Sustainability Channel

Pirelli and PT Astra Otoparts Tbk establish a joint venture (60% Pirelli, 40% PT Astra Otoparts) to build new moto tyre factory in Indonesia

JV’S ESTIMATED 2012-2014 TOTAL INVESTMENT 120 MILLION DOLLARS

EXPECTED 2014 CONVENTIONAL MOTO TYRE PRODUCTION 2 MILLION PIECES, GROWING TO 7 MILLION IN 2016

AT FULL OPERATION THE FACTORY WILL ACCOUNT FOR AROUND 25% OF PIRELLI’S TOTAL WORLDWIDE MOTO PRODUCTION

Pirelli has signed an agreement with Astra Otoparts, the  leading Indonesian automotive components maker, for the construction of a new factory in Indonesia, Pirelli’s first in the country, for the production of conventional motorcycle tyres.

The agreement was signed – on the occasion of a mission to Asia by the Italian Foreign Affairs Minister Giulio Terzi di Sant’Agata – by the Senior Vice President of Pirelli’s Moto Business Unit Uberto Thun and the CEO of Astra Otoparts, Siswanto Prawiroatmodjo. The signing was presided over by Terzi di Sant’Agata, the Indonesian Industry Minister M. S. Hidayat, the Minister for Trade and Investment Gita Wirjawan and the Italian ambassador in Jakarta Federico Failla.

The accord entails the creation of a joint venture in which Pirelli will hold the majority position with 60% of the capital and Astra will hold the remaining 40%. The joint venture will invest a total of 120 million dollars between 2012 and 2014 for the construction of a new factory.

Construction of the new factory, located a short distance from Jakarta, is expected to begin in the fourth quarter of 2012. The site will cover 25 hectares and when fully operated, in 2016, will employ 750 people.

The new factory is expected to become operational from the second half of 2013, with an estimated production of around 2 million conventional moto tyres in 2014 which when fully operational, in 2016, could reach 7 million pieces total. Of these, 3 million will be sold as Astra brands, while the remaining 4 million – equal to about 25% of all Pirelli’s moto production in the world – will carry Pirelli brands (Pirelli or Metzeler). In the context of the group’s ‘local for local’ strategy, 20-25% of the Pirelli brand production made in the Indonesian plant will serve the original equipment and replacement markets of the Asia Pacific area, where the moto market is forecast to grow at an average annual rate of 3.5% from 2011 to 2014. The remaining output will serve all the markets in which Pirelli operates with the exception of South America.

The new facility will allow Pirelli to not only strengthen its moto production capacity – which according to the forecasts of the industrial plan will grow to 16 million pieces in 2015 from 13 million pieces in 2011 – but also to have a direct presence in the Asean area’s biggest economy, which with a circulating pool of 250 million motorcycles is the biggest motorcycle market in the world.  Of this total, 68 million are in Indonesia whose moto market is growing by more than 10% a year. The in-country production capacity will also be free of export duties to Asean markets and reduce the cost of raw material supply thanks to the strong local presence of natural rubber producers.

Pirelli

Founded in 1872, Pirelli is the fifth tyre maker in the world by sales. Present in over 160 countries, at the end of 2011 it counted 21 production facilities on four continents and employed around 34,000 people. Pirelli is a leading producer in the high and ultra-high segments, thanks to its commitment to research and development, an area in which it invests about 3% of total revenues (5.6 billion euro in 2011) or 7% of Premium segment revenues, one of the highest levels in the tyre segment, with the goal of a constant improvement of products in terms of performance, safety and containment of environmental impact. Active in automotive sports since 1907, Pirelli is the exclusive supplier of the Superbike world championship and prestigious mono-brand championships, but above all it is the sole supplier for the Formula 1 championship for the 3-year period 2011-2013.

PT Astra Otoparts Tbk

PT Astra Otoparts Tbk (Astra Otoparts) is Indonesia’s foremost automotive component Company producing components both for Original Equipment (OEM) and Replacement Market (REM). The company counts most major car and motorcycle makers of the world among its clients and has become synonymous with high-quality automotive spare parts. These both satisfy growing local demand and are exported to 49 countries in the Middle East, Asia Oceania, Africa, Europe, and the Americas. The company has established three representative offices in Singapore, Dubai, and Australia. It employs circa 33,000 people and has been listed on the Indonesia Stock Exchange since 1998. Its consolidated revenues in 2011 were 7.36 trillion rupiah (626 million euro).

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ON THE WHEELS OF SUSTAINABILITY: HENKEL AND PIRELLI TOGETHER FOR ROAD SAFETY IN THE COMPANY

Pirelli pit-stop Pirelli at Henkel’s offices; for the first time tyre maintenance and control directly at the place of work

Henkel continues is path towards sustainable mobility and announces a new project in collaboration with Pirelli, a high profile sustainable partner committed to the dissemination of the cultre of road safety. Henkel employees, on the occasion of its first ‘Sustainability Day’ at its Milan headquarters, installed a tyre pumping station available to all employees. The Pirelli station represents a new piece of a wider sustainability strategy which Henkel has been pursuing successfully for many years, also directly involving employees in sensitizing initiatives. Even an apparently simply gesture like checking one’s tyre pressure can contribute to ensuring  vehicle and passenger safety on the one hand and increasing motor efficiency, therefore reducing consumption and emissions, on the other.

During the inauguration of the station, Henkel employees also had the possibility of speaking with Pirelli technicians to learn things about correct tyre maintenance like tread depth, damage that can compromise safety, the difference between winter and summer tyres, pressure and methods of inflation.

The initiative was part of Henkel’s first Sustainability Day, conceived to motivate employee engagement with themes of importance to the company such as the consumption of resources, waste management, safety, social progress and the growth in value of company activities.

“We recently announced a new sustainability strategy which will see us committed from now until 2030 to increasing our efficiency by 30%, with short terms targets set for 2015. To achieve these results it is indispensable that everyone be involved, along the entire value chain and in all areas of activity, with a continual monitoring of the milestones reached. With regard to safety, we are implementing a strict policy of eliminating all types of workplace accidents, through continuous training in responsible behaviour. The theme of safe driving is dear to our hearts; our goal is to shine a light on such arguments also as a way of caring for the health of our employees,” said Giacomo Archi, Chairman and CEO of Henkel Italia.

“In Pirelli we live sustainability as a natural way of managing our business and of creating value for all stakeholders”, said Filippo Bettini, the Pirelli Group’s Director for Sustainability and Risk Governance.  “For this reason we developed a plan that fully fits into the business’s growth strategy and which will lead us to become ever more committed to process innovation, with more challenging targets, such as a 70% reduction in the drawing of water by 2015 or the 15% reduction in specific CO2 emissions and energy consumption in the same time frame. And, obviously, a commitment to continuous product innovation, developing tyres that deliver safety, performance and driving comfort in all atmospheric conditions, as well as environmental efficiency. At the heart of Pirelli plan, underlined Bettini, “is the quality of the workplace environment and the quality of the work of our employees, as well as a commitment to transforming the education of road safety in a true culture of safety. Occasions like today constitute a further cultural enrichment and a stimulus for future commitments”.

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PIRELLI ACQUIRES 60% OF THE BRAZILIAN DISTRIBUTION NETWORK “CAMPNEUS” TO STRENGTHEN ITS MARKET LEADERSHIP

Pirelli announces that it has signed an agreement with the Faria da Silva family to acquire 60% of the company equity of Campneus, one of Brazil’s major tyre distribution networks, for a value of approximately 54 million reais, equal to 22.5 million euro, and subject to adjustment on the basis of the asset situation on the closing date.

In line with the 2012-2014 industrial plan presented in London last November, with this operation Pirelli intends to strengthen its leadership in the Brazilian market both in retail and wholesale distribution, focusing on the higher growth Premium segment and increasing the number of Pirelli owned (Pirelli Pneuac) points of sale from the present 48 to 102.

The 54 Campneus points of sale included in the agreement are already part of Pirelli’s distribution network in Brazil, which counts over 600 points of sale in total. The Campneus stores, which will continue under the same brand even after the closing of the operation, are located in the states of São Paulo, Minas Gerais, Paraná, Mato Grosso do Sul, Santa Catarina and Rio Grande do Sul. They sell the complete range of Pirelli tyres for cars, light-trucks, trucks, buses and agricultural machinery, as well as for earth moving and off road equipment.

The agreement is subject to approval by CADE, the Conselho Administrativo de Defesa Econômica brasiliano, and finalization is expected at the end of the first half of 2012.

CAMPNEUS

The first Campneus point of sale was opened in the Brazilian city of Campinas on September 19th, 1975 and the following year extended to three resellers in the sates of São Paulo and Minas Gerais. At present, the company employs around 600 people in seven Brazilian states.

PIRELLI IN BRAZIL

With over 80 years’ commercial presence in Brazil, Pirelli has five tyre production factories in the country: in Gravataí (RS), Campinas (SP), Santo André (SP), Sumaré (SP) and Feira de Santana (BA). The company employs around 9,000 people in its Brazilian plants and has its own testing grounds in Sumaré city for its R & D activities. As well as official Pirelli resellers, the commercial structure in Brazil includes the Pirelli owned Pneuac chain with 48 points of sale in 14 states.

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