Sustainability Channel

First half operating results

THE BOARD OF DIRECTORS OF PIRELLI & C. SPA APPROVES FINANCIAL STATEMENTS AS OF 30

JUNE 2010:

• FIRST HALF OPERATING RESULTS SIGNIFICANTLY IMPROVED OVER THE SAME PERIOD OF 2009

• IN THE SECOND QUARTER PIRELLI TYRE REPORTS RECORD QUARTERLY OPERATING PROFIT 

• 2010 TARGETS OF PIRELLI GROUP AND PIRELLI TYRE RAISED AGAIN:

PIRELLI GROUP: 2010 REVENUE TARGET IMPROVED (EXCLUDING PIRELLI RE) TO 4.8-4.9 BILLION EUROS, COMPARED WITH  4.6-4.7 BILLION EUROS ESTIMATED IN MAY, WITH EBIT OF ABOUT 7% (IN MAY TARGET WAS AT LEAST 6.5%); INVESTMENTS  RISING TO MORE THAN 350 MILLION EUROS FROM MORE THAN 300 MILLION EUROS, WITH CONFIRMATION OF THE TARGET FOR A NET FINANCIAL POSITION OF – 700 MILLION EUROS 

PIRELLI TYRE: 2010 REVENUE TARGET RAISED, REVENUES EXPECTED TO RISE ORGANICALLY UP TO 15%, COMPARED WITH A TARGET OF MORE THAN 10% ORGANIC GROWTH ESTIMATED IN MAY; EBIT IN ABSOLUTE VALUE EQUAL TO AT LEAST 360 MILLION EUROS COMPARED WITH 320- 330 MILLION EUROS ESTIMATED IN MAY

• BOND ISSUE APPROVED, TO TAKE PLACE WITHIN 12 MONTHS, POSSIBLY IN MORE THAN ONE INSTALLMENT, OF UP TO 800 MILLION EUROS TO OPTIMIZE THE DEBT STRUCTURE 

• CARLO PURI NEGRI RESIGNS. VITTORIO MALACALZA COOPTED TO THE BOARD OF DIRECTORS 

PIRELLI & C. GROUP

• REVENUES: +19.8% TO 2,426.5 MILLION EUROS (2,026.2 MILLION EUROS AS OF 30 JUNE 2009)

• EBIT: +62.8% TO 193.4 MILLION EUROS (118.8 MILLION EUROS AS OF 30 JUNE 2009)

• NET INCOME OF CONTINUING OPERATIONS 80.8 MILLION EUROS, MORE THAN DOUBLE COMPARED WITH 30.3 MILLION EUROS IN THE FIRST HALF OF 2009 

• TOTAL CONSOLIDATED NET RESULT NEGATIVE FOR 175.6 MILLION EUROS DUE TO ACCOUNTING EFFECT OF THE SEPARATION OF PIRELLI RE (NEGATIVE FOR 256.4 MILLION EUROS)

• OPERATING CASH FLOW POSITIVE FOR 55.6 MILLION EUROS (-18.5 MILLION EUROS IN THE FIRST HALF OF 2009); INVESTMENTS UP TO 135.5 MILLION EUROS (65.4 MILLION EUROS IN THE FIRST HALF OF 2009); NET FINANCIAL POSITION NEGATIVE FOR 696.9 MILLION EUROS (- 528.8 MILLION EUROS AS OF 31 DECEMBER 2009)

PIRELLI TYRE

• REVENUES: +21.4% TO 2,325.3 MILLION EUROS (1,915.9 MILLION EUROS IN THE FIRST HALF OF 2009); OPERATING INCOME: +59% TO 217.3 MILLION EUROS (136.8 MILLION EUROS IN THE FIRST HALF OF 2009), WITH EBIT MARGIN RISING TO 9.3% FROM 7.1%

• REVENUES IN THE SECOND QUARTER: +22.9% TO 1,215.3 MILLION EUROS (989.0 MILLION EUROS IN THE SECOND QUARTER OF 2009); OPERATING INCOME: +54% TO 121.8 MILLION EUROS (79.3 MILLION EUROS IN THE SECOND QUARTER OF 2009), WITH EBIT MARGIN RISING TO 10% FROM 8%

‘Millions of smiles’ from InterCampus Romania

With the ‘Millions of Smiles’ tournament, the second edition of the InterCampus Romania series came to an end at Slatina recently. The special project was launched in July 2008 in collaboration with F.C. Internazionale Milano, Pirelli and Comunità Nuova.

For three days, over 250 children played in football matches that took place on pitch two of the 1^st May Stadium, plus recreational activities organised in parallel with them. Fun was assured for the smallest children, who enjoyed karaoke competitions, a puppet theatre, cartoons, clowns and face paint.

‘Millions of Smiles’, made possible by the work of volunteers from various Italian associations, the trainers of F.C. Internazio nale Milano, representatives of Comunità Nuova of Milan, the William Tyrell Foundation of Slatina and employees of Pirelli Tyres Romania, is the event with which InterCampus Romania celebrated a year of sports-recreational activities organised for more than 80 children from various social environments. For more than two years, the children have learnt to work as a team and integrate themselves into an organisational system through football, as well as gaining experience in social values like collaboration, friendship, loyalty and other important qualities.

“The ‘Millions of Smiles’ tournament is the concluding event of the second season, during which over 80 children have been involved in football and relating to each other”, said Luca de Vecchi, a Comunità Nuova representative. “To see their high spirits, the will to play together, to get to know each other without prejudice, makes us believe that the substantial objective we set ourselves with Pirelli and InterCampus of integration through sport is also possible in Slatina”.

“The InterCampus staff has experienced these three days with great satisfaction, establishing that not only the children have made tremendous improvements on the pitch in this sports season, the greatest pleasure was to see how much they enjoyed themselves, thanks also to the activity of animation”, declared Annalisa Novembre for InterCampus. “We would like to thank Pirelli, which has supported this event, the NIP volunteers and Comunità Nuova, Bambini in Romania and the William Tyrell Foundation, who allowed the hundreds of children to enjoy a unique experience and give us thousands of smiles”.

A spokesperson for the volunteers of the Bambini in Romania association said, “For us, the importance of the event was the collaboration between the various Italian and Romanian associations more than anything else, having the mutual objective of creating a joint moment of festivity and integration in the Slatina area. We have seen great potential in the event, which we hope can be exploited and increased in the years to come”.

Fourteen teams from sports clubs in the Olt region and InterCampus competed in this year’s football championship in the various age categories for children born in 1997-1998; 1999; 2000-2001.

Pirelli exports to Australia its technology for reducing CO2 emissions

Milan, 22 June 2010 – Pirelli Ambiente, the company in the Pirelli Group operating in the field of renewable energy, signed a licensing agreement with Bosco International, which promotes systems and industrial processes for a sustainable environment, which will allow the Australian company to use the Pirelli patent for production of high quality solid recovered fuel (HQ-SRF) derived from municipal solid waste (MSW).

The Pirelli technology will initially be used in the Latrobe Valley in Victoria, Australia, as part of the program ‘Towards Zero Waste Policy’ introduced by the local government for containment of waste, with the aim of converting the 600,000 tons of MSW produced annually by the city of Melbourne into fuel. In particular, the exchange of technology will stimulate an investment by Bosco International to develop an HQ-SRF plant in Australia, once authorizations are obtained from local authorities.

The Pirelli HQ-SRF is obtained by adding other components with a high calorific power ( plastic from D.C. and rubber) to dry solid urban waste. It can be used to partially replace fossil fuels in already existing, non-dedicated, plants, such as cement works and thermal power plants and it yields significant environmental benefits for the population, both in terms of lower emissions in particular of CO2, NOX and SO2 from fossil fuels, and in economic terms (lower waste disposal costs).

The integrated system promoted by Pirelli Ambiente has been successfully used since late 2002 in the Cuneo Provincial Authority Area, with the Idea Granda project, a public-private partnership owned 49% by Pirelli, and 51% by local utility ACSR, with cement works Buzzi-Unicem of Robilante, which uses HQ-SRF in its main burner substituting more than 40% of coal-petkoke needed. From its beginning, this system has meant energy recovered from waste in the area rose more than 32%, a level greater than the Italian average (7%) and greater than the European average (27%). In addition, according to a study by the University of Milan in Bicocca using the Life Cycle Assessment Method, use of Pirelli HQ-SRF is, respectively, 90 and 72 times more advantageous for the environment than landfills and incinerators.

Pirelli Ambiente
Pirelli Ambiente is the Pirelli Group company focused on renewable energy. In the field of renewable energy sources and, in particular, of energy recovery from MSW (Municipal Solid Waste), Pirelli Ambiente has developed and patented a High-Quality Solid Recovered Fuel (HQ-SRF). In the photovoltaic energy sector, Pirelli Ambiente created Solar Utility SpA, which invests in roof based solar energy systems for production in Italy.

Bosco International
Bosco International Pty Ltd, established in 2006, facilitates services, systems and processes for industry sectors seeking to create a sustainable environment, including saving energy or protecting resources. Bosco works with Australian and international companies, to offer sustainable environmental solutions. It seeks to achieve approvals and introduce new processes and systems for positive environmental results in: Waste management, Recycling, Power Generation, Manufacturing, Soil Remediation, Water treatment, Agribusiness, Natural Resources, Infrastructure, and Mining.