Sustainability Channel

Meeting of the Board of Directors of Pirelli & C. Spa

Review of prelimiinary data for 9 months ended 30 September 2010

Strong growth in operating results, upward revision of 2010 Group and Pirelli Tyre targets

Pirelli Group: 2010 revenue target above 4.9 billion euros with an ebit margin over 7.5% (about 7% forecast in july) and ebit of approximately 380 million euros

Net financial debt target improved to below 700 million euros, compared with approximately 700 million euros forecast in July

Pirelli Tyre: 2010 revenue target above 4.7 billion euro with an ebit margin above 8.5% with ebit approximately 420 million euros (at least 360 million euros seen in july)

Vittorio Malacalza nominated vice president

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

Pirelli & C. Group

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

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

Preliminary data for the nine months ended 30 September 2010

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

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

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

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

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

Vittorio Malacalza nominated vice president

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

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

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Pirelli a sustainable excellence testimonial

Ten among the major cement manufacturers belonging to the World Business Council for Sustainable Development (WBCSD) – the World Council for Sustainable Development – met in Warsaw from 13-15 September to identify together positive actions to be taken to ensure a sustainable development in their sector of business. Among the objectives was to facilitate a meeting between cement producers in order that they may share ideas and practices and identify projects, in part due to the success of companies in other industrial sectors.

Pirelli was invited to attend theCement Sustainability Initiative as a company carrying out the best practices in the field. Can Alatas, Pirelli Turkey’s head of health, safety and the environment, first presented the Pirelli approach to sustainable management of the business and the recognition it had achieved, then he switched to the specific objective of his presentation: the practices adopted by Pirelli to constantly improve health and safety in the place of work. On the basis of research carried out by the Cement Sustainability Initiative, the Group’s practices were recognised as the best of those conducted by all companies in the Autoparts and Tyres sector.

At the end of the meeting, the cement producing companies approved a programme of objectives and actions that the sector intends to achieve over the next five years. They concern six areas: protection of the climate, fuel and raw materials, the health and safety of employees, emission reduction, local impact and internal business procedures.

The World Business Council for Sustainable Development is an association with its headquarters in Geneva to which about 200 international companies in more than 30 countries belong – Pirelli among them – that proposes voluntary commitment to unite economic growth with sustainable development. In particular, Pirelli Tyre is part of the Tyre Industry Project Group, which was launched in 2006 to identify, with a view to sustainable development, the potential impact on health and the environment of materials associated with the production and use of tyres.