MOVING TOWARDS “GREEN PERFORMANCE”

Marco Tronchetti ProveraChairman and CEO Pirelli Group

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Disclaimer This presentation contains statements that constitute forward-looking statements 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 in the forward looking statements as a result of various factors. 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, Claudio De Conto, 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.

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In the next three years we are going to use the

discontinuityof the external scenario to

transformPirelli Group

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Agenda

Global economic scenario

Pirelli Group transformation

Pirelli Group targets

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Not all fundamentals are negative

Less investmentsLess employment

Less consumption

Low inflationLow interest rates

Low cost of raw materials

WORLD GDP INTEREST RATESEurozone USA

INFLATION

Source: Global insight, Monthly Update, Jan. ‘09

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A global industrial company can better capture opportunities

BRASIL GDP

CHINA GDP

RUSSIA GDP

EUROZONE GDP

USA GDP

08 09 10 11

Source: Global insight, Monthly Forecast Update, Jan. ‘09

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Governmental institutions are massively financing publicly-funded recovery plans, towards a Green Economy

Consumer Subsidies

>700 USD/bn financial system bail-out to keep credit alive

17 USD/bn package to rescue Detroit – big 3

Strong claims by new US Administration:

1 million electric cars on the road by 2015goal to double production of clean energy to >10% by 2012

Government support to Car purchases in Italy (~2 €/bn)

~ 6 €/bn support of public loans to french carmakers

“20/20/20” Energy Plan

US EUROPE

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GREEN ECONOMYfinally taking off, thanks to concurring factors

pulling in the same direction

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Agenda

Global economic scenario

Pirelli Group transformation

Pirelli Group targets

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Pirelli strengths

Capacity of matching innovation, technology and industrial management

Quick success in green-field start-ups

Global brand

Rooted multinational player, also present in emerging markets

Financial strength

Sales in 160 countries, operations in 12

Examples

Among the best 10 Global Italian brands*Estimated brand value* 1.5€/bn (the highest in the industry)

1 €/bn NFP ‘08YE 0.8 €/bn committed credit lines,not drawn* “Best Global Brands 2008" by Interbrand ranking

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5 transformation levers

CompetitivenessBroad geographical coverageOpen collaborationLeadership team

Portfolio reshaping

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Adjust to global recession

Develop distinctive customer value propositions

Leaner business models

“Green Performance” Tyres at LOWER COST

Green auto-parts (emission reduction systems) at LOWER COST

All our companies are currently undergoing competitivenessprograms

>140 €/mln Group restructuring costs,

already generating benefits from 2009

Real Estate: -25% ’09 YoY fixed costsTyre Break Even Point: -200 €/mln vs.

’08YE*

* At sales level

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Broad Geographical Coverage

EUROPE

MIDDLE EAST

ASIA PACIFIC

NORTH AMERICA

LATIN AMERICA

Group RevenuesContribution

‘08

51%

10%

4%2%Of which China

6%

29%

CAGR ’09-‘11

stable

stable

+9.9%+22%

+6.3%

+2%

Revenues

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Creating scale in assets

Pirelli-Brembo-Magneti Marelli in Intelligent Tyre SystemsCo-development with STM, Comau, Sinteco, Evotek and many other industrial players

Joint Research programs with ENEA, all leading Italian, European, Russian, Chinese, US universities (e.g. Berkeley)

Key innovation areas: biomaterials, nanocomposites, new fibers, FEA

JV Ambiente / Cleantech fund

Open collaboration

Examples

Integrated customer solutions

Accelerated innovation

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Leadership team

43Dynamic leadership (avg. age of manager)

Our managers international exposure(with significant experience abroad)

Young talent pool(high-potential under 30)

International career pathof management/staff (in Pirelli)

Leading edge technical capability (R&D people)

GROUP TYRE 09-11 KEY PROJECTS

50%

>250; 3% of total

3% p.y.

>1,100

>140 managers

>200 managers

>20%

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50%

>220; 4% of total

4% p.y.

>1,000

√

√

√

√

√

√

√

√

New reward scheme for 3YP

Leadership team(managers involved to beat crisis)

Equal opportunities(% women managers)

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’09-’11 Transformation Path

100 Pirelli Tyre51 Pirelli Eco technology

100 Pirelli Labs51 Pirelli Ambiente

56 Pirelli Real Estate100 Pirelli Broadband Solutions

1.3 Telecom Italia34.5 CY Optics

5 Alcatel Submarine

~2 CAI32.7 Eurostazioni

1.8 Mediobanca5.3 RCS

Portfolio reshapingIN

DU

STR

IAL

FIN

AN

CIA

L

% Company

- Photovoltaic Energy

- CDR (Waste-to-Energy)

Core Business

Start-up engines

Towards consolidation play

Cash

Hold Shares

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a success story…

Superior technology, universally acknowledged

Fast, Focused, Flexible business model (1,500 headcounts reduction in West Europe already identified in 2H 08)

Dynamic and skilled Management Team

219

276

329 342 358

250 (*)

* before restructuring costs

Tyre strategic guidelines

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Tyre strategic guidelines

a strong rebound story, breaking new frontiers in “Green

products”

a success story, keeping best value

in high-growth markets

Preferred partner of premium and prestige OE brands

Redesign of the industrial footprint to increase competitiveness

Establishing itself into the Green Performance segment

CONSUMERINDUSTRIAL

Exploiting a unique cost-competitiveplatform

Leveraging a favorable balance in markets/mix in emerging countries

Leader in market share & performance (mileage, retreading, weight) in our core markets

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Eco technology strategic guidelines

What:

Why:

Where to:

Ready-to-use retrofit technology for Particulate Matter reduction with large IP (Industrial Property) portfolio

Pirelli “common vision” on Green Transportation (beyond Tyres)High intrinsic profitability (CM>30%) in a new fast-growing marketStrong synergies:

worldwide sales and customer support network of Pirelli tyrebrand identity

In 3-5yrs, a leader in emission control technology in Europe / low emission zones, also for major Vehicles-OEMs

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Labs & Ambiente strategic guidelines

Continuous search for distinctive innovation technologies

First-step incubator for all Group businesses

Strong research capabilities make Pirelli a leader in innovative product & process patents

3.000 patents (~60 family patents in 2008)Patents plan 2009-2011 is 2x the average of the last 10 years

Portfolio reshaping:Opportunity on PV* Energy (technology-driven business)Site Remediation: tactical upsideCDR (Waste-to-Energy): STOP LOSS

PV* business with very good perspectives:

Solid partnership / lower riskSubsidies ensure long-term profitabilityStrong pipeline / generation contracts (~50 MW)

LABS AMBIENTE

Photovoltaic

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Solid Proprietary Technology in a growing market (Broadband Communication / Access / Networking)

High loyalty of existing customers,track record in acquiring new customers

Profitable operations, start-up phase concluded

Open to aggregations / partnerships to address diversification into new applications & industry domains

CURRENT POSITION THE WAY FORWARD

Broadband Solutions strategic guidelines

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Real Estate repositioning

A TOUGH SCENARIO PIRELLI RE’S REPOSITIONING

FROM… … TOOngoing impact of the “credit crunch” and capital market liquidity crisis

A difficult deal-makingenvironment:

Decline in RE investments and transactionsHigher average times for disposals

Investors interests back to resilient markets and only on reliable players

Extensive use of

structured financeDeleverage through

asset disposal and

portfolio optimization

Portfolios oriented towards

trading strategiesComplex business model

Portfolios progressively

oriented to mid-long termRightsizing

Organization by product

with Pan-Europeanapproach

Country-based organization with presence in areas less exposed to real estate volatility (Italy and Germany)

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Real Estate roadmap towards an optimized portfolio and structure

PERSONNEL EVOLUTION (FTE)

Ongoing portfolio rationalizationSelective growthFocus on core products / markets:Italy, Germany/Poland

**

**

** Excluding Non Performing loans

11.3

14.4

2007A 2008A 2009E 2010E

~ stable

2011E

AUM EVOLUTION (€/bn)***

Extensive cost-cutting

Focus on key services and activities

Productivity and result traceability

NPL

Disposals

RE

2,956

1,168

248

1,540

1,473237

1,236800*

800

2007 2008A 2009E

***Book value* Including 230 of outsourcing

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A sounder equity structure

400 €/mln capital increase

Rationale

P&C does believe in Pirelli RE asset quality

P&C provides a solid basis to allow Pirelli RE to change its model from trade to hold

Conditions

Issue price with reference to theoretical ex-rights price (“TERP”) of Pirelli RE ordinary shares with a discount in line with international best practices for similar transactions

P&C underwrites its pro-quota and will underwrite any shares which, at the end of the offer procedure, are not underwritten.

P&C converts part of its financial credit into Pirelli RE equity. The transaction may be completed within 1H09

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Real Estate strategic guidelines

BACK TO BRICKS

Reshaping the business model:Core Italian and GermanReal Estate assetsLean organizational structureSound financial structure

Generating value leveraging on the good quality of the real estate assets& on the company know how

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Agenda

Global economic scenario

Pirelli Group transformation

Pirelli Group targets

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Group targets

€/bln

2008yeunaudited figures

4.6

19%

2009 2011

Group Revenues

Of Which “Green Performance”

4.7–4.8

40%

~4.3

25%

EBIT %

After continuous restructuring 1%* ~ 8%4.5-5.0%

CAPEX 0.3 ~0.7 in 3y plan

NFP 1.0 1.0 <0.8 before

dividends* 4,1% before restructuring costs (144 € /mln)

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