Sustainability Channel

The Board of Directors approves results for the 6 months ended 30 June 2011

PIRELLI & C. SPA BOARD APPROVES RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2011:

• FIRST HALF OPERATIONAL RESULTS NOTABLY IMPROVED COMPARED WITH THE SAME PERIOD OF 2010: CONSOLIDATED NET PROFIT MORE THAN DOUBLED ON MATCHING PERIMETER, FURTHER PROFITABILITY GROWTH

• 2011 PROFITABILITY TARGETS RAISED

• 2012-2014 INDUSTRIAL PLAN PRESENTATION IN NOVEMBER

PIRELLI & C GROUP

• REVENUES: +17.7% TO 2,789.3 MILLION EUROS (2,369.0 MILLION EUROS ON 30 JUNE 2010)

• OPERATING RESULT: +51.2% TO 290.1 MILLION EUROS (191.9 MILLION EUROS ON 30 JUNE 2010), WITH PROFITIABILITY (EBIT/SALES) GROWING TO 10.4% FROM 8.1%

• CONSOLIDATED NET RESULT POSITIVE 158.8 MILLIONEUROS, MORE THAN DOUBLED FROM 77.0 MILLIONEUROS IN FIRST HALF 2010 (BEFORE DISCONTINUED OPERATIONS)

• INVESTMENT IN THE FIRST HALF GREW TO 234.1 MILLION EUROS (135.4 MILLION IN FIRST HALF 2010)

• NET FINANCIAL POSITION NEGATIVE 778.9 MILLIONEUROS (-712.8 MILLION ON 31 MARCH 2011) , AFTER DIVIDEND PAYMENT OF 82.8 MILLIONEUROS

PIRELLI TYRE

• REVENUES: +18.7% TO2,760.9 MILLION EUROS(2,325.3 MILLION IN FIRST HALF 2010); OPERATING RESULT: +43.8% TO 312.5 MILLIONEUROS(217.3 MILLION IN FIRST HALF 2010), WITH PROFITABILITY RISING TO 11.3% FROM 9.3%

• SECOND QUARTER REVENUES: +13.3% TO1,376.4 MILLION EUROS(1,215.3 MILLION IN SECOND QUARTER 2010); OPERATING RESULT: +31.4% TO160.1 MILLIONEUROS(121.8 MILLION IN SECOND QUARTER 2010), WITH PROFITABILITY RISING TO 11.6% FROM 10%

2011 TARGETS

PROFITABILITY TARGETS RAISED: GROUP EBIT MARGIN AFTER RESTRUCTURING COSTS BETWEEN 9.5% AND 10.0%, PIRELLI TYRE BETWEEN 10% AND 11%, TAKING INTO ACCOUNT THE POSITIVE EFFECTS OF THE FOCUS ON THE PREMIUM SEGMENT AND LOWER RAW MATERIAL COST INCREASES THAN ESTIMATED IN MAY

CONSOLIDATED REVENUE TARGET CONFIRMED AT “ABOVE 5.85 BILLION EUROS” AND PIRELLI TYRE AT “ABOVE 5.8 BILLION EUROS”

ESTIMATED NET FINANCIAL POSITION AROUND NEGATIVE 700 MILLION EUROS, EXCLUDING THE INVESTMENT IN RUSSIA

Milan, 27July 2011–A meeting of the Board of Directors of Pirelli & C. SpAtoday reviewed and approved financial results for the six months ended 30 June 2011.

In a market displaying a positive overall demand trend in the Tyre sector, which as indicated in the industrial plan accounts for 99%of group sales,the results of the first half demonstratecontinuous growth and improvement of all economic indicators.These results were obtained as a consequence of the positive effects of continuing efficiency actions and above all the effectiveness of price/mix actions with sales increasingly concentrated in the Premium segment and with the price component able to offset increases in raw material costs.

At the group level, the net result on 30 June 2010 was 158.8 millioneuros, more than doubled from the 77 million posted in first half 2010 applying a matching perimeter (before discontinued operations). In the second quarter, Pirelli Tyre, in particular, re-affirmed the positive performance already evident in the first quarter, both in terms of sales, which in the first half rose 18.7% to 2,760.9 millioneuros,and profitability, which improved by two percentage points, rising to 11.3% from 9.3% in first half 2010. In line with the development plan outlined in the industrial plan, the first half saw a decided increase in investments, increasing in total to 234.1 million euros from 135.4 millioneuros.The net financial position on 30 June was negative 778.9 millioneuros compared with negative 712.8 million euros at end March 2010.

Pirelli & C. SpA Group

The 2010 data have been reclassified to show the assets relating to Pirelli RE and Pirelli Broadband Solutionsamong the discontinued operations following their sale in 2010.

At the consolidated level, Pirelli closed the first halfwith revenues of 2,789.3 millioneuros, an increase of 17.7% from 2,369.0 million in the same period of 2010, and an operating result (Ebit)after restructuring costs of 290.1millioneuros, with an increase of over 50% (+51.2%) from 191.9 millioneuros in the same period of 2010.Profitability–expressed as the operating result over sales – reached 10.4%, with an improvement of over two percentage points from 8.1% in first half 2010.

The second quarter, in particular, saw revenues increase by 12.5% to 1,388.4 million euros and theoperating result (Ebit) improve by 40.7% to 146.8 millioneuros, with profitability of 10.6% (8.5% in the same period of 2010).

Consolidated net profit was158.8 million euros on 30 June 2011, more than doubled from the 77 million posted in the first half 2010 on a matching perimeter (before discontinued operations). In the first six months of last year, the net result was negative 175.6 millioneuros because of the 252.6 millioneuro impact of discontinued operations linked to the operation of assignment of Preliosshares (formerly Pirelli RE).The net result attributable to Pirelli & C. Spa on 30 June 2011 was positive 161.7 millioneuros compared with negative 165.5 million euros in first half 2010.

Consolidated net assetson 30 June 2011 stood at2,047.2 million euros compared with 2,028 millioneurosat the end of 2010. Consolidated net assets attributable to Pirelli & C. SpA amounted to 2,013.6 million euros (4.126 euros per share) compared with 1,990.8 million euros at end 2010 (4.080 euro per share) and 2,004.9 million euros at the end of first half2010.

The group net financial positionon 30 June 2011 was negative 778.9 millioneuros compared with negative 712.8 millioneuros on 31 March 2011 (-455.6 million at end December 2010). In the second quarter, dividends of 82.8 millioneuros were paid (of which 81.1 million euros by the parent company) and investments of 137.2 million were made (85.2 million in the same period of 2010).

Pirelli Tyre

Therevenues ofPirelli Tyreon 30 June 2011 amounted to 2,760.9 million euros, with an increase of 18.7% compared with 2,325.3 million euros of the same period in 2010. On a like-for-like basis, growth in the first half was 19.4%, with a positive contribution from the volume component (+3.5%), and the price/mix component (+15.9%)against the negative impact of 0.7% from the exchange rate component. Thegross operating margin (Ebitda)before restructuring chargeswas 427.9 million euros, an increase of 32.1% compared with 323.9 million euros in first half 2010, growing as a percentage of sales to 15.5% from13.9% on 30 June 2010.

The operating result after restructuring chargesamounts in the first half to 312.5 million euros (320.2 millioneuros before restructuring costs), an increase of 43.8% compared with 217.3 million euros on 30 June 2010, growing as a percentage of sales to 11.3% compared with 9.3% in first half 2010. The improved result was achieved thanks to the positive impact of the commercial variables, in particular the price/mix component, and the continual optimization of efficiency of the industrial activities, which saw, among other things, an increase in production capacity. These elements more than offset the negative impact of increased raw material costs, approximately 212 million euros, of which 130 million solely in the second quarter.

Net profiton 30 June 2011 totaled 162.8 millioneuros (after financial charges of 47.7 millioneurosand tax charges of 102.0 millioneuros), an increase of 47.5% compared with 110.4 million in first half 2010 (after financial charges of 38.3 million euros and tax charges of 68.6 million euros).

In the second quarter, in particular, sales totaled 1,376.4 millioneuros, with an increase of 13.3% compared with 1,215.3 million euros in the second quarter 2010. Over the period, the organic increase was 17.0%, with volumes increasing 1.2% and the price/mix component rose15.8%against a negative exchange rate effect of 3.7%.Ebitdabefore restructuring charges amount to 218.4 millioneuros, with a growth of 23.0% compared with 177.5 millioneuros in the second quarter 2010. The operating result after restructuring charges of 160.1 million euros (164.6 millioneuros before restructuring charges), with a growth of 31.4% compared with 121.8 millioneuros in the same period in 2010 and rising as a percentage of sales to 11.6% from 10% in the second quarter 2010.

In the Consumer (Car and Mototyres), revenuesin the first half were 1,942.2 millioneuros, an increase of 20.1%from 1,616.7 million euros in first half 2010, to which sales’ volume increases contributed 5.7% and the price/mix component 15.4% (-1.0% exchange rate effect). The operating result was 241.1 millioneuros, an increase of 63.7% from 147.3 million euros in first half 2010and equal to 12.4%of revenues (9.1%in the same 2010 period). In the second quarter, Consumer revenues amounted to 958.9 millioneuroswith an organic growth of 18.8% (14.7% net of exchange rate effects). The 16.2% increase in the price/mix component reflects in particular the determined focus on sales in the Premium segment (an increase of 30% in the quarter) and the effectiveness of price increases, while the dynamics of the volume component (+2.6%) was linked, among other things, to the dedication of some production to winter products in preparation for expected strong demand in the second half. These dynamics resulted in a marked improvement in profitability both with respect the same period a year earlier and the first quarter 2011: the operating result amounts to 124.3 millioneuros (80.3 millioneurosin the same 2010 periodand 116.8 million in first quarter 2011), equal to 13% of revenues (9.6% in second quarter 2010 and 11.9% in first quarter 2011).

In the Industrial (Industrial Vehicle tyres and Steelcord)i businesstotal revenues were818.7 millioneuros, an increase of 15.5% from 708.6 million eurosin the same 2010 period, while the operating result totaled 71.4 millioneuros (70 million in first half 2010), equal to 8.7% of sales (9.9% in first half 2010). In the second quarter, in particular, sales rose 10% to 417.5 million euros, with an operating result of 35.8 million euros (41.5 million in the same 2010 period)and equal to 8.6% of sales, down from 10.9% in the second quarter 2010.

The result was affected by a combination of lower sales volumes – linked to a slowdown of activity in Egypt and in the countries of North Africa as a consequence of the geopolitical crisis and a decrease in sales in the conventional segment in Mercosur – and the increasing cost of natural rubber, which has greater impact on this business and reaches the year’s cost peak during this quarter.

On June 30, the number of employees stood at 30,973 compared with 28,865 on December 31^st, 2010.

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Pirelli starts joint venture with Russian Technologies in Russia

PIRELLI-RUSSIAN TECHNOLOGIES JOINT VENTURE TO FOCUS ON WINTER TYRES, HALF CARRYING THE PIRELLI BRAND

2012-2014 investment 200 million euros
Expected 2014 sales over 500 million euros

The agreement signed today with Sibur Holding entails the transfer to the joint venture being formed by Pirelli and Russian Technologies, by November 2011, of the Kirov plant, which has a current production capacity of more than 7 million pieces in the Car and Light Truck sectors, as well as a commitment to transfer further assets that should bring the JV’s production to 11 million pieces by 2014. The transfer of all these assets will take place in exchange for a total consideration of 222 million euros, divided on a pro-quota basis between the partners, with a payment of 55 million euros in 2011 and 167 million euros in 2012.

Pirelli brand products can reach 50% of installed capacity (approximately 11 million pieces total) and the JV’s product of reference will be winter tyres for the replacement market, in particular the “studdable” line to meet the needs of the Russian and CIS markets. The JV’s market share will be approximately 20%.

The joint venture’s sales are expected to be around 300 million euros in 2012, growing to over 500 million euros in 2014. This will also be the result of investments of 200 million euros, over the 3-year period 2012-2014, in plant upgrade and to increase production capacity. Once the start-up phase is over, profitability is expected to be double-digit beginning from 2013. The joint venture will be consolidated by Pirelli at the moment of acquisition, also in light of the terms of the management agreement.

Within the context of the agreements relating to the joint venture being formed by Russian Technologies and Pirelli, the latter has the possibility of raising its stake in the joint venture from 50% to 75% through a 3-year put and call option mechanism.

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Pirelli Ambiente and Intesa Sanpaolo associates in renewable energy with entry in GWM RE II

The shareholder structure of GWM Renewable Energy II (Gwm Re II), the vehicle which controls the renewable energy activities of the GWM group, has been strengthened. Pirelli Ambiente, through its unit Solar Utility, has taken a 16.87% stake and Intesa Sanpaolo group has taken a 12.5% stake. GWM Renewable Energy will hold the remaining 70.63%.

Pirelli Ambiente and Intesa Sanpaolo will participate in a project of international scale in the renewable energy sector. GWM Re II aims to become a significant player in the European renewable energy field. The company’s portfolio already includes 42 Megawatts of photovoltaic capacity in Italy and in Spain, over 222 Megawatt of wind power operating in four countries, and 52 Megawatts under construction through the Danish company Greentech in which it holds a stake of around 20%.

Solar Utility’s entry will require a total investment of approximately 25 million euros, of which 10 million euro will be in cash and the remainder through the re-investment of the revenue deriving from the sale of its stake in GP Energia Spa, a joint venture constituted last year with GWM Renewable Energy into which Solar Utility conferred its photovoltaic activities. The agreement is part of Pirelli Ambiente’s drive to simplify its holdings and identify strategic partners to develop its activities and to enhance the value of its know-how through minority shareholdings.

Intesa Sanpaolo will enter the company with an investment of about 20 million euros, which demonstrates its great interest in the renewable energy sector and confirms its support for the country’s entrepreneurship.

“We are pleased with this Partnership, very much wanted by all, which brings together industrial and financial partners with the founding group which has an international mission thanks to the partners of Gruppo GWM and Gruppo Rottapharm-Madaus. With over 220MW in operation and 52MW under construction, including wind energy and photovoltaic, and active in 6 European countries, together with our affiliate Greentech, listed on Copenaghen’s Nasdaq, we aim to shortly be among the Top 10 producers of renewable energy in Europe with a development of over 900MW and a prospective in the environmental and water treatment sectors of the highest profile at the international level. Intesa Sanpaolo’s involvement will contribute to our development plan both in terms of ratings and coverage and financial support in the countries where the bank is present. The renewed commitment of the Pirelli group which is increasing its position in our Holding also adds to our potential both in terms of new technological solutions and its presence in emerging countries” said Mr.Eugenio de Blasio, chief executive of the GWM Renewable Energy group.

Pirelli Ambiente is the Pirelli group company specialized in technologies and solutions for sustainable development and activities in the renewable energy sector and the energy efficiency of buildings. Last year Solar Utility, the unit constituted in 2007 to invest in photovoltaic, formed an alliance with GWM Renewable Energy which led to the conferral of its activities into GP Energia, controlled by GWM Renewable Energ SpA, (“GWM RE”), a company which invests in renewable sources held by GWM Group,  an international financial group founded over 10 years ago by Sigieri Diaz della Vittoria Pallavicini.

Intesa Sanpaolo is among the top banking groups in the euro zone, with a market capitalisation of 29.8 billion euro (at 30 June 2011), and leader in Italy in all business areas (retail, corporate and wealth management). Thanks to a network of approximately 5,700 branches capillary and well distributed throughout the country, with market shares above 15% in most Italian regions, the Group offers its services to about 11 million customers. Intesa Sanpaolo has a selected presence in Central-Eastern Europe and Middle Eastern and North African countries with a network of more than 1,700 branches and 8.3 million customers of subsidiaries operating in retail and commercial banking in 13 countries. Moreover, the international network specialised in supporting corporate customers is present in 29 countries, in particular the Middle Eastern and North African area and those areas where Italian companies are most active, such as the United States, Russia, China and India.

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