GLOBAL PREMIUM LEADER

MARCO TRONCHETTI PROVERA

AGENDA

1

2012-2015 SCENARIO

PIRELLI 2011

WHY AN UPDATE?

PIRELLI IN 2015

2012 - 2014 TARGETS

RECOVERY PLAN

WHY AN UPDATE?

2

From Regional Premium player to Global Premium Leader

We pressed fast-forward to accelerate our 2011-2013 strategic path

New programs to further increase profitability

For the second consecutive year,we hit the profitability target one year in advance

New developments in RDEs: Russia, Argentina, Indonesia

Plan2009-2011

Plan2011-2013

2010A 2011E2011E 2012E

€/bln

Revenues

Ebit%

4.9

8.4%

4.4 – 4.5

<8%

<5.8

~10%

6.3

<10%

Higher cash flow production

2011 MAJOR ACCOMPLISHMENTS

3

Accelerating the value strategy 9M11 YoY

Well on track

in rebalancing profitability

among Regions

40%

<20%

>40%

>40%

>20%

<40%

RDE

SOUTHAMERICA

MATURE

9M11 Old plan2013E

Strong increase in profitability (Ebit%)

Premium volumes

Premium revenues

Premium market share in Europe

Premium offering

Push on Winter tyres in Europe

New UHP products: Cinturato P7, Phantom, Winter Ice,Scorpion Verde, P7 Silver, etc.

F1 success (advertising & media value equivalent)

Price/mix

+21.5%

+30%

14% +1pp

~ +80%

~300€/Mln*

+17%

+2.1pp10.6%

22% of Car revenues

>50%

<20%

<30%

2010A

*Full year projection

Trends already identified in 2011-2013 Plan

1

2

3

4

5

Wider gap between Auto and Tyre

Growth increasingly driven by RDEs

Premium becoming prevalent in consumer patterns

Premium growth confirmed by Premium car park trend

Trading blocks are back,strengthening ‘local-for-local’ strategies

DESPITE THE CURRENT SLOWDOWN, PIRELLI CONFIRMSTHE KEY INDUSTRY TRENDS IDENTIFIED ONE YEAR AGO

4

* November 2010 Industrial Plan **Excluding Mexico

MATURE RDEs

Source: Global Insight, 14 Oct 2011

GDP(trillion USD)

15.1

USA

Old*

15.1

16.8

2011 2015

1.7% 2.7%

15.3

2012

15.5 17.0 3.1%2.2%

yoyCAGR11-15

GDP(trillion USD)

17.9

Europe

Old*

17.5

18.7

2011 2015

1.7% 1.7%

17.6

2012

18.3 19.5 2.1%1.5%

yoyCAGR11-15

GDP(trillion USD)

3.0

MENA***

Old*

3.0

3.7

2011 2015

2.8% 4.9%

3.2

2012

3.2 3.7 4.7%5.3%

yoyCAGR11-15

GDP(trillion USD)

2.4

Russia & CIS

Old*

2.4

2.8

2011 2015

4.4% 4.1%

2.5

2012

2.5 2.8 4.0%4.6%

yoyCAGR11-15

GDP(trillion USD)

4.3

South America**

Old*

4.3

5.1

2011 2015

4.4% 4.6%

4.4

2012

4.5 5.2 4.7%4.7%

yoyCAGR11-15

GDP(trillion USD)

7.2

China

Old*

7.2

10.0

2011 2015

9.3% 8.4%

7.8

2012

7.8 9.9 8.5%8.6%

yoyCAGR11-15yoy yoy yoy

yoyyoyyoy

4.9%

1.8% 5.1% 4.2%

3.1% 8.1%

8.1%3.9%

1.4%

0.6%

4.9% 4.1%

Between 2012 and 2015, ~ 70% of global GPD growth will be drivenby RDEs (65% in November 2010)

*** Middle East North Africa

A SLOWDOWN SCENARIO IN 2012

5

Source: Pirelli on Bloomberg consensus and company data

2005 2006 2007 2008 2009 2010 2011E

Ebit %

2005 2006 2007 2008 2009 2010 2011E

Ebit %

TYRE VS AUTO & PARTS

6

2012E 2012E

Tyre players are more profitable andless cyclical than Auto manufacturers

The profitability gap gets wider forPremium Tyre manufacturers

Tyre players are more profitable andless cyclical than Auto manufacturers

Top 10 Tyre Manufacturers

Top 10 Auto Manufacturers

The profitability gap gets wider forPremium Tyre manufacturers

Premium Tyre players(Pirelli Consumer Ebit margin , SR1 for Michelin, PLV forContinental, Nokian)

Premium Auto Manufacturers(BMW, Audi, Mercedes)

3.9% 3.1%

5.3%

1.6% 0.8%

5.3%6.4%

8.7%7.1%

8.8%

5.3% 5.5%

8.4%9.0%

3.8%

6.1%

8.2%

4.8%

1.6%

8.9%

10.8%

12.2% 12.3%13.9%

11.1%10.1%

14.6%15.8%

6.0%

9.3%

9.5%

14.9%

PREMIUM:A GROWING SEGMENT IN THE REPLACEMENTCHANNEL EVEN DURING MARKET DOWNTURN

Source: Europool, RMA, Anip, CRIA, Pirelli analysis

Global Market trend - Passenger Car Tyre Business

YoY trend

7

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

+2.4% +3.3% -0.8% -2.1% +9.7% +4.7% +3.3% +3.7% +4.2% +4.3%

+11.1% +9.2% +2.9% +6.8% +16.8% +15.8% +9.6% +9.5% +9.1% +8.7%

+1.7% +2.7% -1.2% -3.0% +8.9% +3.3% +2.4% +2.8% +3.4% +3.6%

Total

Premium

Standard

100 102

106 105 103113

118 122126 132

137

111121 125

133

156

180

198

216

236

256

102104 103 100

109113

115 119122 127

Total

Premium

Standard

8

Mln Passenger + Light Commercial Vehicles

Source: Global Insight, Oct. 2011, Pirelli analysis

Non Premium Premium

PREMIUM KEEPS GROWING ABOVE STANDARD

9.6% 4.7%

3.6%

1,0081,086

1,127

2012 2014 2015

9.2%9.4%

CAGR‘11 – ‘15

CAGR*Affected by Governments’ scrapage schemes

14.7% 9.6%

3.7%

1,4021,533

1,602

2012 2014 2015

12.7%14.2%

CAGR‘11 – ‘15

CAR PARK TYRE MARKET

Mln Tyre

3.7% 4.5%

India

China + ASEAN

COMESA

Brazil

USA

Sept. ’11: WTO upholdsimport tariffs on (imposed2009) tyres from China

Oct. ’11: The Senateapproves anti-dumping billlinked to USD/RMB exchangerate (“Yuan Bill”)

Anti-dumping duties on car andradial truck tyres imports fromChina

Sept. ’11: 30% increase of IPItax on imported cars

Asia Pacific: exportduties on Chinese goodsuntil 2018

Sept. ’11 local industrylobbying to reconfirm anti-dumping rules on radial tyreimports from China andThailand

Preferential trading areaforging free tradeagreements with otherAfrican countries & tradeblocks

EU

Lower tyre import dutiesand introduction of quality-based barriers due tolabelling policies in 2012

Russia + CIS Custom duties on tyres:

20%

“…trade protectionism is gaining ground in some parts of the world as a political reaction to current economicdifficulties” (WTO Report on G-20 Trade Measures, October 2011)

230 protectionist measures filed with the WTO during last 12 months (~200 previous 12 months)

Argentina

Jul. ’11

1:1 policy introduction:import and export valuesexpressed in $ must beequal

SHARPER SEPARATION INTO TRADING BLOCKSDURING CURRENT ECONOMIC SLOWDOWN

9

PIRELLI BY 2015

10

Global Premium: WYZ, RF, Motosport, SUV & Winter ≥ H in Europe, Russia, MEA, APAC, NAFTA, South America

2011 2015Key indicators

Global premium leader

Global Premium* weight on Car business

% Revenues from Replacement 74% 79%

% Revenues from new productionfacilities mix

>43% >60%

% Premium Revenues from RDEs** 19% 34%

% Revenues 50% 60%% Ebit 84% 81%

% Local-for-Local (weighted average by Region) 71% 82%

**LatAm, MEA, APAC, Russia

ACTION PLAN BREAKDOWN

11

CONSUMERS Pirelli ranks first in Premium consumer purchases in all Regions.

PRODUCT

Leading in the Premium segments with the complete range: UHP, Winter, Summer, SUV,Run Flat ... to meet all possible requirements ranging from “sporty” to “green” performance(safety, mileage, low consumption and noise)

TECHNOLOGIES

Product excellence is built on technology-driven solutions and an open innovationdevelopment concept including raw material manufacturers, replacement materials, recycling,new mixing processes and simulation models. All this at the speed experienced in F1.

DISTRIBUTIONStronger control of the Premium market (Sell-out Mix / stock and prices) through a straightand integrated “Route to Market” (Pirelli stores, Driver) and digital marketing.

GEOGRAPHICPRESENCE

Strenghten / consolidate our presence and cost competitiveness in RDEs versus the previousPlan: Russia, Indonesia (Moto), Argentina (Truck, capacity for the local market)

PRODUCTIONOUTLINE

Accelerate Premium capacity growth

“Local for local” evolution: new low cost / high mix plants to:

Meet volatility and variety of demand with flexibility (less stock and lost sales)

Reproduce the mix of the Region (lower logistics costs and less stock in transit)

Part of the Plant mission focuses on competitiveness to develop inter-Regional flow of Premium products

Accelerate innovation: rapid deployment of best practices to the new plants.

Industrial efficiency plan and higher flexibility of labour costs already in 2012.

A

B

C

D

E

F

12

A NEW FAST-FORWARD ORGANIZATIONGLOBAL PREMIUM LEADER

* General Counsel & Institutional Affairs, IR, Com&Media, Culture

** BPI = Business Process Innovation

Opportunities

Fast Plan implementation

Better cohesion,effectiveness & focus

Cross processes along thePremium supply chain (fromproducts to end-users)

Rationale

Elimination of "Corporate and Tyre"

Leaner Management

Clear-cut role definition

Maximization ofmanagement effectiveness

EUROPE RUSSIA MEA NAFTA LATAM APAC

StakeholdersFunctions*

IMAGE&

BRAND EQUITYR&D PROCUREMENT OPERATIONS QUALITY OTHERS

CROSSFUNCTIONS

EXECUTIVE OFFICE

CHAIRMAN&

CEO

BUSINESSUNITS

MOTO

CAR

AGRO

TRUCK

REGIONS

CO

NS

UM

ER

IND

US

TR

IAL

COO

Total Revenues

PIRELLI TARGETS: 2011-2014 P&L€/bln

<5.8

2011E

~6.7

2012E

~7.7

2014E

13

Growth rate

5%

CAGR 11-14

10%

o/w Russia JV

o/w volumes

o/w price/mix

YoY

2%

3%

6%

2%

16%

8%

EBIT*%

EBITDA*%

~ 10%

~14%

11% ÷ 12%

15% ÷ 16%

~ 15% ÷ ~ 16%

19% ÷ 20%

o/w Russia 14% ÷ 15%mid single digit

Holding Costs & LTI provisions

Minor Business & othernon-recurring items

(€/mln)

<20

~ -35

2011

< -20

2012

< -10

2014

Including Tyre following the new organization

*After continuous restructuring

o/w Premium 17%20%23%

~ +3%

~+18%

ONE VALUE TARGET

2010 2011 2012 2015

11.5%

17%

20%

29%Pirelli ROI trend

2014

26%

Premium strategy

Efficient cash flow management

Selective approach on investments

12 pp of value increase in the next 4 years

Main drivers:

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Capacity

Mix (mature plants)

Quality (mature plants)

Others**

2011E

Cumulated Capex (w/o Russia)

Premium Capacity Growth (Mln pcs)

Investments by destination (w/o Russia)

Russia

Russia

UPDATED CAPEX PLAN

Old Plan 2011-2015 New Plan 2011-2015

(***) In Consumer Capacity is included Motoradial only

€/Bln

15

New Plan

(*) In Old Plan Russia is assumed to have a JV partnership (in 2013 financial investments only) with 2015 purchase (all data consolidated)

Consumer*** w/o Russia

Russia

Industrial

56

-

5.8

Year End Capacity2010A 2011E 2014 2014/2011 2015 2015/2011(mln/pcs)

60

-

6

71

10

6.4

+18%

+7%

74

10

6.8

+23%

13%

56%

12%

7%

25%

> 0.5

>1.9

+22,5

(*)

+3,5

+26

53%

16%

10%

21%

< 0.6

<2.2

+24

~0,2

+8

+32Total Premium Capacity Growth (Mln pcs)

(**) Logistics, IT, Maintenance, Heath Safety Environment, others

Shareholder remuneration: ~40% distribution of cumulative 2012-2014 Consolidated Net Profit

Dividend policy

PIRELLI 2014 TARGETNET FINANCIAL POSITION & 2015 LEVERAGE

NetDebt/

Ebitda0.9X 0.7X 0.4X

€/mln

16

2011ENFP

~0.75

FINANCIAL& FISCALCHARGES

<0.6

OPERATINGCASH FLOW

(1.3)

OPERATINGCASH FLOW

(1.85)

FINANCIAL& FISCALCHARGES

1.3

2014 ENFP

~10.3

Δ PERIMETERRUSSIA

0.3

DIVIDENDS

0.5

DIVIDENDS

<0.6

2015ENFP

2011E NFPBEFORERUSSIA

~0.70

RUSSIA

~ 0.05

Liquidity Position 526

Total CommittedLines Not Drawn

830

1,356Liquidity Margin

LIQUIDITY PROFILE

€/mln

BondCommitted line drawdown Other borrowings

DEBT MATURITY

€/mln

Gross Debt30 Sept.’11

370

500

888.1

1,758.1

486.7

159

500

187.9

207.689

127.9

370

116.7

2011 2012 2013 20142016 &

beyond2015

Additional diversification of counterparties and currencies

Further extension of debt maturities: the sound InvestimentGrade credit of Pirelli will give us the option to further taplonger than 5 years maturities

Cost of debt: ~6.50% p.a. over the plan horizon, due togeneralised spread increases and debt denominated incurrencies with higher interest rates than Euro

65% of the debt maturity beyond 2014

Sept. 30, 2011:

Cost of debt ~ 5,50% p.a.

Gross debt profile ~70% Fixed and ~30% Floating

Main achievements

DEBT AND LIQUIDITY PROFILE

17

Situation as of today (Sept. 30, 2011)

Key Messages over the Plan horizon

Strong risk control on liquidity position:

No net credit exposure towards European banks

No exposure to European Government bonds

11.8% 5.1%10.7% 37.4%7.3% 27.7%% of

Gross Debt

A CONTINGENCY PLAN ALWAYS READY TO KICK IN

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Circumstances triggering the plan

Strong car OE order slowdown (-10%) Significant contraction of the truckbusiness (-20% YoY volume)

Sell out drop over 10%

Cash flow will remain under control.Profitability (EBIT margin) will be on the low end of the range.

LABOUR FURTHER ACTIONS TO RECOVERVOLUMES REDUCTION

CAPEX

2012 Priorities

Premium mixworldwide growth

Special projects inRomania and China

Route to Premium inRussia

No major inefficiencies within15-20% volumes reductions

Benefit from lower pressureon raw material costs

Closer co-operation with Suppliers

Reduction of program costs for thegrowth and other discretionary costs

Better product availability to servenew and unexplored channels

11%Temps & agency

5%Overtime

(€/mln)

1

2

3Total 2012

CAPEX

560

Capacity, mix,quality

MaintenainceIT, etc.

Russia 110

70

380

Flexibility: 20% of total capex+

Tight working capital management(below 5% of net sales)

Enforcement of social benefits

This presentation contains statements that constitute forward-looking statements based on Pirelli & C SpA’s current

expectations and projections about future events and does not constitute an offer or solicitation for the sale, purchase or

acquisition of securities of any of the companies mentioned and is directed to professionals of the financial community.

These statements appear in a number of places in this presentation and include statements regarding the intent, belief or

current expectations of the customer base, estimates regarding future growth in the different business lines and the global

business, market share, financial results and other aspects of the activities and situation relating to the Company.\

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual

results may differ materially from those expressed in or implied by these forward looking statements as a result of various

factors, many of which are beyond the ability of Pirelli & C SpA to control or estimate precisely. Consequently it is

recommended that they be viewed as indicative only.

Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of

this presentation.

Pirelli & C. SpA undertakes no obligation to release publicly the results of any revisions to these forward looking statements

which may be made to reflect events and circumstances after the date of this presentation, including, without limitation,

changes in Pirelli & C. SpA business or acquisition strategy or to reflect the occurrence of unanticipated events.

Statement

The Manager mandated to draft corporate accounting documents of Pirelli & C. SpA. Francesco Tanzi, attests – as per

art.154-bis. comma 2 of the Testo Unico della Finanza (D.Lgs. 58/1998) – that all the accounting information contained in

this presentation correspond to the documented results, books and accounting of the Company.

DISCLAIMER

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