BROADER VIEW, SELECTIVE CHOICES

Marco Tronchetti ProveraChairman and CEO

2

AGENDA

3

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

4

TRANSITION TO A PURE TYRE COMPANY ACCOMPLISHED

Tyres: ~98% of 2010 revenues

Separation from the Real Estate Business in October accomplished

Disposal of non core investments (Broadband Solutions, Telecom Italia, Alcatel Lucent Submarine, Oclaro)

Pirelli & C transition to a “pure tyre” company accomplished:

PZero Moda/Fashion, sustain premium strategy and the Pirelli powerbrand

Eco-Tech + Ambiente: strengthen Pirelli’s commitment to “Green”

Revenues 2010E

Non Tyre2%

Tyre 98%

2010: TARGETS OF OLD PLAN ACHIEVEDONE YEAR IN ADVANCE

*Before dividends

Plan

2009-11

Actual results

3.9

4.1

5.0-5.5%

7.4%

~0.7*

0.5 <0.7~4.8 >7.5% >0.6

2009 actual results, 2010 FY estimates and 2011 targets (old plan) have been adjusted excluding Pirelli Real Estate and Pirelli Broadband

(<0.6 before

divid.)

€/bln

Leveraging these results, Pirelli has developed the new 2011-2013 industrial plan and the “2015 vision” for the next wave of profitable growth

5

2009A 2010E 2011E (Old Plan)

Rev. Rev. Ebit %Cum

capex 09-10

Rev. Ebit % NFPEbit % NFP NFPCum

Capex 09-11

<0.6*4.4-4.5 <8.0% ~0.7

AGENDA

6

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

KEY INDUSTRY TRENDS

Tyre industry dynamics different from automotive1

Rising role of emerging markets in a context of progressive economic recovery2

Evolving consumption patterns in mature markets widen the “premium” market3

Worldwide premium car park growing(also in emerging markets)4

World economy increasingly divided into trading blocks: rising importance of local-for-local sourcing5

7

TYRE DEMAND LESS DEPENDENT FROM AUTOMOTIVE CYCLE

Car & LCVs

Trucks

Yearly Sales

Mln vehicles

8

844

915936 964

1.023 1.0893.1%

2.7%

5.6%

-1.0%

39

44

3,2 2,9

45 46 50 54

3,2 3,4 4,1 4,5

3.7%

4.0%

7.1%

-3.2%

2010 2011 2013 20152006 2009

Park

2010 2011 2013 20152006 2009

66 64 69 74 84 90

Replacement

OEM

Car & LCV Tyre Sales(Avg Yearly)

Replacement

OEM

Truck Tyre Sales(Avg Yearly)

>80%

<20%

>70%

<30%

1

Source: Global Insight, Eurostat, Anfac, Pirelli estimates

TYRE: RESILIENT PROFITABILITY VS COST FACTORS

9

Avg top Tyre Manufacturers

PBIT margins (1)

Natural rubber price

Synthetic rubber price

100 = Average 2002 prices

(1) Weighted average Top 10 Tyre Companies, Bloomberg

1

2002 2003 2004 2005 2006 2007 2008 2009 9M 2010

6,8% 6,8%

8,2%8,7%

7,1%

8,8%

5,3%

5,5%

7,3%

448

203

-6%

-12%

15%

volume growth (2)

(2) Weighted average Michelin, Goodyear, Continental, Pirelli. Source: Company figures

Source: Bloomberg

Ebit %

4.9%

6.4%

2.5%

5.7%

4.6%4.4% 4.3% 4.6%

3.9%

3.1%

1.6%

0.8%

4.3%

8.7%8.8%

5.5%

7.3%

6.6%

3.0%

6.1%6.3%6.2%6.0%6.1%

5.3%

4.0%

5.3%

7.1%

6.8%

8.2%

5.4%

6.9% 6.8%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E

TYRE: HIGHER PROFITABILITY AND FASTER REACTIVITY

More profitability and reactivity vs. Auto Manufacturers

Top 10 Tyre Manufacturers Top 10 Autopart Manufacturers Top 10 Auto Manufacturers

10

1

RDE DRIVE GDP RECOVERY

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Source: ONU, Global Insight

10.1 12.6

LATAM

3,000

4,000

2009 2015

5%

GDP (billion USD)

GDP/capita (‘000 US$ PPP)

33.0

EU

GDP/capita (‘000 US$ PPP)

GDP (billion USD)

18,400

2015

2%

16,400

2009

29.8

14,100

GDP (billion USD)

16,700

2009 2015

45.9 51.2

3%

USA

GDP/capita (‘000 US$ PPP)

10.8 13.8

Russia & CIS

GDP (billion USD)

1,600 2,100

2009 2015

4%

GDP/capita (‘000 US$ PPP)

9.3 11.2

MENA

2,200

2009 2015

3,000GDP (billion USD)

5%

GDP/capita (‘000 US$ PPP)

3.1 4.6

India

GDP (billion USD)

1,300 2,000

2009 2015

8%

GDP/capita (‘000 US$ PPP)

China

6.9 11.0

5,000

8,300

2009 2015

GDP (billion USD)

9%

GDP/capita (‘000 US$ PPP)

GDP real avg. rate of growth 2009-15

MATURE RDE

2

BROADEN THE “PREMIUM” MARKET

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PREMIUM & LUXURY

Green Safety

Status/Allure

Comfort

Cool & Trendy

3

Mln Passenger + Light Commercial Vehicles

PREMIUM GLOBAL CAR PARK CONTINUE TO EXPAND

Source: Global Insight, Pirelli analysis

13

Non Premium Vehicle fitting Premium

8%

11%

10%

2.6%2.6%

5.0%

2.8%

3.1%

5.2%

2.8%2.8%

709

936964

1,023

1,089

2000 2010 2011 2013 2015

10%

4

India

China + ASEAN

COMESA

Brazil

USA

TRADING BLOCKS AND LOCAL-FOR-LOCAL SOURCING

* 35% in 2010, 30% in 2011 and 25% in 2012

2010-12 tariffs** on car & truck tyres from China

Anti-dumping duties levied on imported Chinese car and radial truck tyres

In China, high non tariff barriers

Asean tariffs on Chinese imports likely to last until 2018

Anti-dumping duties on radial tyres imported from China and Thailand (Feb. 010)

Relevant non tariff barriers Low end tyre mix (car+truck)

Preferential trading area forging free trade agree -ments with other African countries & trade blocks

EU Low import tariffs for

tyres … but rising non tariff barriers to low quality imports

Mercosur associate members Asean special partners

14

Russia + CIS High import duties (20%)

5

AGENDA

15

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

Competitive industrial footprint

75% of production made in low cost/high growth countries

Macro-regional player, leader in the high-growth Latam market

“1st Top of Mind brand in Brazil across all industries”

People

Unique and multinational company culture that delivers fast and integrated answers

“People management” through strong commitment at all organizational levels

PIRELLI TODAY

Leading Premium Segment with consolidated relationship

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Exceptional brand value further enhanced by Formula 1

Wide range of high-end and Green Performance in products (Green 36% of revenues)

AGENDA

17

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

18

PIRELLI IN 2015

will further leverage and grow 3 “intangible assets”:

BRAND

PEOPLE

TECHNOLOGY

1

2

3

*Interbrand Brand Valuation Methodology: economic flows from brand discounted at a rate reflecting brand risk

TOP EXPLOITABLE POTENTIALS FOR OUR BUSINESS

Beyond the product, aspirational and cool

The most popular brand in Brazil for the second year in a row (Oct. 2010)

#1 by “the voice of the customer” JD POWER 2010

Estimate brand value (Oct. 2010): 1,8 bln euro*

PIRELLI IN 2015

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1

2

3

4

PIRELLI IN 2015

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“Breakthrough” materials (from renewables; from upstream alliances in rubber)

People

TechnologyIncreasingly flexible and fast processes (PTSM: leading edge stability and integration in compound mixing, next MIRS: from concept to product in < 18 months)

“Empowered” team: a new model of leadership development for the whole management built on 3 pillars:

Leading business

Leading people

Leading change

“Motivated” team (Long Term Incentive program based on cumulated PBIT and cash-flow, with annual MBO partially deferred…)

Young team (average age of 280 Managers < 46)

Multicultural team (15 different nationalities among Management)

People and Technology

2006-2010

1.5

90%

-13 mln low value tyres

PIRELLI IN 2015: LEVERAGING OUR TIMELY INVESTMENTS

€/Bln

21

Cumulated capex

Of which tyre

Rationalization, product mix improvement,

start ups

2011-2015

1.9

99%

+26 mln premium tyres

Premium growth

Year end Capacity (mln pcs)Consumer 55.0Industrial 5.4

2005

56.05.8

2010

70.07.0

2013

80.08.0

2015

+2%+7%

2010 /2005

+26%+21%

+44%+38%

2013 /2010 2015 /2010

- Product mix change

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PIRELLI IN 2015

About 60% of volumes from our new production facilities mix

Major accomplishments

Specialized “Premium” plants, with top production capacity, in low-cost/high-growth countries

Full premium product range ready for customization and in constant renewal

1

2

3

Rebalanced profitability between regions

* Latam, APAC, Russia, MEA

2010 2015Key indicators

% Revenues in Premium/Specialty segments

66% 73%

% Revenues in RDE* 52% 57%

% Revenues from new production facilities mix

>30% >60%

23

PIRELLI IN 2015

% Revenues from Replacement 75% 76%

a premium player

AGENDA

24

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

Total Revenues

EBITDA%after continuous restructuring

EBIT%after continuous restructuring

€/bln

Green performance on revenues

(2)

~ 4.8 >5.15 >6.05

>8%

36% 39% 47%

>12%

>7.5%

13% ÷ 14%

8.5% ÷ 9.5%

15% ÷ 16%

10.5% ÷ 11.5%

Holding Costs & LTI provisions

Minor Business & other non recurring items

>20 <20 <20

<-10 close to break-even <10

(€/mln) 2010 2011 2013(2)

(1) Excluding Pirelli Re and Broadband

PIRELLI TARGETS: P&L 2011-2013

2010E 2011 2013(1)

25

Cagr 10 - 13

2010E NFP

DIVIDENDS

<0.7

<1.0>0.7

FINANCIAL & FISCAL

CHARGES

OPERATING CASH FLOW

0.30.3

€/bln

Lower tax rate thanks to higher growth in emerging countries(-1pp/-2pp by 2011; -3pp by 2013, -5pp by 2015 vs. 2010FY)

Shareholder remuneration: ~40% distribution of cumulated 2011-2013 Consolidated Net Profit

Fiscal & Dividend policy 2011-2013

PIRELLI TARGET 2013NET FINANCIAL POSITION & 2015 LEVERAGE

Net Debt/Ebitda*

FINANCIAL & FISCAL

CHARGES

1.1X ~1X ~0.6X

OPERATING CASH FLOW

(1.3)

0.7(0.8) 0.8

(1.3)

2013E NFP

2015E NFP

DIVIDENDS

26*After continuous restructuring

DEBT PROFILE

27

already sound today (Sept. 30, 2010) further strengthened by 2015

Liquidity Position 389

Total CommittedLines Not Drawn

1,070

1,459Liquidity Margin

LIQUIDITY PROFILE

€/mln

Other Borrowings MLT Debt Committed Line Drawdown

DEBT MATURITY(1)

Better diversification/optimization of

Gross debt (Capital Market)

Ongoing Debt maturity extension

(e.g. new committed revolving credit facilities)

Gross debt profile (Currency & Interest

Rate) already targeted to reduce volatility

in net financial charges (~65% Fixed and

~35% Floating)€/mln

1,207

Gross Debt 30 Sept.’10

405

628

2010 ye

165

2011 2012 2013 2014 & beyond

126

135

405

146

551 90

266

174

(1) Net of Pirelli RE

Sept. 30, 2010 – Cost of debt ~ 4% p.a.

AGENDA

28

TARGETS 2011-2013

WHY A NEW PLAN?

PIRELLI TODAY

WHAT WE WILL NOT DO

SCENARIO FOR THE 2011-2015 PLAN

PIRELLI IN 2015

WHAT PIRELLI WILL NOT DO IN THE PLAN

OE Vehicles on low pull-through platforms

Capacity investments in the Indian market

Multi-brand portfolio strategy

Big M&A transactions

Capital increase

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DISCLAIMER

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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. 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.