and a net financial position substantially in line with the figure for the first nine months of 2008.

Consolidated revenues amounted to 4,648 million euros, in line with the previous year(-0.5%) on a like-for-like basis, and net of the exchange rate effect (-3% inclusive of that effect), compared with 4,780 million euros in 2007 net of the sales relating to deconsolidation of real estate assets of DGAG. Considering the DGAG effect, sales as of 31 December 2007 amounted to 6,075.6 million euros.

EBITDA before restructuring charges amounted to 397 million euros, compared with 573.6 million euros in 2007. EBIT before restructuring charges stood at 188 million euros compared with 363.9 million euros in 2007. Considering restructuring charges for the whole year, amounting to 144 million euros, EBIT was 44 million euros. Restructuring charges were related to rationalization of staff structures and the manufacturing base in Europe for Pirelli Tyre, and to structural rationalization for Pirelli RE.

The consolidated net financial position as of 31 December 2008 was negative for 1,028 million euros (down slightly from 1,055.7 million euros as of 30 September 2008). The net financial position at corporate level was positive for 536 million euros. Among the elements affecting it during the year was the repurchase of 38.9% of Pirelli Tyre (835.5 million euros) and the purchase of Turkish minority shareholdings as part of the strategy to strengthen the tyre business (43.3 million euros), and the payment of dividends (168 million euros). As of 31 December 2007, the consolidated net financial position was positive for 302.1 million euros.

It should be noted that the photonics business, and the Integrated Facility Management business of Pirelli RE, sold during the course of the year, are considered "discontinued operations" and are therefore only part of the net result. For homogeneous representation, the comparison with 2007 data is done on a like-for-like basis.

Pirelli Tyre

Pirelli Tyre closed 2008 with revenues slightly up despite a heavily negative economic scenario. Margins suffered from the increase in raw materials prices, which in 2008 brought about greater costs of about 200 million euros, as well as from the crisis in the auto industry which affected the original equipment channel.
In order to counter that scenario, the company undertook restructuring actions, accelerated in the fourth quarter against further deterioration of the market, in order to strengthen the competitiveness of the industrial organization in Europe and reduce costs of central structures.

2008 revenues were 4,100 million euros, up 1.3% on a like-for-like basis, net of exchange rates (-1.5% including the exchange rate effect). EBITDA before restructuring charges stood at 443 million euros, down 19% compared with 548.6 million euros in 2007. EBIT before restructuring charges was 250 million euros, down 30% from 358.1 million euros in 2007. Considering restructuring charges for the entire year, equal to 100 million euros, EBIT was 150 million euros. The net financial position was negative for 1,266 million euros (559.6 million euros at the end of 2007) following the repurchase of minority stakes in the Turkish subsidiaries and the merger of  Speed into Pirelli Tyre.

The fourth quarter, in particular, registered revenues of 870 million euros, down 5% on a like-for-like basis, and EBIT before restructuring charges - which in the fourth quarter alone amounted to 68 million euros - of 18 million euros compared with 71.9 million euros in the year earlier period.

Pirelli RE

In real estate, the market was in its second consecutive year of international crisis. The decline in prices, the slowdown in transactions and credit access difficulties penalized all the companies in the sector. In order to counter the changed scenario, Pirelli RE announced at the end of the year a process of cost cutting and reorganization focused on the two territorial macro-areas of Italy and Germany/Poland, aiming at relaunching the business activities and bringing out the value of the quality of assets in the portfolio.

Pro-quota aggregate revenues of Pirelli RE in 2008 amounted to approximately 776 million euros, down 18% compared with 2007 (they stood at 949 million euros net of the component relating to the deconsolidation of DGAG). Consolidated revenues were about 365 million euros (in 2007 they stood at 334.1 million euros net of DGAG). EBIT including the results of equity participations, before restructuring and revaluations/writedowns, was negative for about 60 million euros compared with a positive figure of 83.6 million euros in 2007 (net of DGAG).
EBIT including results of equity participations, restructuring and revaluations/writedowns, was negative for about 240 million euros (compared with a positive figure of 151.1 million euros in 2007 net of DGAG), of which about 136 million euros were writedowns and about 44 million restructuring costs; in 2007 there were revaluations for 67.5 million euros.

The net financial position at the end of 2008 was negative for about 289 million euros, in line with 289.7 million euros at the end of 2007 (as of 30 September 2008 it was negative for about 324 million euros). The net financial position, including shareholders' loans, was negative for about 862 million euros as of 31 December 2008, with an improvement of about 73 million euros compared with 30 September 2008 and about 46 million euros worse compared with 31 December 2007. The debt with controlling shareholder Pirelli & C SpA was reduced to about 490 million euros, compared with about 700 million euros as of 30 September 2008 and about 526 million euros as of 31 December 2007.

It should be noted that the activities of Integrated Facility Management of Pirelli RE, sold during the course of the year, are considered "discontinued operations" and therefore are only part of the net result. For homogeneous representation, the comparison with 2007 figures is on a like-for-like basis.
 

2009-2011 Industrial Plan

The Pirelli Group
 
In a macroeconomic scenario that continues to present critical elements and uncertainty, the Pirelli Group has already begun, and will continue to develop, the measures necessary to increase its competitiveness and improve its efficiency in the different sectors where it is present. The group will continue and intensify the actions of restructuring, reorganization and rationalization of the businesses, focusing on development of solutions that anticipate market demand, in particular in all the businesses related to definition and evolution of "green" technologies and products, in line with new environmental standards.

Through cost cutting, optimization of geographical presence, reorganization and rationalization of existing business activity and continuous attention to research and technology innovation, the solidity and flexibility of the group will be strengthened. The group will therefore be able to not only face the current economic crisis, but also to take advantage of new growth and development opportunities.

The objective for the three-year period is one of transformation, bringing the group to greater focus on its core businesses (Pirelli Tyre and the particulate filters of Pirelli Eco Technology), to be a "green performer" in its areas of activity and to have the financial flexibility to be able to sustain growth.

Thanks to skills already acquired, Pirelli will continue to develop products and solutions on the cutting edge in the "green economy", which offers important development opportunities in various sectors: sustainable mobility, eco-compatible building construction, renewable energy. At the end of the three-year period the incidence of the "green" component on revenues is expected to rise to about 40% of the total compared with about 20% today.

The reorganization and restructuring actions already begun by Pirelli Tyre will increase competitiveness of its industrial structure. The measures foreseen for the three-year period will allow the company to improve its profitability and continue to generate liquidity, making the most of a competitive advantage arising from a manufacturing presence in emerging markets that present higher growth rates and lower industrial costs.

Pirelli Eco Technology will leverage its technology to capture an important position in the particulate filter market both for commercial vehicles already in circulation and for new vehicles and, thanks in part to synergies with Pirelli Tyre, will develop within a rapidly growing market.

In the real estate sector the reorganization plan already launched at the end of 2008 will continue, with the adoption of a leaner structure concentrated on the geographical areas of Italy and Germany/Poland, capable of making the value of the assets in the portfolio emerge. The reorganization of Pirelli RE also foresees concentrating all Italian real estate services and portfolio management under the company's fund management company ("SGR"). The actions and the strategies adopted, together with know-how matured in the industry, will open the way for strategic partnerships for management of the Italian real estate patrimony. The proposed capital increase will allow for strengthening the equity structure and sustaining the new business model, protecting the value of the assets, which is currently unexpressed, while awaiting a recovery of the market, now heavily weighed down by the economic crisis.

Pirelli Labs will continue with advanced research in support of all the industrial activities of the group with an essential role in launching start-ups in business areas of interest which, thanks to the strength and value of the Pirelli brand, will be able to increase their value both through autonomous development projects and through aggregations with other market players.
An example of development of innovative businesses supported by the research at Pirelli Labs is the photovoltaic business of Pirelli Ambiente, with the opportunities offered by the growth of the renewable energy market.

The group will also continue to develop broadband access systems, to give Pirelli Broadband Solutions a portfolio of more and more innovative and complete products and services, and will be open to opportunities for aggregation with third parties that may arise which may further increase the value of the business.

The group has a solid financial structure, with a net financial position as of 31 December 2008 that was negative for 1,028 million euros and available, unutilized credit lines worth about 800 million euros and expiration dates allowing the company to have no need for debt refinancing for the next two years.

During the course of 2008 the group strengthened its core business with the repurchase of the 38.9% of Pirelli Tyre held by Speed for 835.5 million euros and the purchase of minority shares in Pirelli Tyre's Turkish subsidiaries for 43.3 million euros.

At corporate level the group has a positive net financial position of 536 million euros, the balance between debt of 511 million euros, available liquidity of about 110 million euros and credits with business units of about 930 million euros (in particular approximately 490 million euros with Pirelli RE and about 430 million euros with Pirelli Tyre, mainly attributable to the purchase of Speed).
Thanks to that solidity, the group will be able to on the one hand contribute to strengthening the equity structure of Pirelli RE, and on the other hand have flexibility, taking into account Pirelli Tyre's capacity to generate liquidity.

In the three-year period covered by the plan, a progressive improvement of the net financial position is expected: after a 2009 in which the NFP is expected to be in line with 2008, the group expects for the end of the period net debt, before any dividends, of less than 800 million euros, in part thanks to expected net cash generation of 250 million euros.

Pirelli Chairman Marco Tronchetti Provera said:
"The coming three years for Pirelli will be three years of transformation, which the group is prepared for thanks to acceleration of restructuring already begun in 2008. Today we can count on significant solidity of our equity base and on the efficiency of Pirelli Tyre, which will increase its profitability and continue to generate liquidity. The strengthening of Pirelli RE wll help bring out the value of its assets, not expressed today. Our course of growth will be ensured by further rationalization and focus on core businesses, with an increase in the "green" component of the business."

Group targets
2009:
Revenues: approximately 4.3 billion euros (of which 25% "green")
EBIT margin: 4.5 to 5%  
Net financial position: negative for approximately 1 billion euros
2011:
Revenues: 4.7 to 4.8 billion euros (of which 40% "green")
EBIT margin: approximately 8%
Net financial position: negative for less than 800 million euros (before any dividends, if any)
 
Pirelli Tyre

In a macroeconomic context where the tyre business is penalized by the effects of the international crisis, reorganization and restructuring actions already underway will allow Pirelli Tyre to improve the competitiveness of its industrial structure. The actions to be carried out in the three-year period will allow the company to improve profitability and continue to generate liquidity, using the competitive advantage of a manufacturing presence in emerging markets which present greater growth rates and lower industrial costs.

The company has responded rapidly to the unfavorable economic scenario, starting up and accelerating a restructuring plan which in 2008 brought about financial charges of 100 million euros and whose benefits will allow the company to meet the continued challenges in market conditions, already this year.

The strategy that will allow the company to reach its objectives includes:

Actions on costs

• continuation of the plan already begun in 2008, with the goal of saving over 300 million euros in the three-year period. This will be through:

- rationalization of manufacturing structures and staff in Europe;  
- renegotiation of raw materials purchasing agreements in order to take advantage of a phase of falling prices, following an increase in these costs of about 200 million euros in 2008;
- savings from lower energy costs and on logistics.

• growth of manufacturing capacity in emerging markets, where the greatest demand and the lowest industrial costs (logistics, energy, cost of labour) are located. Examples are the Group's factories in China, where the start-up phase has been concluded, in Latin America, in Egypt, in Turkey and in Romania, and the presence in Russia.

               - Industrial: Pirelli Tyre has 87% of its total production today in low-cost countries, where the company associates cost-competitive structures with the use of cutting-edge technology. This represents a unique competitive advantage with respect to the 50% average figure of Pirelli's four major competitors.

               - Consumer: rationalization of geographical distribution, focusing high value added production in high-cost countries. This occurs already in Germany (Ultra High Performance - UHP, Winter, Runflat) and in the UK (SUV) and will be applied in the new high-tech production facility in Settimo Torinese (Turin) in Italy, where 155 million euros in investments are confirmed.

Actions on revenues

• Skill in responding to demand in high growth markets, taking advantage of the competitive leverage of local presence and brand strength;
• Development and launch of new products: premium, green performance and Cyber Tyre

               - Industrial: new product launches aim to increase market share (with particular attention to Russia, China and the Far East) and to confirm the leadership position in Latin America and the Mediterranean area. In addition the company aims to take advantage of opportunities offered by the Agro segment.
              - Consumer:  the goal is to create value by confirming the selective partnership strategy in original equipment, which focuses on quality and profitability more than volumes, and reinforcing, in the replacement channel, Pirelli's leadership in the high performance segment. In addition, the company aims to take advantage of opportunities offered by the evolution of the market with 'green' products developed ad hoc in the various market segments, under the umbrella of the Cinturato brand and with innovative solutions for the auto industry, like the Cyber Tyre. In the motorcycle sector, essentially non-cyclical and representing a significant contribution to the profitability of the consumer sector, Pirelli expects to further consolidate its leadership position.
    
R&D and technology

The actions delineated above will be supported by R&D, with continuous technological evolution of products and manufacturing processes. In particular, with:

• evolution of MIRS, Pirelli's robotized system for manufacturing tyres;
• new ecological materials, among which silica derived from rice husk, with benefits both on the environmental front and on the cost front. Development of "green performance" products is foreseen for the various segments, strengthening in particular the leadership Pirelli already holds in the Premium segment;
• technological partnerships with other actors in the sector. An example is the recent agreement signed with Brembo and Magneti Marelli for the Cyber Tyre, the tyre with an integrated chip which will make a significant contribution in terms of safety and reduction of fuel consumption. Pirelli has been working for some time with the contribution of some of the most prestigious research institutions, including Ispra, Milan's Politecnico University, Turin's Politecnico University, UC Berkeley, the University of Craiova, and Shandong University;
• development of the technological and manufacturing facility in Settimo Torinese (Turin), to build a factory for production of the company's most technologically advanced and efficient 'green' tyres, within the context of a process that guarantees the highest standards of efficiency and productivity of the factory.

 Targets
 2009: 
 Revenues: - 6 to -7% compared with 2008
 EBIT margin: 6.5 to 7% 
 Net financial position: negative for 1.2 billion euros (before dividends, if any)
 2011:
 Revenues: +9 to +10% compared with 2009
 EBIT margin: 8 to 8.5%
 Net financial position: negative for approximately 1 billion euros (before dividends, if any)
 
 Pirelli Eco Technology
 
 Pirelli Eco Technology aims to achieve a leadership position in the field of technology for control of diesel vehicle emissions with the use of particulate filters. This goal will be pursued in part thanks to synergies with Pirelli Tyre, in particular relating to use of its commercial network. The use of such filters is constantly increasing as international regulations become more and more stringent, and due to incentives for their use in some countries and the low cost of their application.
 In particular, the company holds proprietary technology called Feelpure, which is a filter system based on silicon carbide, which can reduce particulate emissions of diesel engines by more than 95%.
 The 'retrofit' technology used by Pirelli Eco Technology, destined for commercial vehicles and buses already in circulation:

• allows for access to city center areas with limits on vehicles with high polluting levels, respecting the most recent European legislation;
• is the only one to have obtained homologation in Italy;
• is certified for access to limited traffic areas in Switzerland, Denmark, Sweden, Norway, the Netherlands, and the United Kingdom. In the first half of 2009 homologation is expected in key markets such as Germany and China.

 In a market phase favorable to the widespread use of particulate filters, Pirelli Eco Technology intends to capitalize on the competitive advantage it enjoys, based on: 

•  an increase in manufacturing capacity. The company is moving in this direction with the startup of the new totally automated factory in Romania (with annual manufacturing capacity of about 50,000 units) and the manufacturing facility in Arese (Italy, with capacity of around 30,000 units);
•  greater commercial presence in key markets, with a focus in 2009 on Italy and Germany that will extend in 2009-2011 to other parts of Europe and China and, later, to other parts of the world;
•  strengthening both in the retrofit segment and, in the medium term, in original equipment;
•  research and innovation, in part thanks to collaboration with international universities, as well as with Pirelli Labs, for development of new applications and continuous improvement of manufacturing processes. Today the new totally automated filter factory in Romania, developed as part of Pirelli's industrial aggregation there, is an example.

 The goal is to become, within 3-5 years, leader in the 'retrofit' market in Europe.
 
 Targets
 2009: 
 Revenues: more than 100 million euros (approximately 60 million euros in 2008)
 EBIT margin: more than 10%   
 2011:
 Revenues: more than 200 million euros
 EBIT margin: more than 20%

Pirelli RE

The objective of Pirelli RE is to increase efficiency of management of the assets in its portfolio, cut costs and adapt its internal organization to the changed scenario in the real estate market, accelerating the turnaround the company has already begun. Penalized by a phase in the market that renders the real value of its assets unexpressed, the company will go into the three-year period strengthened from an equity point of view thanks to the proposed capital increase.
Pirelli RE will continue restructuring and rationalization actions already begun, with the new organizational structure based on two territorial areas, Italy and Germany/Poland, less exposed than others to the volatility in the real estate market. The aim of the restructuring, whose benefits will be manifested already in 2009, is to rationalize intermediary organizational levels and reduce operating costs thanks to downsizing of personnel and a clear simplification of corporate structures.
The business units, organized by product specialization (Residential and Commercial), allow the company to combine local market knowledge and specialized product know-how. In Italy in particular it is foreseen that all real estate services and portfolio management will be concentrated in the Group's asset management company ("SGR"), which will become the main real estate asset manager in Italy, open to possible strategic partnerships.
Actions taken aim towards clearer highlighting of the high quality of the assets in the portfolio.
Sale of non-strategic assets such as the 'Non Performing Loans' (NPL) business will be part of the rationalization of the company's activities.
The new business model also aims at:

• progressive reduction of debt;
• reaching economic and financial equilibrium in real estate management through a better balance between recurring revenues and structural costs;
• progressive reorientation from an approach characterized by rapid portfolio rotation to one more focused on quality and profitability;
• selective management of real estate development projects, based on trends in demand.

The strategy for reaching these goals includes:

Actions on costs

• rationalization of the number of employees in real estate, with the goal of reaching a headcount of about 800 people at the end of 2009, net of already expected outsourcing of activities;
• reduction of the number of corporate vehicles and cutbacks in other fixed costs.

These actions will allow for savings of 50 million euros already in 2009.

Actions on revenues

Area: ITALY

• Preside efficiently over all the phases in the value chain, responding to demand for services both in Residential and in Commercial (stores, offices, logistics).
• Focus the business on the following activities:
• sales of non-strategic real property and of the current Residential portfolio;
• selective development of real estate initiatives in Residential, realizing products with distinctive characteristics such as eco-compatibility, at sustainable prices;
• increase profitability in Commercial, bringing occupation rates of rental properties to above 95% in 2011, and improving profitability indicators on properties (such as the Yield/Cost ratio on investment and NOI (net operating income, the balance between gross income from properties and cost of managing the same properties);
• partnerships in the public and private sectors for management of large real estate portfolios, as already experimented in Milan and Turin.

Area: GERMANY/POLAND
" Focus the business on the following activities:

• in Residential: improvement of asset management, with the goal to increase profitability of assets, and administrative services for property in the portfolio (property management); concentration of Agency services on single unit sales;
• in Commercial: improvement of asset management, with the goal to increase profitability of assets, and focus on reconversion of properties (development management); reallocation of part of the Karstadt (Arcandor Group) portfolio properties; further development of the shopping center management activity.

Financial structure

At the close of 2008, Pirelli RE had a negative net financial position of about 289 million euros, in line with previous year. The net financial position including debt owed to shareholders was, at the end of 2008, negative for approximately 862 million euros. This figure, thanks to the actions foreseen by the plan and in particular sales of assets and non-strategic activities - is expected to fall significantly during the three-year period to about 350 million euros at the end of 2009 and about 200 million euros at the end of 2011 (figures after proposed capital increase).

The company, whose debt owed to controlling shareholder Pirelli & C has been reduced to about 490 million euros from about 714 million euros as of 30 September 2008, can count on bank credit lines amounting to about 400 million euros. 

The quota pertaining to Pirelli RE of total debt of real estate funds and vehicles it owns stakes in amounts to about 3 billion euros (3.6 billion euros including the 0.4 billion euros of shareholder financing relating to real estate activities and 0.2 billion euros of shareholder financing relating to NPL activities), divided between 2.6 billion euros in real estate and 0.4 billion euros in the NPL activities. That debt, which has an average residual life of approximately 3.6 years, is guaranteed by real property and by NPL credits behind the loans.
The net asset value (NAV) of real estate assets pertaining to Pirelli RE, following writedowns, amounts to approximately 800 million euros, the balance between the pro-quota market value of assets managed by Pirelli RE (approximately 3.8 billion euros) and the pro-quota debt owed by investment funds and vehicles to banks plus debt owed by Pirelli RE to Pirelli & C.
Refinancing needs of vehicles (average pro-quota share pertaining to Pirelli RE is 24%) amount to approximately 154 million euros for 2009 and approximately 176 million euros for 2010. Refinancing needs for 2011 amount to approximately 778 million euros, of which approximately 425 million euros related to Highstreet, the investment company which holds in its portfolio the buildings leased to Karstadt (Arcandor Group), the German department store chain, and which Pirelli RE owns 12% of, alongside shareholders like Deutsche Bank, Assicurazioni Generali and Goldman Sachs.

Targets
 In 2009 the company aims for a turnaround, from a loss of 60 million euros in 2008 (EBIT including results from equity participations and before revaluations/writedowns and restructuring costs) to a profit of 20/30 million euros, thanks to actions on costs and on increasing the value of the asset management company ("SGR"). One billion euros in sales are foreseen this year, from which Pirelli RE will benefit pro-quota, and no acquisitions are foreseen.
 
 As a trend, the goal for 2011 is one of stability of assets managed compared with 2008, in part thanks to management of new third party portfolios, and EBIT close to 100 million euros (including results from equity participations and before revaluations/writedowns and restructuring costs).
 
Proposed capital increase
Within the context of the three-year plan, the Board of Directors of Pirelli RE reviewed a transaction aimed at strengthening the equity structure and sustaining the new business model, approving a proposal for a capital increase, with shareholders' pre-emption right, up to a maximum amount of 400 million euros.
In terms of the conditions for the capital increase, it is foreseen that the shareholders give a mandate to the Board to set, among other things, the issue price, taking as a point of reference the theoretical ex-rights price ("TERP") of Pirelli RE ordinary shares and applying a discount in line with the conditions, and best practices, applied on the market in similar transactions.
The capital increase transaction has received the full support of controlling shareholder Pirelli & C., which has committed itself to underwrite the quota pertaining to it and has declared its willingness to underwrite any shares which, at the end of the offer procedure, are not underwritten. Pirelli & C. will fulfill its commitment by converting part of its financial credit vis a vis Pirelli RE into equity.
The documentation legally required to formulate the capital increase proposal to the extraordinary shareholders' meeting will be examined by the Board of Directors' meeting of Pirelli RE scheduled for 5 March. The Board meeting will also call the extraordinary shareholders' meeting which, presumably, will be scheduled to coincide with the ordinary shareholders' meeting called to approve the financial statements for the year that closed on 31 December 2008.
It is foreseeable that the transaction may be completed in the first half of the current year, assuming approval by the extraordinary shareholders' meeting and necessary authorizations from competent authorities.

Pirelli Ambiente

Pirelli Ambiente is the company in the Pirelli Group specialized in technologies for sustainable development, renewable energy sources including photovoltaic, and environmental site remediation.
In the three-year period, the Group foresees a redefinition of the assets in the company's portfolio, with a strong imprint in the direction of photovoltaic energy in a scenario that offers excellent opportunities for development. In this area the company operates with Solar Utility, the 50/50 joint venture with Global Cleantech Capital.

The strategy outlined for reaching objectives includes:

• Technological leverage: thanks to collaboration with Pirelli Labs, Pirelli Ambiente has developed a solar tracker with low visual impact, high wind resistance and reduced installation and maintenance costs. The company has also recently realized a photovoltaic concentrator, a highly innovative solar panel with reduced costs thanks to reduced use of silicon, greater efficiency per solar cell, and lower cost manufacturing processes;
• Increase in energy generation capacity, to reach up to about 50 MegaWatts at the end of 2010, in particular thanks to 10 systems now awaiting authorization, whose construction will begin in the second quarter of 2009.

Pirelli Broadband Solutions

Pirelli Broadband Solutions is the company in the Pirelli Group which operates in broadband access solutions, offering a range of products for domestic and small business solutions, with access gateways, IPTV set-top boxes, remote management systems and fixed-mobile convergence solutions for the digital home. The company addresses a market whose potential value is estimated at 2.5 billion euros today, and is growing rapidly thanks to development of the 'quadruple play', to incentives for new generation network construction, and to progressive diffusion of IPTV.

In the three-year period the company plans:
      

• constant focus on technological innovation;
• completion and broadening of the product portfolio, with consequent diversification and growth of the customer base;
• strengthening of its commercial presence internationally, with particular attention to Latin America, Asia Pacific, and North Africa;
• possible strategic partnerships to sustain further development. Targets

 2009: 
 Revenues: 130 to 140 million euros
 EBIT margin: 3 to 3.5%
 Net financial position: stable (negative for approximately 15 million euros in 2008)   
 
 2011:
Revenues: 140 to 150 million euros 
EBIT margin: 4 to 4.5%
Net financial position: stable
 
 
The manager mandated to draft corporate accounting documents of Pirelli & C. SpA, Claudio De Conto, and the manager mandated to draft corporate accounting documents of Pirelli RE, Gerardo Benuzzi, declare - 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 of the above mentioned companies.
 

The Cyber Tyre, the intelligent tyre developed by Pirelli, will be integrated with Magneti Marelli electronic control systems and with Brembo's evolved braking systems in order to realize ad hoc technology solutions, at the service of performance and safety requirements of all types of customers.

The internationally recognized skills and excellence of the three Italian groups will allow for important synergies and for development of applications in particular in the field of safety systems for automobiles, also in order to reduce environmental impact, in line with the evolution of international regulations and new European Union CO2 emissions limits to enter into force in 2012.
 

During the meeting, the Chairman and top management of Pirelli illustrated to the two ministers and their respective delegations the activities of the Group in the automotive, environmental and energy sectors, with particular reference to the Russian market.

The visit of Ministers Scajola and Khristenko coincides with an expansion phase for Pirelli in the Russian Federation and the Commonwealth of Indepedent States. The Company, in fact, will build an industrial facility with partner Russian Technologies for manufacturing of tyres in the Russian region of Samara, for a joint investment of about 300 million euros. On 6 November, as part of the Italian-Russian summit held in Moscow, Pirelli and Russian Technologies signed an agreement that forecasts the start of tyre production in Russia by the end of 2010.

Milan, 10 December 2008 - The Niguarda Ca' Granda hospital of Milan, the Slatina (Romania) hospital, and the Pirelli Group presented today in Milan the first results of collaboration between the Italian hospital and that of the OLT region, with the goal of training and professional development of Romanian medical and nursing personnel.
The Vice Secretary of State for Health of Romania, Raed Arafat, representatives of the two hospitals, of Lombard institutional authorities, and of Pirelli, participated in a meeting at the Niguarda hospital.

In its first year of activity, the collaboration has involved about 25 doctors and nurse from the Slatina hospital, for a total of 300 hours of training. Training took place mainly in the Emergency Medicine, Emergency Surgery, Intensive Care, Reanimation and Emergency Gynecology wards at Niguarda. Some managers at the Milan hospital, in addition, held professional development courses at the Slatina hospital on the use of new technologies and procedures for emergency care.

The initiative was promoted by the Pirelli Group, which in addition to financing training activities has also donated to the Romanian hospital modern medical equipment for diagnostics and emrgency treatment, including sonogram and electrocardiogram equipment.

The agreement is part of a package of social and sustainable development initiatives by Pirelli for the community of Slatina, where the Group manufactures high performance tyres for Central and Eastern European markets.

The collaboration will involve a total of about 70 doctors and nurses at the Slatina hospital over a three-year period, with participation in theoretical and practical courses in Emergency Medicine, Emergency Surgery, Intensive Care, Reanimation and Hospital Epidemiology

"Pirelli considers of particular importance the integration of the areas in which we operate, and thus we decided to support an initiative that puts health at the center, through improvement of the local hospital,'' said Enrico Malerba, ceo of Pirelli Tyre Romania. "We are very happy with the results so far both in terms of quality of training and in terms of the good professional and personal relationships that have been created this year between Italian and Romanian doctors and nurses. The professional standing of the Niguarda personnel allows us to make a useful contribution to the Slatina hospital and the entire local community, which Pirelli feels itself an integral part of."

"Our hospital has been involved for many years as indicated by the Lombard Region, in various projects all over the world and we are pleased make the professional skills of our staff available for this important project promoted by Pirelli in Romania", said Pasquale Cannatelli, general manager of the Niguarda Ca' Granda Hospital.

"The collaboration this year with the  Niguarda hospital, which will continue into the future, has been an extremely positive experience for the medical staff of the Slatina hospital,'' said Ion Bratoi, medical director of the Regional Emergency Hospital of Slatina. "The great professional skills of the Italian doctors is an example for our Romanian medical staff, who especially appreciated the organizational structure of the emergency activities of the Milan hospital. We want to thank Pirelli for the support and for the medical equipment donated to the Slatina hospital, which will guarantee to citizens a high level of medical assistance".

The setting for the 36th "Cal" is the landscape of Botswana, where last May famed photographer Peter Beard spent ten days immortalizing seven internationally renowned models. Beard, who lived in Kenya for thirty years, is one of the world's greatest interpreters of the mystery and charm of Africa.
 
After last year's China edition, where Patrick Demarchelier artfully juxtaposed the atmospheres of ancient tea houses with the modernity of China's metropolises, the Pirelli Calendar moves to one of the few places in Africa that remain wild and unspoiled, free of the ravages of war and with the highest concentration of wildlife.

Peter Beard has chosen an authentic and ancestral land that is born of the interpenetration of two different worlds: the aquatic oasis of the Okavango River delta and the arid expanse of the Kalahari Desert. A place that has been spared both the exploitation of the land and the impoverishment of its resources, the ideal setting for the photographer's representation of nature as a metaphysical entity, always in motion, source of infinite creativity, within whose rhythms and laws everything must begin and end. 

A nature described as powerful yet at the same time wounded, with an harmonic view of the environment that draws on the spirit of 19th-century American naturalism. Through Beard's lens, nature unleashes an angry cry and rebels against humanity's incapacity to combine growth and development with wisdom and respect for diversity. It is in this context that elephants, the real protagonists of this edition of the Cal, struggle to survive, relegated as they are to ever shrinking areas. Elephants as metaphor of the human race, and Africa as metaphor of a devastated world that must recover its lost harmony. 

Beard grants no privilege to humans, for he believes that we, just like animals, must respect nature's balance. He imagines for all of us the bitter fate of living in an environment rendered ever more inhospitable by myopic, uncontrolled development, where the quality of life progressively declines and must come to terms with the rebellion of an offended nature.

The only hope is beauty. Beard believes that the key to saving humankind lies in a constant quest for truth and beauty. Beard's women are portrayed as generators of life, the source of all things, whose grace remains fully intact. They are depicted as creatures born of nature's womb, heroic, full of strength, with decisive features and powerful movements; statues, symbols of nature's creativity and ability to regenerate itself. "Only beauty can save the world" is the message of the new Pirelli Calendar, in the spirit of Fyodor Dostoevsky.

The seven models are: Daria Werbowy of Canada, Emanuela de Paula and Isabeli Fontana (who debuted in Demarchelier's 2005 Calendar) from Brazil, Lara Stone and Rianne Ten Haken from Holland, Malgosia Bela of Poland and Italy's own Mariacarla Boscono (who first appeared in the 2003 edition by Bruce Weber and again in Nick Knight's 2004 Calendar).

The final result is a calendar/diary that Peter Beard describes as "a living sculpture". The 56 plates of the new Cal are a rich collage of images, quotations, observations by the artist on the environment, climate change and global warming, overpopulation and the depletion of natural resources. "My real concern", says the photographer "is the destruction of nature on a global scale. We've totally lost track of what evolution is based on, and how important diversity is in nature. This concept is the very foundation of survival".
 
Throughout the shooting and production of the Calendar, a number of measures were taken to minimize its environmental impact. In keeping with Peter Beard's message, the Pirelli Calendar and the gala presentation of the 2009 edition will be Zero Impact®. Pirelli, in cooperation with a LifeGate initiative, will contribute to the creation and protection of a forested area in Costa Rica capable of absorbing the same quantity of CO2 emissions generated by the production and printing of the Calendar and by the presentation gala. Additionally, the Calendar will be printed on natural, lead-free paper.

Pirelli will present itself as "parte civile", a damaged party, against the accused in those proceedings. The company in addition will bring proceedings against anyone who has damaged it.

Pirelli also took note that it has been included in the court register of investigated parties, on the basis of Law 231, reiterating that it is a damaged party and declaring that it will continue to collaborate in order to clarify its position in the context of the above-mentioned proceedings.

Milan and San Diego, 26 February 2008 - Pirelli today announced that it is presenting PGT Photonics, a new Group company which will specialize in second generation photonics based on nanotechnologies, and displaying its comprehensive product offering which includes Pirelli's DTL Tunable Laser, ITLA, 300-PIN MSA Transponders, and DWDM XFP Transceivers at the OFC/NFOEC exhibition and conference, taking place in San Diego, Calif., 24 - 28 February 2008. 

PGT Photonics will have its headquarters in Milan along with its Sales office in Atlanta, Ga. Earlier this month, Pirelli announced the incorporation of a new company that would integrate the Photonics business unit of Pirelli Broadband Solutions and the Optical Innovation division of Pirelli Labs. The move is seen as a strategic initiative to generate greater synergies between R&D activities and the commercialization of Pirelli's growing product portfolio of optical components and modules.

"The OFC/NFOEC exhibition and conference is the ideal platform to announce to the industry the name of our new company PGT Photonics," said Claudio De Conto, General Manager for the Pirelli Group and Chairman for PGT Photonics. "With a more flexible structure suited for the Optical Communications sector, we will be more closely focusing on our core business while simultaneously leveraging our expertise in order to meet the needs of the marketplace in a timely manner."

At the core of the tunable portfolio presented at the OFC/NFOEC is Pirelli's Dynamically Tunable Laser: Telcordia GR-468-CORE qualified and hermetically sealed in a 26-pin butterfly package, providing increased reliability, a smaller footprint and a significant reduction in optical network costs. The Pirelli Integrable Tunable Laser Assembly (ITLA) allows telecoms operators to integrate tunability into their networks while reducing development costs and time to market.  For further integration, Pirelli's 300-PIN MSA transponders, available in multiple optical interfaces (NRZ, negative-chirp NRZ and Duobinary formats), extend the reach of metro networks to 350+ Km.  All tunable solutions are available in full C-band and L-band coverage (40 nm/100 channels).  On the pluggable side, Pirelli's DWDM XFP Transceivers feature high output power and dispersion tolerance levels for 80 to 200+ Km distances, optimizing cost-performance ratios for network operators.

Notes to editors
1. A complete portfolio of Pirelli's optical components and modules will be on display at the Pirelli stand - number 2049 - at the OFC/ NFOEC exhibition and conference, taking place in San Diego, 26-28 February 2008.

About Pirelli
Pirelli & C. SpA, listed on the Italian Stock Exchange, is the parent company of a multinational Group active in more than 160 countries with 135 years of industrial experience. Pirelli Tyre is the fifth tyre manufacturer in the world in terms of sales revenue and leader in the high-end segments of the market. Pirelli RE operates in real estate and has affirmed its leadership in Italy in just a few years. Pirelli RE has recently begun expansion in Central and Eastern Europe. Thanks to its technological leadership, in recent years the Pirelli Group has launched highly innovative start-up ventures in sectors such as photonics, broadband access, sustainable mobility and renewable energy. Pirelli Labs is the advanced research center at the services of all of Pirelli's businesses. www.pirelli.com


 

Milan, 10 December 2007 - Pirelli signed an agreement with the Niguarda Cà Granda Hospital of Milan and the Hospital of Slatina (Romania) for professional continuing education of Romanian medical and nursing personnel at the Milan hospital. In the context of this initiative, in addition, Pirelli will donate modern hospital equipment to the Slatina hospital for diagnostics and emergency surgery.

The professional training program will begin in January 2008 and will involve over the next three years approximately 70 doctors and nurses from the Romanian hospital, who will participate in theoretical and practical courses in the areas of Emergency Medical Care, Emergency Surgery, Intensive Care, Reanimation, Emergency Gynecology and Hospital Epidemiology, at the Niguarda Hospital. During the training period, hospital managers from Niguarda will go to Slatina to supervise activation of the new technologies and procedures in the Emergency Room and Emergency Care Department. Pirelli will donate to the project, over a three-year period, a contribution of about 500 thousand euros.

The agreement is part of a set of social initiatives undertaken by Pirelli in support of the community of Slatina, where the Group has built a large industrial pole dedicated to the manufacturing of high-performance tyres for Central and Eastern European markets.

The thirty-fifth edition of "The Cal", the first ever realized in Asia, is an exceptional visiting card to bring the world of Pirelli to the public of the Orient.

The 2008 Calendar is set entirely in Shanghai: the picturesque streets of the old French Concession, the splendid gardens of the former British Legation, the mysterious and sensual atmosphere of forbidden China, the convulsive Nanjing Road and the characteristic tea houses constitute the background for the camera shots that will grace the coming months.

The twenty-three intense portraits (two for each month; August has just one) recount the pomp of ancient China, with its splendour and the colours in which the Oriental myth of female beauty - perfection, purity, grace - is searched out. "Very often I find Western people seem to go for the more cliché Chinese faces: long hair, slanted eyes. All that has changed I think. Many Chinese women are graceful; I think we have an inner grace that's more rare than you find in the West," affirmed Maggie Cheung, the well-known Chinese actress.

Patrick Demarchelier, the influential maestro of portrait photography, who for the second time authors the celebrated almanac (his first Pirelli Calendar was shot in 2005 in Rio de Janeiro, Brazil) said: "The casting was a fascinating mix between the West and the Orient: an interesting group of faces."

Shooting last April kept eleven models and actresses occupied for ten days of intense work that involved a troupe of more than 40 people.

The leading ladies of this edition are rising stars such as Agyness Deane and Lily Donaldson (UK), Doutzen Kroes (the Netherlands), Catherine Mc Neil and Gemma Ward (Australia), Sasha Pivovarova (Russia), Coco Rocha (Ireland) and Caroline Trentini (Brazil). The Calendar also features Chinese beauties like Mo Wan Dan and Du Juan and one name in particular stands out: Maggie Cheung, the celebrated actress and Asian beauty, known internationally for her acting in Police Story (1985), Super Cop (1992), Actress (1992), Chinese Box (1997), In the Mood for Love (2000) e Hero (2003).

The official unveiling of the new Calendar occurs just a few days after the opening of the second Pirelli tyre plant in the Shandong Province. China and the other Asian markets are, in fact, the new frontiers for international expansion of the Group, which is investing and growing in order to take advantage of the extraordinary business opportunities in the area.

"The Cal," which has always been an artistic synthesis bringing together innovation, respect for values, and tradition, also expresses Pirelli's capacity to adapt to and integrate different cultures while at the same time affirming the qualities and the glamour of what being Italian is all about.

In late November, the book "The Complete Works: The Pirelli Calendar 1964-2007," published by Mondadori, will be distributed in bookstores worldwide. The book represents an important international publishing event and involves seven foreign co-publishers (Flammarion for France, Schirmer & Mosel for Germany, Rizzoli USA for the US and Canada, Thames & Hudson for the United Kingdom, South Africa, Australia, and other world markets, Magma for Russia, Rebis for Poland, and Slovart for the Czech Republic). The book is the result of a long, meticulous project of research and recovery of original materials. From the sixties to today, the reader takes a passionate excursion through the evolution of fashion, trends, and customs of the last 40 years, in harmony with the evolution of the language of Pirelli's communication.

A spin from Bertolini after half an hour of racing puts an end to the hopes of the # 11 Playteam Maserati, running on Pirelli tyres. Shortly beforehand, a misunderstanding between Pier Guidi in the other P Zero Racing-equipped Maserati and Davies in the Aston Martin-Pirelli resulted in contact that eliminated both of them. In GT2, the Porsche-Pirelli driven by Collard – which was also in the hunt for the category's drivers' title – was unable to make the most of its chances and finished fourth.

A combination of unfortunate circumstances put to an end to Pirelli Competizioni's hopes of claiming the 2007 FIA GT drivers' titles. The Pirelli-equipped Maserati MC12 of Bertolini spun and ended up in the gravel trap while fighting at the front, following a magnificent drive earlier from the outgoing FIA GT Champion. The unlucky Maserati rejoined at the back of the field following the incident, which took place after half an hour of racing, and eventually ended up in eighth place.

In GT2 Pirelli rubber allowed the Scuderia Ecosse Ferrari 430 GTC of Kirkaldy-Sugden to hold a podium place for a significant portion of the race, before slowing towards the finish. In the meantime, especially the 78 Kg of ballast prevented the Pirelli-equipped BMS-Scuderia Italia Porsche 997 GT3-RSR of Collard-Malucelli from having a proper tilt at the drivers' championship.

Alessandro Pier Guidi, in the second PZero Racing-equipped Playteam Sarafree Maserati MC12, had a particularly unlucky encounter. Having gone quickest in the morning warm-up, the Italian's race was ended after just 18 laps following a misunderstanding with another competitor. He was unfortunate enough to hit the AMR-BMS Aston Martin DBR9-Pirelli, which Jamie Davies was trying to nurse back to the pits with a terminal gearbox problem. Both cars were forced into instant retirement.

In GT2, the Scuderia Ecosse Ferrari 430 GTC-Pirelli, driven by Kirkaldy and Sugden, had an excellent race before having to slow down in the closing stages. Their fourth place was then taken by the Collard-Malucelli Porsche 997 GT3-RSR. The French-Italian crew was never really at ease on the Belgian track, characterised by winter weather that made life even more difficult than usual for the team's engineers and those of Pirelli.

Zolder marked the end of the 2007 FIA GT season, with next year's first race scheduled for springtime at the classic Silverstone circuit in England.

The new inflatable spars, currently being used on the boat racing in the Louis Vuitton Cup in Valencia, were conceived as an alternative to the traditional rigid glass or carbon fibre spars and have been realized with materials typical of racing tyres.

The use of reinforcement spars for genoas, introduced into the 2007 America's Cup regulations, allows for increasing the surface of the sail but makes manoeuvring more difficult, in particular in tacking when the genoa, especially if of larger size and with rigid inserts, must skip around the mast. To solve this inconvenience, Pirelli designed inflatable spars with the same characteristics of rigidity, light weight, and shock absorption of traditional ones, but with a decidedly superior elasticity. Beyond a certain level of deformation, in fact, the inflatable spar collapses, losing its rigidity entirely but without breaking, later returning once again to its form and rigidity when the external prompting is reduced

The winners of the various categories of the international competition dedicated to the communication of science and technology on the Internet have been selected from approximately a thousand candidates

Rome, 11 May 2007 - Pirelli, as part of the eleventh edition of the Pirelli Internet ional Award ( www.pirelliaward.com ) the first international competition dedicated to science and technology communication managed entirely on the Internet, has awarded the Norwegian start-up "New Index" ( http://www.newindex.no/ ), for its video illustrating their latest invention: the "interactive mobile whiteboard"; a special pen that can write, draw, colour and erase on a whiteboard, equipped with a sensor linked to a videoprojector and a personal computer. The winners received the Top Pirelli Prize, the main award consisting of 25,000 euros and chosen amongst the winners of each category. This project has also been judged best product for multimedia communication in the field of ICT (Information and Communication Technology).

After the international jury's thorough evaluation of approximately one thousand candidatures coming from all over the world, the Pirelli Award for the communication of Physics, worth 15,000 euros, has been awarded to the Chandra X-ray Observatory for "How Chandra Does What It Does" ( http://chandra.harvard.edu/resources/podcasts ). This work is the first of a series of video-podcasts that illustrate the missions and results of the space telescope Chandra, in orbit since July 1999 to study X-rays coming from high energy areas of the universe.

The award for Chemistry, has been assigned to "Chemistry Comes Alive!" ( http://jchemed.chem.wisc.edu/jcesoft/cca/CCA0/SAMPMOVS.HTM ), an archive of about two thousand chemistry video-experiments published by the Journal of Chemical Education Software . This project, that won the 15,000 euro prize, has been developed and produced with a grant from the National Science Foundation and presents itself as an innovative aide toward the teaching of chemistry in schools and universities.

The Pirelli Award for the Mathematics category has been assigned to David Gale of the University of California, Berkeley who presented his "Math Site" ( http://mathsite.math.berkeley.edu/main.html ), a multimedia work that introduces the wider public to theories, applications and mathematical curiosities through experiments and interactive games. This work won a prize of 15,000 euros.

For Life Sciences, the prize of 15,000 euros has been awarded to the University of Cincinnati for "Reproductive Physiology Learning Modules" ( http://www.aitl.uc.edu/itc/ReproPhys/ ), an e-learning system that, utilizing 64 animations, describes the male and female reproductive apparatus. The multimedia product is subdivided into educational units and is introduced by a video that illustrates the various sections.

For the Premio Pirelli per l'Italia ("Pirelli Award for Italy"), reserved for projects authored by Italian nationals, the winner is the publishing house Federico Motta with its multimedia product "La Bussola della conoscenza" ("The compass of knowledge"; http://www.mottaeditore.it/home.php?_idnodo=837 ), which introduces students and primary and secondary grade teachers to Charles Darwin's theory of evolution, through a virtual journey that tracks the one originally made in South America by the great British scientist in 1831. The project was awarded a prize of 10,000 euros.

Finally, for its high social value, a Jury's Honourable Mention has been assigned to "PIPS - Personalized Information Platform for Life and Health Services" from the Istituto San Raffaele di Milano, for the multimedia presentation of a project in the field of life sciences, which provides patients with constant medical assistance via new technologies.

The ceremony was held in Rome, within the halls of the Temple of Hadrian (145 A.D.), presented by the TV personality Carlo Massarini with the participation of: Antonio Calabrò, Director of Institutional Affairs and Public Relations for Pirelli; Stefano Rolando, representing UNESCO-BRESCE and Roberto Vacca representing the award's jury.

1. Carlo Alessandro Puri Negri
2. Claudio De Conto
3. Luciano Gobbi
4. Gilberto Benetton
5. Gianni Mion
6. Carlo Orazio Buora
7. Riccardo Ruggiero
8. Aldo Minucci
9. Renato Pagliaro
10. Paolo Baratta (indipendente)
11. Diana Bracco (indipendente)
12. Domenico De Sole (indipendente)
13. Luigi Fausti (indipendente)
14. Jean Paul Fitoussi (indipendente)
15. Pasquale Pistorio (indipendente)
16. Francesco Gori
17. Lucio Pinto

Milan, 10 February 2007 - Pirelli and F.C Internazionale return to a tradition of "speaking Chinese" for the third time in a little more than a year. On the occasion of the "Serie A" championship challenge between Chievo Verona and Inter, to be held at the Bentegodi Stadium in Verona on Sunday 11 February at 3 p.m., the word "Pirelli" on the T-shirts of the "Nerazzurri" team will be translated into Chinese characters. With this initiative, Inter and Pirelli aim to salute once again the numerous fans that follow the "Nerazzurri" from the Far East as well.

The Pirelli Group has a long tradition in China, where it is present with a recent industrial initiative dedicated to development and manufacturing of tyres for industrial vehicles. In upcoming months the Group will add a new plant dedicated to manufacturing of high-performance car tyres.

Directed by Kathryn Bigelow, with Uma Thurman as guest star, the film required ten days of filming and three months of post production in Los Angeles

New York, January 30, 2007 - After the successful first edition, the new Pirelli short film,Mission Zero, will star Uma Thurman and be directed by Kathryn Bigelow of Strange Days and Point Break fame.

Once again Pirelli has chosen film via Internet to promote its brand and business activities.

Due to her past roles and films, Kill Bill star Uma Thurman is an actress who best represents the concept of speed and power in the collective mind of the international public.  But in this edition, Uma's speed and power will be nothing without control. Driving a fiery Lamborghini Gallardo with PZero tires, she will speed through the streets of Los Angeles to escape mysterious assassins who suddenly appear and try to kill her for no apparent reason.

The film is based on hair-raising chase scenes, but only the final scene of the clever plot will reveal the solution to a series of unexplainable events that happen to the star. Director Kathryn Bigelow gave a realistic interpretation of the script and added great emotional and psychological tension to the action scenes.   

The film was shot with internationally renowned talents directly in Los Angeles, taking advantage of all the potential that the city, the home of the movie industry, has to offer. Everyone, from Director of Photography Janusz Kaminski (Oscar winner for Saving Private Ryan and Schindler's List) to the weapons master and post-production team, contributed to the successful outcome of this short film that has all the characteristics of the best action flicks. The result is a complete film that concentrates in just 10 minutes the best that Hollywood has to offer.

Last year choosing the Internet as the distribution channel turned out to be a great idea. Thanks to its widespread use, in just a few months the movie reached global dimensions and was accessed from 216 countries and independent territories.
There was a large number of hits from Europe and Latin America, but movie buffs and web surfers also connected from remote places like the Comore Islands and Fiji, and even from the icy Antarctica base, for more than 5,000,000 film views in less than a year (equal to a share of more than 1.1% of the entire Internet broadband population - Source:  Internet World Stats and Nielsen Net Ratings).

This year, too, the project has been the talk of the town and has encouraged people to present new scripts and ideas.

The plot
On a quiet, sunny morning in Los Angeles, Uma leaves home and goes for a spin aboard her fiery Lamborghini Gallardo with new Pirelli Pzero tires..
A kid shoots her with his water pistol. It looks like an innocent prank, but it is just the start of a dangerous game lasting eight minutes.
Two sinister guys pull up beside her, start chasing her and shooting. Uma becomes a moving target: terrified, she goes to hide in a fast food joint, but risks her life once again. Explosions, ambushes, and all sorts of unexpected events occur in a crescendo of adrenaline-pumping suspense. Uma suffers and takes risks, but her skillful driving helps get her out of trouble. And when the game gets rough…she starts enjoying it: the tension rises, but so does her ability to react. Suddenly, after she dodges a missile, the game ends. Was it reality or a fantasy?
 

Milan, 21 December 2006 - Pirelli & C. SpA announces that the duration of its committed revolving 1 billion euro line of credit, stipulated in 2003 with a pool of international banks and renegotiated in 2005, has been further extended from 2010 to 2011.

The mandated lead arrangers of the loan are Barclays Capital, BNP Paribas, HSBC Bank plc, J.P. Morgan plc and The Royal Bank of Scotland plc.

The extension of the duration of the line of credit, at parity of costs, will allow Pirelli & C. to improve its financial structure.

Milan, 19 December 2006 - The Shareholders' meeting of Olimpia SpA, which met today, approved the following changes to the by-laws, already announced to the market, as proposed by the Board of Directors on 6 November 2006:

• reduction of the number of members of the Board of Directors from ten to six and introduction of a clause that limits the maximum number of members of the Board that may be drawn from a single list to half of the total number of directors (three);
• reduction of the quorum required for constitution of an extraordinary Shareholders' meeting, and for all relating resolutions, to 81%.

The Shareholders' meeting also established that the Board of Directors would remain in office for three years (and thus until approval of the 31 December 2008 balance sheet) and appointed as directors Marco Tronchetti Provera, Carlo A. Puri Negri and Luciano Gobbi (drawn from the list presented by Pirelli & C. SpA), Gilberto Benetton, Gianni Mion and Giancarlo Olgiati (drawn from the list presented jointly by Edizione Finance International SA and Edizione Holding SpA).

The Board of Directors, which met following the Shareholders' meeting, confirmed Marco Tronchetti Provera and Gilberto Benetton in the roles, respectively, of Chairman and Vice Chairman of the Company.

In collaboration with CNR, test monitoring in the city of Parma of air quality and levels of electromagnetic and acoustic pollution

Milan, 5 December 2006 - Pirelli Labs, the Pirelli Group's advanced research center, and Istituto sull'Inquinamento Atmosferico (the Institute on Atmospheric Pollution) of the Centro Nazionale delle Ricerche - National Research Center (CNR-IIA), have presented a project for real time monitoring of air quality and of electromagnetic and acoustic pollution levels, to take place in the city of Parma until May, 2007.

The monitoring will be conducted using experimental, innovative technologies and will regard the urban area as well as an area near the A1 highway exit.

In detail, the study will include a mapping of the area, in eight urban posts and two peripheral ones, with miniaturized instruments developed by Pirelli Labs (which integrate up to five oxide semiconductor sensors) capable of detecting and transmitting in real time concentrations of pollutant gases, such as carbon monoxide, nitrogen dioxide and nitrogen oxides. CNR will add to these instruments sensors for the measurement of fine dusts, of noise levels, with analysis of frequencies, and of electromagnetic pollution. All of the instruments together will constitute a mini-network linked via GSM to a central server able to make results of the monitoring available in real time.

The test monitoring will be part of a Planning Agreement between CNR-IIA and the Environment Ministry, together with the City of Parma and Pirelli Labs.

This new philosophy of atmospheric and environmental pollution monitoring proposes offering solutions that are complementary to conventional ones, and characterized by a high level of flexibility and usability, in addition to low costs and low invasiveness, while maintaining high quality standards. Thus it will be possible to increase the number and the representative nature of observation points giving those responsible adequate instruments for environmental pollution monitoring in urban centers.

Milan, 29 November 2006 – Pirelli Ambiente, a company within the Pirelli & C. Group active among other things in the field of technology for sustainable development, today signed in Romania, in the presence of local authorities, the ground lease for the site on which a plant for the production of original equipment particulate filters is due to be built.

The plant, located on a 10-hectare plot within the Gorj Industrial Park in the south-west of Romania , will be operative from the second half of 2008 and will be organized around two production lines. The new factory, whose works will start in January 2007 and will be operative from the second half of 2008, is expected to produce over 1,300 tons of silicon carbide filters annually for the OEM diesel engine market and will lead to the hiring of around 400 employees.

The particulate filters produced by Pirelli Ambiente– already operating in the field of low environmental impact fuels with Gecam tm, the white diesel fuel - are gas emissions treatment systems that can cut diesel-engine particulate emissions by over 90% . The filters are realized in porous silicon carbide, a material that is uniquely resistant to heat and abrupt temperature changes, and can be fitted to diesel engines as original equipment or retrofit components.

Pirelli Ambiente already produces retrofit particulate filters suitable for all diesel engines. Several hundred buses in Italy have been fitted with Pirelli Ambiente filters and applications for earth-moving equipment, heavy transport, diesel trains and electricity generating units are being developed.

Pirelli Ambiente is Pirelli Group's company operating in the business of providing solutions for the environment and for sustainable development. Pirelli Ambiente can offer the market a vast range of solutions offering low environmental impact and high-tech contents of the highest order. Thanks to the synergies with Pirelli Labs – the Group's centre for advanced research – the company can focus unwaveringly on products and processes that are increasingly eco-compatible and on innovative solutions. Pirelli Ambiente operates via three companies active in different business areas: Pirelli Ambiente Renewable Energy in the field of energy recovery from waste and renewable sources, Pirelli Ambiente Eco Technology in technologies for sustainable development and Pirelli Ambiente Site Remediation in the environmental remediation sector.

OLIMPIA, MEDIOBANCA AND GENERALI: APPOINTMENT OF THE BOARD OF THE SHAREHOLDERS' AGREEMENT REGARDING TELECOM ITALIA HOLDINGS

Milan, 20 November 2006 - Olimpia, Mediobanca and Generali appointed today the members of the Board of the shareholders' agreement signed last October 18 in which they tied-up a total of 23.2% of the ordinary share capital of Telecom Italia.

The four members of the Board are Marco Tronchetti Provera, who will hold the position of Chairman, Gilberto Benetton, Renato Pagliaro and Giovanni Perissinotto.

The stars of this edition are five of Hollywood's most acclaimed and beloved actresses: Sophia Loren, Penelope Cruz, Hilary Swank, Naomi Watts and daring newcomer Lou Doillon, photographed by the Dutch duo Inez Van Lamsweerde and Vinoodh Matadin in California.

The unique 2007 calendar marks a turning point: the glamour that characterized past editions is absent. There has been a return to the simplicity of the film sets, stories and photography of the early sixties (reminiscent of the films of Pier Paolo Pasolini and Michelangelo Antonioni): the personality of the person prevails over the environment in a plain, unadorned setting.

Simple, spontaneous images portray five women. These profound, secret stories reveal the most private and hidden soul of the protagonists. The resolute and proud personalities of the actresses overwhelmingly emerge in the bareness of the environment. One bed, five protagonists, and five stories appear in a calendar that challenges fads, breaks with convention, and delves into the psyches of the women. Intellectual, psychological, and artistic are the adjectives that best describe this edition.

"We are in a room with just a bed and sheet. We wanted to make it as personal and intimate as possible, as if we were shooting pictures with friends," said Inez. This completely new way of portraying the actresses sharply contrasts with the usual images of the five superstars appearing in the media - from the red carpet of film premieres to glossy glamour magazine photos and snapshots taken by the paparazzi.

The 2007 calendar is a powerful combination of simple, eclectic images that explore the female personality in depth. Inez, a great portraitist, immediately establishes a feeling with the stars and puts them at ease. From one woman to another, she tries to capture the hidden and most intense aspects of the protagonists. Thus, Penelope appears "sanguine and sensual", Hilary is "a pure, sporty, natural American beauty", Lou is "elegant and cool", Naomi is "sleek and sophisticated, representing British perfection", and Sophia Loren is "a superstar and legend".

Twenty-six incredibly powerful black and white photographs are the result. The light, composition, and atmosphere of the simple, candid shots have everything one would expect from two great international photographers such as Inez and Vinoodh.

THE PHOTOGRAPHERS

INEZ VAN LAMSWEERDE AND VINOODH MATADIN

The photography team composed of Inez van Lamsweerde and Vinoodh Matadin has an apparently infinite ability to explore new visual territories. In the early nineties they were among the first to demonstrate the potential of digital technology as an important creative medium. They developed their hallmark style - a combination of visual seduction and provocative stories -- that introduced new concepts to fashion photography.

Since the early nineties they have done revolutionary spreads for Vogue America , France and Italy ; V Magazine; Visionaire; The New York Times Magazine; and W Magazine. Their innovative approach can also be seen in advertising campaigns for Balenciaga, Calvin Klein, Louis Vuitton, Yohji Yamamoto, Chloe, Dior Homme, Miu Miu and Estee Lauder.

Besides their work in the fashion industry, van Lamsweerde and Matadin create photos that have been applauded in the world of contemporary art. They are represented by the Matthew Marks Gallery of New York where they showed The Now People Part Two Life on Earth (2005), The Now People Part One: Paradise (2003/4), ME (1999) and The Widow (1997). Their work has also appeared in international museums and art galleries, including the Stedelijk Museum in Amsterdam , the Hayward Gallery in London , and the Whitney Museum of Contemporary Art in New York .

SOPHIA LOREN

Oscar winner Sophia Loren is one of the most famous Italian actresses of all time. She was born and raised in the town of Pozzuoli , in the province of Naples , where she lived until the end of World War II.

At age 14 she took part in her first beauty contest in Naples , where she won one of the 12 titles. Shortly after, Sophia's mother enrolled her in acting school, and Sophia worked as an extra in Mervyn LeRoy's films Quo Vadis, Hearts at Sea, The Ballot, The Six Wives of Barbablu, and I Am the Captain.

One evening Sophia went with friends to a nightclub where the Miss Rome beauty contest was being held. She was noticed by one of the judges, the famous film producer Carlo Ponti, who encouraged her to participate. Sophia came in second but, even more importantly, she won a film test with Ponti, which did not result in a contract, however.

Sophia played a feature role in Africa under the Seas. The film was not instrumental to her career, but the turning point came with a film version of the opera Aida by Giuseppe Verdi. When the leading actress dropped out shortly after production began, Sophia stepped in and did a stunning job that earned her the applause of the critics and a one-year contract with Carlo Ponti.

Afterwards, the famous director/actor Vittorio de Sica asked Sophia to play the part of a Neapolitan pizza-maker in The Gold of Naples. De Sica recognized Sophia's love of acting, originality, and explosive passion and decided to help the young actress, which allowed her to cap the role of Nives Mongolini in The River Girl. She also starred in Too Bad She's Bad, The Miller's Beautiful Wife, Neapolitan Carousel, and Lucky to Be a Woman.

While filming Lucky to Be a Woman, Sophia started studying with linguist Sarah Spain to prepare herself for roles in English. She could not have chosen a better moment for lessons because American producer/director Stanley Kramer wanted Sophia for the leading role in the costume film The Pride and the Passion that also starred Cary Grant and Frank Sinatra.

Sophia accepted Kramer's offer of 200,000 dollars and filmed The Pride and the Passion with Sinatra and Grant, which opened the doors for other films in English such as Boy on a Dolphin with Alan Ladd.

In 1957 Sophia filmed Legend of the Lost with John Wayne. In the same year she signed a contract with Columbia for four more films, including Houseboat, once again with Cary Grant. After Houseboat, she starred in several successful films, including The Key with William Holden and Trevor Howard; It Started in Naples with Clark Gable and De Sica; The Millionairess with Peter Sellers; and Black Orchid and Heller in Pink Tights, both with Anthony Quinn as her leading man.

In 1960 Sophia participated in the Venice Film Festival, where she received the Volpi Cup as the Best Actress for Black Orchid. Her next film was Two Women, the story of a mother and daughter who survived World War II. During the filming, the actress relived memories of that war but now saw it through the eyes of the mother.

Sophia was thrilled when she learned she won the Oscar for Best Actress. She beat actresses of the caliber of Audrey Hepburn in Breakfast at Tiffany's, Piper Laurie in The Hustler, Geraldine Page in Summer and Smoke, and Natalie Wood in Splendor in the Grass. Sophia was the first actress ever to win the Best Actress award for a foreign film.

Sophia wrote several books, including Sophia: Living and Loving; Her Own Story; Women and Beauty; Eat with Me; and Ricordi e ricette.

The magical chemistry with De Sica and Mastroianni, her favorite film partner, continued to produce hits such as: Yesterday, Today and Tomorrow; Marriage - Italian Style; The Priest's Wife, Oopsie Poopsie; Friday or another day; and Prêt-à-porter. Some of Sophia's favorite co-stars were Anthony Perkins ( Desire Under the Elms ), Robert Wagner ( The Condemned of Altona ), Paul Newman and David Niven ( Lady L ), Gregory Peck ( Arabesque ), Marlon Brando ( A Countess from Hong Kong ), Peter O'Toole ( The Man of La Mancha ), Richard Burton ( The Voyage and Brief Encounter ), Burt Lancaster and Ava Gardner ( Cassandra Crossing ), and Jack Lemmon and Walter Matthau ( Grumpier Old Men ).

Today Sophia Loren is one of the most loved and phenomenal actresses of history. She has made over 100 films in her 50-year career. She received the Oscar for Lifetime Achievements and has been defined by People Magazine as "one of the world's most stunning and age resistant women". She was recently proclaimed "The world's most beautiful woman" by Time Magazine.

HILARY SWANK

Hilary Swank is the third-youngest woman to win the Oscar for Best Actress twice. Besides her Oscar for her portrayal of "Brandon Teena" in Boys Don't Cry, Hilary won the Golden Globe Award for "Best Actress in a Drama" and the Best Actress awards from the New York Film Critics, the Los Angeles Film Critics, the Chicago Film Critics, and the Broadcast Film Critics Association. She also won the "Breakthrough Performance" award of the National Board of Review.

Hilary subsequently appeared in supporting roles with Cate Blanchett and Keanu Reeves in The Gift directed by Sam Raimi and with Al Pacino and Robin Williams in Insomnia directed by Christopher Nolan. She capped the leading role of Alice Paul in Iron Jawed Angels for HBO, which tells the story of the suffragette movement: her performance in this film won her SAG and Golden Globe nominations.

Recently, Hilary starred with Clint Eastwood and Morgan Freeman in Million Dollar Baby, directed by Eastwood, the story of a girl who tries to make her dream of becoming a professional boxer come true. For this film she won her second Oscar as Best Actress and she also won other awards such as Best Actress from the National Society of Film Critics, the Screen Actors Guild, the Broadcast Film Critics, and a Golden Globe for the "Best Actress in a Drama".

Hillary played a supporting role in Black Dahlia directed by Brian De Palma, with Scarlett Johansson and Josh Hartnett, and will star in The Reaping for Warner Brothers. She recently made her debut as a producer with Freedom Writers, the true story of Long Beach teacher Erin Gruwell.

In fall, she will work again with Richard LaGravenese, the screenwriter/director of her Freedom Writers, to portray the protagonist in the film version of Cecelia Ahern's book P.S. I Love You.

PENELOPE CRUZ

Penelope Cruz Sanchez was born in Madrid in the mid-seventies. Dancing captured her imagination and dominated her life since she was a child, and she studied classical ballet at the National Spanish Conservatory for 9 years. After Penelope left high school at 15 years of age, she beat 300 competitors in an agency audition and started working part-time as a model. National fame arrived at 16 when she was chosen to present Spanish television programs.

Since the beginning of her career, Penelope has starred in many important films, but it was her role in the 2001 film with Nicolas Cage, Captain Corelli's Mandolin, that helped her become one of the world's most famous actresses. In the same year she co-starred with Tom Cruise in Vanilla Sky, the Hollywood remake of Abre Los Ojos, in which the actress interpreted the same character. Vanilla Sky would drastically change Penelope's life. The film made 100 million dollars at the box office, which launched her to stardom in Hollywood , and it also marked the start of her relationship with Tom Cruise.

In 2003 she played a mentally disturbed woman in Gothika, with Halle Berry , and in 2005 she co-starred with Charlize Theron and Matthew McConaughey in Sahara.

Penelope Cruz has always been actively involved in charity work. She once donated her entire earnings for a film to Mother Teresa's orphanage, and she also did volunteer work for two months in Uganda .

NAOMI WATTS

Born in England but raised in Australia , Naomi Watts has been in the movie business for 15 years. After moving to Hollywood , her big break arrived in 2001 when she got a part in David Lynch's Mulholland Drive. Her extraordinary performance was critically acclaimed and she received several awards that attracted the attention of major producers in Hollywood and abroad.

Naomi finally reached stardom in 2002 when she won the role of the investigative reporter in The Ring, which made 100 million dollars at the box office. She starred in the sequel, The Ring 2, and in 2005 she played Anne Darrow in one of the biggest remakes of our time, King Kong. The role immortalized by Faye Wray in the original film would turn out to be Watts ' most commercial part to date. Directed by Peter Jackson, the director of The Lord of the Rings, the film was critically acclaimed and made over 400 million dollars worldwide.

Naomi's beauty and sex appeal are irresistible. In 2002 People magazine included her in their "50 most beautiful women" list, and she was also voted one of the 15 sexiest actresses by the Australian Empire Magazine, on whose cover she appeared in March 2003.

LOU DOILLON

Lou Doillon was born in 1982 to a "show biz" family: her mother is actress and singer Jane Birkin. At a very early age, she realized that her family's profession was an inescapable destiny.

Doillon made her film debut at five as Jane Birkin's on-screen daughter in a romantic drama entitled Kung fu master, but her first starring role arrived in 1997 when she played the rebellious adolescent in the film Trop peu d'amour, directed by her father.

At 16, she began an unexpected career as a model for Eres, Missoni and Givenchy and for the "Eau Torride" perfume, and she appears in the current Miu Miu advertising campaign.

Lou has often played tempestuous, volcanic roles such as Blanche, a romantic and sexy costume film from 2002. She next appeared with Charlotte Rampling, who played her mother, in Summer Things. In 2003, she was Miss Pepys, co-starring with Steve Coogan for the BBC, and she appeared in Saint Ange, her first French-American horror flick, with Virginie Ledoyen.

In 2006 Lou just finished a film written and directed by Douglas Buck, co-starring Chloé Sévigny and Stephen Rea. "Sisters" is the remake of "The Two Sisters", directed by Brian de Palma in 1973. She will soon appear in Boxes, the story of a family, directed by her mother Jane Birkin and starring Geraldine Chaplin, John Hurt, and Natacha Régnier.

www.pirellical.com

THE GROUP ENDED THE FIRST NINE MONTHS OF THE YEAR WITH AN IMPROVEMENT IN RESULTS FROM OPERATIONS: REVENUES +9.1%, OPERATING INCOME +7.8%

THE CARRYING VALUE OF THE EQUITY INVESTMENT IN OLIMPIA ADJUSTED: THE "SEE-THROUGH" VALUE OF THE TELECOM ITALIA SHARES DOWN FROM APPROXIMATELY 4 TO 3 EUROS PER SHARE

THE CONSOLIDATED SHAREHOLDERS' EQUITY AMOUNTS TO 4,426.7 MILLION EUROS, COMPARED TO NET DEBT OF 1,430.8 MILLION EUROS

LUCIANO GOBBI APPOINTED AS CHIEF FINANCE AND STRATEGIC PLANNING OFFICER. CLAUDIO DE CONTO APPOINTED AS CHIEF OPERATING OFFICER

PIRELLI & C. SPA GROUP

• REVENUES: 3,623.1 MILLION EUROS, UP BY 9.1% COMPARED TO 3,322.3 MILLION AT 30 SEPTEMBER 2005 (+6.4% NET OF EXCHANGE RATES)
• OPERATING INCOME: 299.7 MILLION EUROS (+7.8%); ROS OF 8.3%
• NET DEBT: 1,430.8 MILLION EUROS FROM 1,574.9 MILLION AT 30 JUNE 2006
• NET RESULT: -1,410.5 MILLION EUROS, COMPARED TO 316.2 MILLION AT 30 SEPTEMBER 2005. THE RESULT IS AFFECTED BY THE VALUE ADJUSTMENT OF 2,110 MILLION EUROS OF THE EQUITY INVESTMENT IN OLIMPIA. NET OF THE EXTRAORDINARY ITEMS AND ON A LIKE-FOR-LIKE BASIS, THE NET RESULT IS A POSITIVE FIGURE OF 296.6 MILLION EUROS (266.4 MILLION AT 30 SEPTEMBER 2005) 
• 28,645 EMPLOYEES, UP FROM 26,827 AT THE END OF 2005 THANKS ABOVE ALL TO THE EXPANSION OF THE TYRE BUSINESS

PIRELLI TYRE

• REVENUES: 2,990.6 MILLION EUROS, AN IMPROVEMENT OF 10.5% FROM 2,706.9 MILLION IN THE SAME PERIOD OF 2005 (+7.3% NET OF EXCHANGE RATES)
• OPERATING INCOME FROM ORDINARY OPERATIONS: 278.8 MILLION  EUROS, +2.8% FROM 271.1 MILLION AT 30 SEPTEMBER 2005; ROS OF 9.3%. OPERATING INCOME AFTER THE COSTS OF THE IPO PROJECT: 271.4 MILLION EUROS; ROS OF 9.1%

PIRELLI RE

• OPERATING PROFIT INCLUDING INCOME FROM EQUITY PARTICIPATIONS: 115.6 MILLION EUROS (+11% COMPARED TO 30 SEPTEMBER 2005)
• NET PROFIT: 84 MILLION EUROS (+8% FROM 78 MILLION AT 30 SEPTEMBER 2005)
• ASSETS MANAGED AT MARKET VALUE (INCLUDING THE BINDING COMMITMENTS FOR ACQUISITIONS): APPROXIMATELY 15 BILLION EUROS, OF WHICH ABOUT 3.4 BILLION OWNED BY PIRELLI RE

PIRELLI BROADBAND SOLUTIONS

• REVENUES: 102.6 MILLION EUROS, UP BY 26% COMPARED TO 81.4 MILLION IN THE FIRST NINE MONTHS OF 2005
• OPERATING INCOME: -1 MILLION EUROS (-6 MILLION EUROS AT 30 SEPTEMBER 2005)

PIRELLI AMBIENTE

• REVENUES: 54.5 MILLION EUROS, AN IMPROVEMENT OF 35.9% COMPARED TO 40.1 MILLION AT 30 SEPTEMBER 2005
• OPERATING INCOME: 0.9 MILLION EUROS, COMPARED TO -2.4 MILLION EUROS AT 30 SEPTEMBER 2005

§

THE GROUP CONFIRMS ITS EXPECTATIONS OF AN IMPROVEMENT IN RESULTS FROM OPERATIONS FOR 2006

Milan, 7 November 2006 - The Board of Directors of Pirelli & C. SpA, which met today, has examined the results for the first nine months of 2006.

The results at 30 September 2006 show a growth in results from operations with respect to the same period of last year thanks to the positive performance of the Group's core businesses. At consolidated level, revenues increased by 9.1% and the operating income by 7.8%. In industrial activities, Pirelli Tyre ended the first nine months of the year with a double digit growth in revenues ( +10.5% ) with respect to the same period of 2005, with increases in both the Consumer and Industrial businesses. In real estate activities, Pirelli RE achieved an 11% increase in the operating profit including income from equity participations. As for the start-ups, Pirelli Broadband Solutions and Pirelli Ambiente registered significant revenues increases, respectively 26% and 35.9%, compared to last year.

New management structure

The Board of Directors has accepted the resignation of Mr. Carlo Buora from his appointment as CEO, expressing its sincere thanks for his fundamental contribution to the Group's growth and expansion during the course of over fifteen years work with the Company. The Board then appointed Mr. Luciano Gobbi as Chief Finance and Strategic Planning Officer and, to co-ordinate all the other functions directly reporting to the Chairman, it created the new position of Chief Operating Officer, which it entrusted to Mr. Claudio De Conto.

Value adjustment of the equity investment in Olimpia

Furthermore, the Board of Directors decided to make an adjustment to the carrying value of the equity investment that the Company holds in Olimpia SpA. At consolidated level this adjustment amounts to 2,110 million euros and corresponds to a see-through valuation of the Olimpia asset (or the Telecom Italia shares held by the latter) of 3 euros per share, with respect to the previous valuation of about 4 euros per share.

The deterioration in the recoverable value of the equity investment, which took place during 2006, is ascribable to the negative stock market performance of the Telecom Italia shares – inferior to both European sector indexes and the expectations of Pirelli management – and the analysts' reduction of the target price.

The Company has considered it appropriate, having recorded the effective existence of a loss for the reduction in value of the equity investment and in view of the significance of this investment and taking also into account the observations formulated by Consob, to make use of both the value configurations provided by international accounting standards for the purpose of determining the amount of the loss itself (fair value, deducting sale costs and value in use). This was also decided due to the current absence of a consolidated practice, as result of the recent introduction of the IFRS standards, and the variety of value configurations and criteria for recoverable value estimates utilised by European operators in the telecommunications sector, as well as the specific nature of the asset subject to test of impairment.

In the light of this transaction, the impact of Olimpia on the consolidated income statement of Pirelli & C. SpA at 30 September was a negative figure of 1,983 million euros. This result is due to the negative component of 2,110 million euros related to the value adjustment and positive result of 127 million euros achieved by Olimpia in the first nine months.

Pirelli & C.'s consolidated shareholders' equity at 30 September 2006, following the value adjustment of the equity investment in Olimpia, was 4,426.7 million euros, compared to the net debt that, at the same date, was 1,430.8 million euros. The shareholders' equity of the Parent Company Pirelli & C. SpA, following the value adjustment of the equity investment in Olimpia, is 2,936 million euros, of which the share capital is 2,790 million euros. The valuation adjustment of Olimpia, therefore, does not have repercussions on the equity and financial solidity of the Group.

Pirelli & C. SpA Group

At consolidated level, the Group's revenues at 30 September 2006 amounted to 3,623.1 million euros, an increase of 9.1% compared to 3,322.3 million euros for the same period of 2005. Net of exchange rates, revenues were up by 6.4%.

The consolidated gross operating margin (EBITDA) was 462 million euros (12.8% of sales), an increase of 6% compared to 435.9 million euros in the first nine months of 2005. Excluding the non-recurring costs incurred for the planned flotation of Pirelli Tyre SpA (about 13.5 million euros), the consolidated EBITDA amounted to 475.5 million euros (13.1% of sales), an increase of about 9.1% compared to the first nine months of 2005.

T he consolidated operating income (EBIT) was 299.7 million euros, an increase of 7.8% from 278 million at 30 September 2005 and growth in all the business sectors. T he consolidated profitability margin ( ROS – Return on Sales) was 8.3%. Excluding the non-recurring costs incurred for the planned flotation of Pirelli Tyre SpA (about 13.5 million euros), the consolidated operating income was 313.2 million euros ( +12.7% with respect to 2005) with a 8.6% ROS (8.4% at September 2005).

T he result from equity participations was a negative amount of 1,469.5 million euros, against a positive figure of 194.9 million in the first nine months of 2005 and above all includes the value adjustment of the equity investment in Olimpia (2,110 million euros) , against a capital gain realised in the third quarter following the private placement of 38.9% of Pirelli Tyre (416.4 million euros). The item also includes the result of the companies valued with the shareholders' equity method and the dividends of the other non-consolidated equity investments. In particular, Olimpia made a positive contribution of 127 million euros from 129.7 million at 30 September 2005. It is recalled that Olimpia's financial statements, adopted in the Group's consolidated financial statements, were drawn up in accordance with the IFRS standards and include the valuation using the shareholders' equity method of the Telecom Italia equity investment.

The item also includes the results of the real estate sector companies (Pirelli RE Group), which were a positive 63.3 million euros (62.6 million at 30 September 2005 ) and the dividends received of 51.4 million euros (20 million at 30 September 2005 ).

The item financial charges and income recorded a negative balance of 129.3 million euros (50.4 million euros of which is related to the valuation of the derivatives on ordinary Telecom Italia shares held by the Group), compared to 110 million (38.2 million euros of which was related to the valuation of the derivatives on ordinary Telecom Italia shares held by the Group) for the same period of 2005.

The consolidated net result at 30 September 2006 was a negative amount of 1,410.5 million euros, with respect to a positive figure of 316.2 million euros for the first nine months of 2005 (which included a contribution of 49.8 million euros for the cable activities sold). The figure was affected by the value adjustment of 2,110 million euros in the equity investment in Olimpia. Net of the extraordinary items (the value adjustment of Olimpia, capital gain from the sale of part of the Pirelli Tyre shares and the Tyre IPO project costs) with the same scope of consolidation (net of the contribution of the assets sold), the net consolidated result at 30 September was a positive 296.6 million euros, an increase compared to 266.4 million for the same period of 2005.

Net result attributable to Pirelli & C. SpA for the first nine months of the year was a negative 1,472.4 million euros, compared to 276 million euros in the first nine months of 2005 (which included a contribution of 49.8 million euros of the activities sold). The figure was affected by the value adjustment of 2,110 million euros in the equity investment in Olimpia. Net of the extraordinary items (the value adjustment of Olimpia, capital gain from the sale of part of the Pirelli Tyre shares and the Tyre IPO project costs) with the same scope of consolidation, net result attributable to Pirelli & C. SpA at 30 September was a positive 234.7 million euros, compared to 226.2 million for the same period of 2005.

The consolidated shareholders' equity at 30 September 2006 was 4,426.7 million euros, compared to 5,613.8 million at 31 December 2005. T he shareholders' equity attributable to Pirelli & C. SpA was 3,766.3 million euros compared to 5,204.9 million euros at the end of 2005. The change compared to the end of 2005 reflects the value adjustment of 2,110 million euros in the equity investment in Olimpia. The shareholders' equity of the Parent Company Pirelli & C. SpA, following the value adjustment of the equity investment in Olimpia, is 2,936 million euros, of which the share capital is 2,790 million euros.

The Group's net debt at 30 September 2006 amounted to 1,430.8 million euros, compared to 1,574.9 million euros at 30 June 2006. The change in the quarter is mainly due to the difference between the outlay for the acquisition of 12.8% of Olimpia from Hopa (approximately 498 million euros) and the receipts from the private placement of 38.9% of Pirelli Tyre (about 740 million euros). The net debt at 30 September 2005 was 1,235.8 million euros, while this was 1,177.4 million euros at 31 December 2005.

The Group's employees at 30 September 2006 totalled 28,645 against 26,827 at the end of 2005. The extra 1,818 persons relate above all to personnel with a term contract (798 persons) and are mainly linked to the expansion of the activities in the tyres sector.

Pirelli Tyre

Pirelli Tyre achieved a sales growth exceeding 10% in the first nine months of 2006 and increased results from operations compared to the previous year. This performance was obtained despite the significant rise in raw material costs, which penalised the entire sector.

Revenues were 2,990.6 million euros, up by 10.5% compared to 2,706.9 million in the same period of 2005 (+7.3% net of exchange rates).

The EBITDA was 418.1 million euros ( +1.4% compared to the first nine months of 2005 and 14% of sales), after non-recurring costs of about 7 million euros incurred for the planned flotation. The EBITDA from ordinary operations amounted to 425.5 million euros (14.2% of sales), an increase of 3.2% compared to 412.4 million euros in the first nine months of 2005.

The operating income amounted to 271.4 million euros ( ROS of 9.1% ), substantially in line with the figure at 30 September 2005 , including non-recurring costs of about 7 million euros incurred for the planned flotation. The operating income from ordinary operations was 278.8 million euros , up by 2.8% from 271.1 million euros at 30 September 2005, with a ROS of 9.3% (10% in the first nine months of 2005). The improved result is a function of the positive impacts related to the sales and efficiency increases, which have more than compensated for the increased costs of the production factors. The reduction of the profitability percentage is mainly attributable to the increased costs of raw materials.

The net income was 153.6 million euros (after financial charges of 42 million euros and tax charges of 75.8 million euros), compared to 165.1 million euros (after financial charges of 30.1 million euros and tax charges of 75.9 million euros) in the first nine months of 2005. This change resulted from the higher financial charges related to the corporate reorganisation and optimization of the financial structure of Pirelli Tyre that took place in the course of 2006.

N et debt was 783.3 million euros, compared to 739.6 million at 30 June 2006 .

At the end of September, the headcount stood at 25,396 employees (of which 3,730 were temporary), compared to 23,673 (of which 2,958 were temporary) at 31 December 2005 , thanks to the development of the activities.

In the Consumer business, the first nine months of 2006 showed growth both in terms of revenues (+9%) and operating income (+14%) with respect to the previous year. In detail, the revenues amounted to 2,072 million euros and the operating income from ordinary operations was 193.9 million euros. The third quarter revenues amounted to 669 million euros, up by 6% with respect to the same period of 2005, thanks to higher volumes and a significant improvement in the price/mix component. The operating income from ordinary operations of 53.2 million euros (8% of sales), also registered an increase with respect to the previous year (+5%), thanks to the positive contribution of the commercial variables and efficiencies, which more than compensated the higher raw materials cost.

The demand in the Car segment was positive in Europe, in particular in the segments in which Pirelli Tyre is traditionally the leader (High Performance and Ultra-High Performance), as well as Winter, where Pirelli continues to grow in the more sporting applications with the Sottozero, Snowsport, Snowcontrol and Scorpion ICE & Snow range thanks also to the successes in the Automobile Club test and those of the more prestigious German, Austrian and Swiss magazines. The demand in the South American market was stable overall. Pirelli Tyre's selective growth in North America continues, notwithstanding negative demand, supported by new products such as the SUV Scorpion ATR tyre. The improvement continues in the profitability of the Motorcycle segment, where the volume and mix more than compensated for the trend in raw material costs.

The Industrial business revenues at 30 September of 919 million euros, show a growth of 13% with respect to the previous year. Market demand was positive in Europe overall, while a reduction occurred in South America . Growth in steelcord volumes continued in the third quarter. The operating income, which was down, was 84.9 million euros. The third quarter ended with revenues of 303 million euros, up by 8% with respect to the same period of 2005. The operating income from ordinary operations was 24.5 million euros, down compared to the third quarter of 2005 due to the peak reached by natural rubber, the main cost item of the business' raw materials. The ROS was 8.1%.

Pirelli RE

Pirelli RE is a management company t hat manages funds and companies owning properties and non-performing loans, and in which it holds minority interests (the fund and asset management businesses). It also provides a full range of property services to the above companies and to other customers, either directly or via its franchise network. In analysing the following results it should be noted that the operating profit including income from equity participations is the most appropriate measure of the Group's operating performance.

The aggregate revenues pro-quota amount to 915.1 million euros , which are substantially in line with the 920.1 million euros of the previous year.

The operating profit including income from equity participations was 115.6 million euros , an increase of 11% compared to 104.5 million euros for the first nine months of 2005.

The company's attributable net profit was 84 million euros , up by 8% against 78 million euros in the same period of 2005.

At 30 September 2006 the operating profit including income from equity participations was up 11% with respect to 2005, notwithstanding a quarter affected by uncertainty regarding new tax legislation on the property front, which came into force at the beginning of October, with the latest change relating to the transfer tax on the property funds. The operating profit including income from equity participations registered strong growth above all in tertiary assets, up from 48.1 to 68.4 million euros, a growth of 42%, and in the more recent Asset Management NPL sector, rose from 4.7 to 7.9 million euros, a 68% improvement.

The assets under management at market value, including the binding commitments for acquisitions inclusive of the binding agreement for acquisition of the German DGAG, rose to over 15 billion euros, of which about 3.4 billion euros is owned by Pirelli RE.

The net financial position was a negative figure of 94.9 million euros , with respect to 82.3 million at 30 June 2006 (30.5 million at the end of 2005). Pirelli RE had 1,655 employees at 30 September 2006 (1,596 at the end of 2005).

For further information on the performance of the real estate activities you are referred to the press release issued by Pirelli & C. Real Estate on 6 November.

Pirelli Broadband Solutions

The revenues at 30 September 2006 rose to 102.6 million euros , a growth of 26% with respect to 81.4 million euros in the first nine months of 2005, which was also linked to the marketing of second generation photonic products (optical components and modules to improve the performance and flexibility of telecommunication networks) for 11.3 million euros.

The company's EBITDA reached break-even and improved compared to -5.6 million at 30 September 2005 .

The operating income, positive with regard to the access activities, nevertheless suffered from the start-up phase of the second generation photonic products and was - 1 million euros, an improvement compared to the -6 million of the same period of 2005.

The net income was a negative amount of 2.5 million euros, compared to -6.9 million at 30 September 2005 .

N et debt totalled 9 million euros.

There were 156 employees at the end of September, an increase of 34 with respect to 31 December 2005 .

The sales increase achieved by Pirelli Broadband Solutions in the first nine months of 2006 with respect to the same period of the previous year is the fruit of the growth seen in both the company's divisions (access and photonics). A significant increase in volumes was recorded in the broadband access business, partially cut back by a fall of the market prices for residential access gateways. Furthermore, the first contracts were signed for supply of the "dual-mode" phones for integration between fixed and mobile telephony services, which will produce the first turnover in the last quarter of 2006. Instead, in photonics the good market success of the City8 (CWDM) continues, while the pre-sale qualification phase was initiated with some principal customers of the DTL (Dynamically Tunable Laser), which should lead to the signing by the year-end of the first supply contracts for 2007.

Pirelli Ambiente

Pirelli Ambiente, the company incorporated to reinforce the Group's presence in the environment and sustainable development sector, registered revenues of 54.5 million euros at 30 September 2006 (+35.9% compared to 40.1 million euros in the same period of 2005), confirming the effectiveness of the technologies developed by the company. The growth attained in the first nine months is related to sales of fuel with a low environmental impact Gecam™ - Il Gasolio Bianco, in particular in the French market through the subsidiary Gecam France, development of the new business line of anti-particulate filters for reduction of the emissions of diesel vehicles and the agreement signed with the British company ReEnergy for the development and marketing of the fuel derived from waste by Pirelli (Cdr-P) in the United Kingdom.

The company's EBITDA was a positive 1.5 million euros with respect to a negative figure of 1.2 million euros at 30 September 2005 , thanks to an agreement signed with ReEnergy.

The operating income was a positive 0.9 million euros compared to -2.4 million for the same period of 2005.

The net result was a positive 0.5 million euros compared to -2.5 million for the same period of 2005.

The net financial position at 30 September was a positive figure of 0.3 million euros .

There were 49 employees at 30 September .

Outlook for full-year 2006

The results for the first nine months allow the confirmation for full-year 2006 of forecasts of an improvement in results from operations in all Group's businesses compared with 2005, barring external factors of an extraordinary nature which today cannot be foreseen, while the impact of the value adjustment of the equity investment in Olimpia will continue to affect the net result. Pirelli expects that the net debt will reach approximately 2 billion euros at the end of 2006, net of the temporary effect of the transaction finalised on 9 October by Pirelli RE in Germany , which will have an impact of about 80 million euros on the Group's consolidated net financial position when completed.

Relevant events after 30 September 2006

On 4 October 2006 , Pirelli & C. SpA finalized the acquisition of the stakes in Olimpia SpA held by Banca Intesa SpA (4.77%) and Unicredito Italiano SpA (4.77%) for a consideration of approximately 585 million euros for each bank.

On 9 October 2006, Pirelli RE signed a binding agreement to acquire approximately 97% of Deutsche Grundvermögen (DGAG), one of Germany's leading property companies, with offices in Hamburg and Kiel, based on a valuation of 100% of the company's equity of 440 million euros (at 31 December 2005).

On 18 October 2006 , Olimpia, Pirelli, Edizione Holding, Edizione Finance International, Mediobanca and Generali executed a shareholder's agreement by way of which Olimpia, Mediobanca and Generali have tied-up a total of 23.2% of Telecom Italia ordinary shares.

On 26 October 2006 , Pirelli Tyre officially started tyre manufacturing in Romania at its new facility in Slatina ( Olt Province ). The plant produces top-of-the-range tyres for cars and SUVs (Sport Utility Vehicles) and is located close to the steel-cord facility opened last year. The total investment is approximately 170 million euros.

On 26 October 2006 , Pirelli & C. SpA, following up on its communication of 28 September, concluded the sale of its 49,689,476 Capitalia shares (about 1.92% of the share capital) for a total amount of approximately 333 million euros.

Bonds maturing in the 18 months following 30 September 2006

On 4 April 2007 , the bond issued in 2002 at a fixed rate of 6.5% by Pirelli Finance Luxembourg SA, a subsidiary of Pirelli & C. SpA, of a value of 500 million euros, is due to mature.

Conference call

The results relative to the first nine months of 2006 will be illustrated at 4.30 p.m GMT in a conference call with the participation of the Chairman of Pirelli & C. SpA, Marco Tronchetti Provera.
Journalists will be able to follow the presentation, without the possibility of asking questions, by calling +39 06 33485042.
The presentation will also be available in audio streaming - in real time - at www.pirelli.com in the Investor Relations section, where it will also be possible to consult the slides.

***

Pirelli Press Office - Tel. +39 02 85354270 - pressoffice@pirelli.com
Pirelli Investor Relations  - Tel. +39 02 64422949 - ir@pirelli.com
www.pirelli.com

In order to present more complete information regarding the results at 30 September 2006, summaries of the consolidated financial statements included in the report approved by the Board of Directors are attached. Please note that they are not subject to being audited by the Auditing company. Pro-forma consolidated balance sheet and statement of income for Pirelli & C. SpA at 30 September 2006, assuming full consolidation of Olimpia SpA. and valuation of the investment in Telecom Italia SpA according to the equity method. Calendar of main corporate events for 2007 also attached.