In particular, we will commit ourselves to supporting 25 deserving and less well-off students in order to help them complete their studies with the sum of RMB 100,000

And that’s not all. With a second project, Pirelli will help the university to keep its China Confucius web site active and support the Confucius Culture Month as a result of a donation of RMB 60,000.

Our Pirelli China colleagues invited the president of the academy, Ren Tingqi, to our production site in China, together with other important members of the university: the delegation visited our PCR factory as it did the steel cord plant and its members were really enthusiastic about the working environment, comprising high level employees and many sophisticated machines.

The meeting was an excellent opportunity during which to explain who we are and to present ourselves as one of the major tyre manufacturers, active throughout the world; a company that has in its DNA sustainability as much as it pays care and attention to its social responsibilities.

We expect to return to Qufu University as early as January: who knows, perhaps it will be there that we shall be able to find our talented new young people.

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THE PROJECT FOR THE NEW FACTORY WILL DELIVER PRODUCTION CAPACITY OF 700,000 RADIAL TRUCK TYRES TO SATISFY GROWING INTERNAL DEMAND AND FOR EXPORT TO MERCOSUR MARKETS

REVENUES IN ARGENTINA SEEN AT 500 MILLION DOLLARS IN 2011 (+40% COMPARED WITH 2010)

Pirelli is ready to strengthen its position in Argentina with a project to build a new radial truck tyre factory which aims to rebalance the company’s position in South America. The project, which will take the macro-economic context and demand dynamics into account, calls for investment from 2012 of approximately 300 million dollars for the first phase of development which ends in 2014. This investment is part of the total foreseen for the industrial segment as announced to the market last year with the presentation of the industrial plan. A second phase would require additional investment of about 200 million dollars. The Argentinian government, accompanying Pirelli’s commitment, will facilitate the project by funding part of the investment at a facilitated interest rate and by guaranteeing the delivery of services (gas, energy, electricity, etc.)

The first investment phase aims to deliver an annual production capacity of 700,000 pieces and employ about 700 people. The second phase would enable the plant to reach a potential production capacity of 1.4 million pieces, at full operation, and employ about 1,200 people. When the project is completed, it would bring Pirelli’s total number of employees in Argentina to approximately 2,300 people, including the 1,100 already employed at the Merlo plant.

Pirelli’s growth plan under consideration was presented today at a meeting in Buenos Aires, at the Residencia Presidencial de Olivos. The participants were the President of Argentina, Cristina Fernández de Kirchner, the Minister for Industry, Débora Giorgi, the chairman of Pirelli, Marco Tronchetti Provera, and the chairman of Pirelli Neumáticos Argentina, Franco Livini.

The project, which aims to further strengthen Pirelli’s leadership in South America, is part of the company’s international expansion strategy which, in recent years, has seen an increasing direct industrial presence in countries like Argentina which have fast rates of growth and competitive industrial costs, in the context of a region-based logic which permits, among other things, the containment of effects connected with exchange rate fluctuations. The new plant, in particular, would satisfy increased demand for radial tyres in a country whose economic growth is attracting new investment from the automotive industry. The dynamism of the auto market in South America is also linked to the launch of new industrial projects by some of the major car makers, including Fiat, Ford, Renault, Volkswagen, Toyota, Peugeot, Mercedes, Mitsubishi, General Motors, Hyundai and Honda, whose recent total investment plans for the area amounted to over 20 billion dollars. The Truck Business Unit in South America counts among its clients such major truck makers as Ford, Scania, Volvo, Man, IVECO, Mercedes and Agrale. Today, Pirelli satisfies the demand in Argentina with imports from other production sites.

According to data released by the National Association of Automobile Manufactures (Adefa), production in Argentina in the first nine months of 2011 grew by over 23%, compared with the same period in 2010, and the full year is expected to see record production of more 800,000 vehicles. According to data from the Association of Dealerships in Argentina (Acara), sales of new vehicles in August 2011 were 32% higher in total than a year earlier, with auto sales 31.5% higher and heavy vehicles 33% higher, which demonstrates the favourable demand trend in the truck segment and which, in the coming years, will result in a larger replacement market.

The planned strengthening of Pirelli’s position in the country could bring Argentina to represent 13% of the Pirelli group’s total truck tyre production. The investment will not only allow us to satisfy growing internal market demand, which will absorb 50% of production, but also that of the important export markets like other markets of the Mercosur area.

In 2011, Pirelli estimates that its revenues in Argentina will reach 500 million dollars, an increase of 40% from 2010.

The project for the new factory, the construction of which is expected to start at the beginning in 2012, foresees the production of technologically innovative tyres, which offer efficient solutions in terms of performance, safety, eco-sustainability and economy of usage. The product lines foreseen will use SATT technology of the latest generation, which lengthens product life, optimizes wear and improves driving precision. Compounds and tread patterns are planned and optimized as a function of the performances required in their different uses.

Output from the new site, would be in addition to the 5 million pieces already produced annually for the entire car, Suv and light truck range at the Merlo factory, in the province of Buenos Aires, where Pirelli has operated since 1951 and where production capacity is already being increased. Last year, Pirelli announced a 100 million dollar investment to increase capacity in the SUV and Light Truck segments in Merlo. Merlo’s output today represents, as said earlier, 10% of total production in South America and 20% of car tyre production in the area.

Pirelli’s Truck Business Unit

Pirelli’s Truck Business Unit has six plants, located in Turkey, Italy, Egypt, China and Brazil, where there are two. All the division’s factories utilize the group’s most modern production technology and draw on Research and Development carried out in Izmit, Santo Andrè (Brazil), Yanzhou (China) and Milan, which ensure that the tyre design is in line with the specific needs of different markets.

The global growth strategy adopted in recent years has allowed Pirelli’s Truck Business Unit to confirm its weight in traditional markets and to expand into rapidly growing economies. In particular, thanks to the recent investments in Brazil and China, the Unit can count on significant, competitive production capacity to satisfy the growing demand for tyres for industrial vehicles, which is particularly strong in fast growing economies. This strategy has ensured Pirelli a leadership position in some of these markets, beginning with those of the Mediterranean area, particularly Turkey and Egypt and in South America.

Pirelli in Argentina

Of the 19 production sites which today compose Pirelli’s industrial universe, 7 facilities – 1 in Argentina, 5 in Brazil, 1 in Venezuela – are located in the South American continent with production that covers the entire range of segments: auto, industrial vehicles, motorcycles, agricultural machinery and worksite machinery.

Pirelli has been in Argentina for more than a century. In fact, it participated in the Buenos Aires Expo of 1910, formally marking the birth of Pirelli Argentina. The step up in size happened in 1929, at the edges of the capital where the company built a new factory for electrical conductors: the “La Rosa” factory. In 1948, it became Industrias Pirelli Saic and in 1956 Pirelli Argentina acquired a factory in Bella Vista, outside Buenos Aires, where it concentrated all its rubber processing, both for the cables sector and diversified products. In 1968, with the acquisition of 100% of Coplan, in which it had held 50% from 1951, Pirelli began the direct production of tyres in the town of Merlo, where the group’s plant has grown over the years and where the company is still located.

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Protocol of intent signed by Pirelli, the Interior Ministry and the Ministry for Education and Research to jointly develop projects aimed at reducing traffic accidents.

The initiative was presented at the Chamber of Deputies before the Interior Minister, Roberto Maroni, the Education Minister, Mariastella Gelmini, the chairman of the Transport Commission of the Chamber of Deputies, Mario Valducci, and the director of the Italian highway patrol, Roberto Sgalla.

A video produced together with the national police force will teach secondary-school students the role that tyres play in safe driving.

The project is one of a number designed by Pirelli, within the scope of the European Road Safety Charter, aimed at improving road safety and reducing the number of accident victims.

Today, Pirelli signed a protocol of intent with the Interior Ministry and the Ministry for Education and Research in order to select and support joint projects and other initiatives aimed at increasing awareness among Italian drivers – especially secondary-school students and other young drivers – on the issue of road safety through education and other informational campaigns.

The signing of the protocol took place in Rome today at the Chamber of Deputies before the Interior Minister, Roberto Maroni, the Education Minister, Mariastella Gelmini, the chairman of the Pirelli group, Marco Tronchetti Provera, the director of the Italian highway patrol, Roberto Sgalla, and the chairman of the Transport Commission of the Chamber of Deputies, Mario Valducci. This agreement calls for the three parties to work together for at least three years on road-safety projects.

The protocol falls within the scope of the initiatives Pirelli has undertaken throughout Europe in order to help reduce traffic accidents in observance of the principles of the European Road Safety Charter, of which Pirelli is a signatory.

The signing of the agreement was accompanied by the presentation of the first promotional project born out of the collaboration between Pirelli and the Italian Polizia di Stato (national police force), which is in the form of an educational video explaining the central role that tyres play in driving safety. The video is to be shown in Italian secondary schools, published in the web site of the Interior Ministry, and used as teaching material for the national police force. In particular, police officers will be showing the video to young people during road safety courses held in schools. The high impact of the images and the direct language used underscore the importance that tyres play in road safety, while placing an emphasis on proper maintenance and the appropriate use of tyres and on the need to choose the right tyre for the car and for the usage conditions, such as using winter tyres in the colder months. The video is also to be used by the police force as an in-house training tool and in the numerous road-safety and accident-prevention campaigns of the Interior Ministry’s Department of Public Safety.

The video presented to the Chamber of Deputies was produced last April at the Pirelli track in Vizzola Ticino during a training exercise for the Polizia Stradale (Italian highway patrol).The training involved some 50 agents who, joined by the heads of Pirelli Experimentation, studied theory and also had the opportunity to experience first-hand the role that tyres play in passive safety, including in-vehicle stability, grip in curves, and braking. Another goal of the course was to learn to understand the structural and performance characteristics shown on the sidewall of all tyres and in the vehicle’s registration book, such assize, load index, speed code, homologation, tyre pressure, and tread depth.

Tyres and safety. The tyre is an essential component in the performance and safety of any vehicle, as confirmed by the central role tyres play in Formula One racing, where Pirelli is the sole manufacturer. This importance is even more evident in terms of the prevention of accidents. Here, tyre quality and proper maintenance are decisive factors in road safety. As the sole point of contact between the vehicle and the road surface, the tyre is crucial both in braking and in grip in all conditions –dry or wet, in a straight line or in a curve. A worn or improperly inflated tyre can extend braking distance by up to 70%, so it can be the cause of traffic accidents.

As many studies have shown, we tend to pay too little attention to our tyres. According to a study conducted last year by Federpneus and Assogomma, in collaboration with the Italian highway patrol, more than 50% of Italians drive on underinflated, worn, damaged, or even non-homologated tyres.

Pirelli Research. Throughout the world, Pirelli is synonymous with both performance and safety. Together with environmental protection, road safety is one of the key elements of the premium strategy at the heart of the group’s industrial and business decisions. Pirelli’s commitment to road safety comes in the form of a great many training and promotional activities and, above all, in research and the constant application of innovative technologies to promote sustainable mobility.

This means ecological materials and tyre structures developed to achieve the utmost in fuel savings and, at the same time, an increase in vehicle safety, particularly in braking and in curves.

Pirelli’s Research and Development unit, in which the group invests roughly 3% of its annual revenues, also works towards cutting-edge solutions such as the “cyber tyre”, which is a smart tyre that “reads” the road surface by way of an integrated microchip. Currently in final testing before actual commercialisation, this cyber tyre monitors the health and pressure of the tyre and provides important data regarding the state of the tyre and the conditions of the road surface.

Pirelli’s commitment to safety and sustainable mobility is being repeatedly acknowledged in tests conducted around the world by the most prestigious certifying bodies and by the industry press, as well as by international sustainability indexes. In 2011 in particular, and for the fifth year in a row, Pirelli was named the world leader in sustainability in the Auto Parts & Tyres section of the Dow Jones Sustainability Index.

European Road Safety Charter. As part of the company’s commitment to road safety, Pirelli has signed the European Road Safety Charter promoted by the European Commission. As a signatory of this charter, Pirelli is bound to intensify its efforts already under way internationally in order to help reduce traffic accidents. Promoted by the European Commission, the charter aims to support all projects that can help to increase road safety. The activities that Pirelli has planned meet the standards of feasibility, utility and verifiability required by the European Road Safety Charter, which has been signed by more than 1,900 companies and other organisations throughout Europe, and they also work towards the targets for 2020 regarding the development of safety technologies and the planning of actions to increase awareness internationally.

Pirelli’s many initiatives also include those that seek to increase driver awareness of the key role played by tyre quality and maintenance in preventing traffic accidents. These activities involve both extensive promotional and prevention efforts and training programmes for customers and resellers. This includes the 2010 “Safe & Go” campaign conducted in collaboration with Autostrade per l’Italia. As part of this campaign, mobile workshops were set up along the Italian motorways where Pirelli technicians conducted tyre-condition tests free of charge. Pirelli has also recently launched the online contest “Dai voce alla sicurezza” (Give voice to safety) in order to increase awareness of road safety issues among truck drivers. In addition, Pirelli organises on-track activities for young people and organisations, and the company is also partnering with a number of leading safe-driving schools for drivers around the world.

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Pirelli sustained the restoration of this important work, which was carried out with great care by the specialists of the National Museum of Art in Bucharest, a difficult task concluded in a record time of almost three months.

President of Italy Giorgio Napolitano, who was making a two-day state visit to Romania at the time, inaugurated the masterpiece at the national museum.

Also attending were the Italian Ambassador to Romania, Mario Cospito, the director general of Pirelli Tyres Romania, Giuseppe Cangelosi and representatives of the Italian community in Romania.

The support of Pirelli Romania for the Museum of National Art in Bucharest is part of the numerous social and cultural activities set in motion by the Group in the country. They range from its partnership with the University of Craiova on the subject of technological innovation to the Italian culture promotional project in Slatina, collaboration with the Niguarda Hospital in Milan and the InterCampus initiative with FC Internazionale Milano at Slatina.

So how do we select the recipients of our money? Well, it’s not that easy to identify a solidarity project in one of the world’s most industrialised countries like Japan. But we have decided to aim for the children and their hunger for “food for the soul”. For their need to overcome the traumas and difficulties of the post-earthquake.

So what have we done?

With the help of the United Nations High Commission for Refugees (UNHCR), who were most helpful as our partners in the ‘My Time for Haiti’ project, we made contact with the Shanti Volunteer Association (SVA), ONP internationally active in various parts of Asia and in particular in the area of Japan devastated by the earthquake.

The SVA proposed that we support a community building project, contributing to financing the so-called “itinerant libraries”, which have already been successfully experimented with in other Asian countries in similar situations. Itinerant libraries are a means by which volunteers create aggregation initiatives devoted first and foremost to children, but the relative families who have experienced the earthquake also benefit as many of them live in temporary houses. We are to devote all of the money raised by the ‘My Time for Japan’ project to buying a vehicle that acts as an itinerant library, as well as thousands of books.

Books and reading initiatives will be taken to 32 stations in the Iwate Prefecture, one of the areas devastated by the earthquake including Yamada Town, Otsuchi Town, Ofunato City and Rikuzentakata City to reach 2,500 children.

Fairy stories, poetry, comics, and that’s not all. Thousands of Japanese children will finally be able to go back to reading the books they prefer and receive the necessary support  to smile again, also thanks to ‘My Time for Japan’, a solidarity initiative that distinguishes us for the mobilisation of colleagues and companies together and our direct involvement in choosing the destination of the project.

Request information: mytimeforjapan@pirelli.com

Pirelli Ambiente and Intesa Sanpaolo will participate in a project of international scale in the renewable energy sector. GWM Re II aims to become a significant player in the European renewable energy field. The company’s portfolio already includes 42 Megawatts of photovoltaic capacity in Italy and in Spain, over 222 Megawatt of wind power operating in four countries, and 52 Megawatts under construction through the Danish company Greentech in which it holds a stake of around 20%.

Solar Utility’s entry will require a total investment of approximately 25 million euros, of which 10 million euro will be in cash and the remainder through the re-investment of the revenue deriving from the sale of its stake in GP Energia Spa, a joint venture constituted last year with GWM Renewable Energy into which Solar Utility conferred its photovoltaic activities. The agreement is part of Pirelli Ambiente’s drive to simplify its holdings and identify strategic partners to develop its activities and to enhance the value of its know-how through minority shareholdings.

Intesa Sanpaolo will enter the company with an investment of about 20 million euros, which demonstrates its great interest in the renewable energy sector and confirms its support for the country’s entrepreneurship.

“We are pleased with this Partnership, very much wanted by all, which brings together industrial and financial partners with the founding group which has an international mission thanks to the partners of Gruppo GWM and Gruppo Rottapharm-Madaus. With over 220MW in operation and 52MW under construction, including wind energy and photovoltaic, and active in 6 European countries, together with our affiliate Greentech, listed on Copenaghen’s Nasdaq, we aim to shortly be among the Top 10 producers of renewable energy in Europe with a development of over 900MW and a prospective in the environmental and water treatment sectors of the highest profile at the international level. Intesa Sanpaolo’s involvement will contribute to our development plan both in terms of ratings and coverage and financial support in the countries where the bank is present. The renewed commitment of the Pirelli group which is increasing its position in our Holding also adds to our potential both in terms of new technological solutions and its presence in emerging countries” said Mr.Eugenio de Blasio, chief executive of the GWM Renewable Energy group.

Pirelli Ambiente is the Pirelli group company specialized in technologies and solutions for sustainable development and activities in the renewable energy sector and the energy efficiency of buildings. Last year Solar Utility, the unit constituted in 2007 to invest in photovoltaic, formed an alliance with GWM Renewable Energy which led to the conferral of its activities into GP Energia, controlled by GWM Renewable Energ SpA, (“GWM RE”), a company which invests in renewable sources held by GWM Group,  an international financial group founded over 10 years ago by Sigieri Diaz della Vittoria Pallavicini.

Intesa Sanpaolo is among the top banking groups in the euro zone, with a market capitalisation of 29.8 billion euro (at 30 June 2011), and leader in Italy in all business areas (retail, corporate and wealth management). Thanks to a network of approximately 5,700 branches capillary and well distributed throughout the country, with market shares above 15% in most Italian regions, the Group offers its services to about 11 million customers. Intesa Sanpaolo has a selected presence in Central-Eastern Europe and Middle Eastern and North African countries with a network of more than 1,700 branches and 8.3 million customers of subsidiaries operating in retail and commercial banking in 13 countries. Moreover, the international network specialised in supporting corporate customers is present in 29 countries, in particular the Middle Eastern and North African area and those areas where Italian companies are most active, such as the United States, Russia, China and India.

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Millions of Smiles

This year, 350 children from the city of Slatina took part in the event, as well as others from the southern regions of Romania.

The initiative, which took place as a result of the support of the Municipality of Slatina, FC Internazionale and the volunteers of Onlus Communità Nuova Italia, was much liked by the children, who enjoyed two days of great fun.

For them there were sports competitions and other creative activities, like face painting, a photographic and painting workshop, karaoke and volleyball, all organised at the same time as some exciting football matches.

To the joy of the little participants, there were many surprises and they were presented with trophies, prizes and footballs offered by the local authorities, together with the director of Pirelli Romania, Giuseppe Cangelosi.

As a result of the collaboration of Pirelli, the play will be performed in the cities of Feira de Santana, Campinas and Santo André in which the company has factories, and where it is not often that young people are able to attend cultural initiatives of this kind.

Due to the commitment of Pirelli, students and teachers will be able to see the performances free of cost, together with the local communities who, by paying a symbolic price, can also enjoy the show.

In the play, one of the most representative of the Pirandello theatrical productions, the man is Professor Paolino, the beast is the violent and irascible Captain Perella and virtue is the remissive Mrs. Perella, the neglected wife of the captain and the professor’s lover. The Pirandello work, written in 1919 and performed for the first time in Milan that same year, is a satire about that society which, in appearance, accepts the common names but in secret violates them.

PIRELLI & C. SPA

• REVENUES 1,400.9 MILLION EUROS, +23.4%  COMPARED WITH 1,135.0 MILLION EUROS ON 31 MARCH 2010

• OPERATING RESULT  (EBIT) AFTER RESTRUCTURING CHARGES 143.3 MILLION EUROS  (+63.6% COMPARED WITH 87.6 MILLION EUROS ON 31 MARCH 2010),  WITH PROFITABILITY (EBIT/SALES) RISING TO 10.2% FROM 7.7%

• TOTAL CONSOLIDATED NET PROFIT  81.4 MILLION EUROS, MORE THAN DOUBLE COMPARED WITH 38.9 MILLION EUROS ON 31 MARCH 2010;
  ATTRIBUTABLE CONSOLIDATED NET PROFIT 82.8 MILLION EUROS (39.2 MILLION EUROS ON 31 MARCH 2010)

• NET FINANCIAL POSITION NEGATIVE 712.8 MILLION EUROS  (678.4 MILLION EUROS ON 31 MARCH 2010),  AFTER TOTAL INVESTMENT ALMOST DOUBLED TO 96.9 MILLION EUROS FROM 50.2 MILLION EUROS IN Q1 2010

PIRELLI TYRE

• REVENUES 1,384.5 MILLION EUROS, +24.7% COMPARED WITH 1,100.0 MILLION EUROS ON 31 MARCH 2010

• OPERATING RESULT (EBIT) AFTER RESTRUCTURING CHARGES 152.4 MILLION EUROS, +59.6% COMPARED WITH 95.5 MILLION EUROS ON 31 MARCH 2010;
  PROFITABILITY (EBIT/SALES) AT RECORD LEVEL OF 11% (8.6% IN Q1 2010)

2011 TARGETS

• REVENUE TARGET REVISED FROM “ABOVE 5.55 BILLION EUROS” TO “ABOVE 5.85 BILLION EUROS”.  TAKES INTO ACCOUNT PRICE RISES TO OFFSET RAW MATERIAL COST INCREASES BEYOND INDUSTRIAL PLAN ESTIMATES

• PROFITABILITY TARGETS CONFIRMED: EBIT MARGIN POST GROUP RESTRUCTURING COSTS BETWEEN 8.5% AND 9.5%, PIRELLI TYRE BETWEEN 9% AND 10%

INVESTMENT ABOVE 500 MILLION EUROS CONFIRMED AND NET FINANCIAL POSITION EXPECTED AT AROUND NEGATIVE 700 MILLION EUROS

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