PEERS & MARKETS

Key european stock market indices were mixed in the week from the 23rd to the 27th of January, 2012 (Milan +2%, London +0.1%, Frankfurt +1.7%, Paris -0.1%). According to the IMF, world GDP growth in 2012 will be slower than anticipated (+3.3% vs 4% previously), and Eurozone GDP will contract by 0.5%. The US Federal Reserve stated the intention to keep benchmark interest rates at the current low levels until 2014, and added that other stimulus measures are still on the table. In the bond market, the spread between Italian BTPs and German Bunds narrowed by approx. 100bps, after the successful outcome of Italian sovereign debt auctions (3y Ctz yield down to 3.76% from 4.85%).

Within the Auto & Parts sector (European index up 1.1% vs Stoxx 600 -0.2%), Auto OEMs and Parts producers outperformed, thanks to positive US durable goods data. Tyre stocks were weak, including Pirelli which ended the week down 1.9% at €7.08, in line with peers. According to brokers Exane, Equita and Intermonte, Pirelli will hit 2011 profitability targets notwithstanding the softness in Q4 volumes; attention now turns, according to Intermonte, to H1 2012 sales which should be sustained by the low level of summer tyre stock held by dealers.

PEERS & MARKETS

European stock markets advanced in the week from the 16th to the 20th of January 2012 (Milan +4.1%, London +1.6%, Frankfurt +4.3%, Paris +3.9%). Investors reacted positively to the newsflow around the Euro sovereign debt crisis, such as the strenghtening of the EFSF (worth $500 bln), the possible conclusion of the negotiations between Greece and private sector creditors and the increase in Euro-area bond purchases by the ECB in the secondary market (€3.7 bln). Over the week, the spread between Italian BTPs and German Bunds narrowed significantly.

Auto & Parts stocks were up strongly: sector index Stoxx posted a +8.9% increase over the week, as broker Goldman Sachs affirmed the attractiveness of the sector while upgrading Pirelli to Buy rating and increasing its Price Objective to €14.3 (from €9.4), making it the highest in the coverage universe. Pirelli closed the week up +9.6% at €7.22

Pirelli Investor Relations

PEERS & MARKETS

European stock markets were mixed in the first week of the year, from the 2nd to the 6th of January 2012 (-2.9% Milan, London +1.5%, +2.7% Frankfurt, Paris -0.7%). Despite positive macroeconomic data from Germany and the US (manufacturing and unemployment rates), concerns about the financial crisis in the euro area prevailed.

The banking sector (Stoxx banks -2.7%), recorded the worst weekly performance discounting the possibility of the need for new resources to address the crisis in the eurozone.

Good performance for Auto&Parts (+6.4% the Stoxx index) thanks to the December car registrations data, particularly in Germany and Brazil.

Pirelli closed the week at € 6.7 with an increase of 3.2%. Cheuvreux included Pirelli stock among the 7 Italian Top Picks in 2012 while Merrill Lynch has confirmed the view on the stock and upgraded the TP to € 6.5 from € 5.8.