EXPECTED 2014 CONVENTIONAL MOTO TYRE PRODUCTION 2 MILLION PIECES, GROWING TO 7 MILLION IN 2016

AT FULL OPERATION THE FACTORY WILL ACCOUNT FOR AROUND 25% OF PIRELLI’S TOTAL WORLDWIDE MOTO PRODUCTION

Pirelli has signed an agreement with Astra Otoparts, the  leading Indonesian automotive components maker, for the construction of a new factory in Indonesia, Pirelli’s first in the country, for the production of conventional motorcycle tyres.

The agreement was signed – on the occasion of a mission to Asia by the Italian Foreign Affairs Minister Giulio Terzi di Sant’Agata – by the Senior Vice President of Pirelli’s Moto Business Unit Uberto Thun and the CEO of Astra Otoparts, Siswanto Prawiroatmodjo. The signing was presided over by Terzi di Sant’Agata, the Indonesian Industry Minister M. S. Hidayat, the Minister for Trade and Investment Gita Wirjawan and the Italian ambassador in Jakarta Federico Failla.

The accord entails the creation of a joint venture in which Pirelli will hold the majority position with 60% of the capital and Astra will hold the remaining 40%. The joint venture will invest a total of 120 million dollars between 2012 and 2014 for the construction of a new factory.

Construction of the new factory, located a short distance from Jakarta, is expected to begin in the fourth quarter of 2012. The site will cover 25 hectares and when fully operated, in 2016, will employ 750 people.

The new factory is expected to become operational from the second half of 2013, with an estimated production of around 2 million conventional moto tyres in 2014 which when fully operational, in 2016, could reach 7 million pieces total. Of these, 3 million will be sold as Astra brands, while the remaining 4 million – equal to about 25% of all Pirelli’s moto production in the world – will carry Pirelli brands (Pirelli or Metzeler). In the context of the group’s ‘local for local’ strategy, 20-25% of the Pirelli brand production made in the Indonesian plant will serve the original equipment and replacement markets of the Asia Pacific area, where the moto market is forecast to grow at an average annual rate of 3.5% from 2011 to 2014. The remaining output will serve all the markets in which Pirelli operates with the exception of South America.

The new facility will allow Pirelli to not only strengthen its moto production capacity – which according to the forecasts of the industrial plan will grow to 16 million pieces in 2015 from 13 million pieces in 2011 – but also to have a direct presence in the Asean area’s biggest economy, which with a circulating pool of 250 million motorcycles is the biggest motorcycle market in the world.  Of this total, 68 million are in Indonesia whose moto market is growing by more than 10% a year. The in-country production capacity will also be free of export duties to Asean markets and reduce the cost of raw material supply thanks to the strong local presence of natural rubber producers.

Pirelli

Founded in 1872, Pirelli is the fifth tyre maker in the world by sales. Present in over 160 countries, at the end of 2011 it counted 21 production facilities on four continents and employed around 34,000 people. Pirelli is a leading producer in the high and ultra-high segments, thanks to its commitment to research and development, an area in which it invests about 3% of total revenues (5.6 billion euro in 2011) or 7% of Premium segment revenues, one of the highest levels in the tyre segment, with the goal of a constant improvement of products in terms of performance, safety and containment of environmental impact. Active in automotive sports since 1907, Pirelli is the exclusive supplier of the Superbike world championship and prestigious mono-brand championships, but above all it is the sole supplier for the Formula 1 championship for the 3-year period 2011-2013.

PT Astra Otoparts Tbk

PT Astra Otoparts Tbk (Astra Otoparts) is Indonesia’s foremost automotive component Company producing components both for Original Equipment (OEM) and Replacement Market (REM). The company counts most major car and motorcycle makers of the world among its clients and has become synonymous with high-quality automotive spare parts. These both satisfy growing local demand and are exported to 49 countries in the Middle East, Asia Oceania, Africa, Europe, and the Americas. The company has established three representative offices in Singapore, Dubai, and Australia. It employs circa 33,000 people and has been listed on the Indonesia Stock Exchange since 1998. Its consolidated revenues in 2011 were 7.36 trillion rupiah (626 million euro).

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Henkel continues is path towards sustainable mobility and announces a new project in collaboration with Pirelli, a high profile sustainable partner committed to the dissemination of the cultre of road safety. Henkel employees, on the occasion of its first ‘Sustainability Day’ at its Milan headquarters, installed a tyre pumping station available to all employees. The Pirelli station represents a new piece of a wider sustainability strategy which Henkel has been pursuing successfully for many years, also directly involving employees in sensitizing initiatives. Even an apparently simply gesture like checking one’s tyre pressure can contribute to ensuring  vehicle and passenger safety on the one hand and increasing motor efficiency, therefore reducing consumption and emissions, on the other.

During the inauguration of the station, Henkel employees also had the possibility of speaking with Pirelli technicians to learn things about correct tyre maintenance like tread depth, damage that can compromise safety, the difference between winter and summer tyres, pressure and methods of inflation.

The initiative was part of Henkel’s first Sustainability Day, conceived to motivate employee engagement with themes of importance to the company such as the consumption of resources, waste management, safety, social progress and the growth in value of company activities.

“We recently announced a new sustainability strategy which will see us committed from now until 2030 to increasing our efficiency by 30%, with short terms targets set for 2015. To achieve these results it is indispensable that everyone be involved, along the entire value chain and in all areas of activity, with a continual monitoring of the milestones reached. With regard to safety, we are implementing a strict policy of eliminating all types of workplace accidents, through continuous training in responsible behaviour. The theme of safe driving is dear to our hearts; our goal is to shine a light on such arguments also as a way of caring for the health of our employees,” said Giacomo Archi, Chairman and CEO of Henkel Italia.

“In Pirelli we live sustainability as a natural way of managing our business and of creating value for all stakeholders”, said Filippo Bettini, the Pirelli Group’s Director for Sustainability and Risk Governance.  “For this reason we developed a plan that fully fits into the business’s growth strategy and which will lead us to become ever more committed to process innovation, with more challenging targets, such as a 70% reduction in the drawing of water by 2015 or the 15% reduction in specific CO2 emissions and energy consumption in the same time frame. And, obviously, a commitment to continuous product innovation, developing tyres that deliver safety, performance and driving comfort in all atmospheric conditions, as well as environmental efficiency. At the heart of Pirelli plan, underlined Bettini, “is the quality of the workplace environment and the quality of the work of our employees, as well as a commitment to transforming the education of road safety in a true culture of safety. Occasions like today constitute a further cultural enrichment and a stimulus for future commitments”.

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As certified by the German Motorrad TestCenter, which carried out a test for which it bought the Metzeler products and those of its direct competitors.

To guarantee a high level of safety to motorcyclists, Metzeler decided to develop new tread compounds for its Roadtec Z8 Interact tyres with the clear objective of offering them not only the latest technological solutions in the area of wet handling, but also the chance of having a tyre that represents the new point of reference in all weather conditions, from wet and cold to dry.

The values taken into consideration by the Motorrad TestCenter test in the wet were: riding precision and characteristics, maintenance of trajectory under acceleration, ease of riding, grip when cornering, grip of the front and rear tyres in lean angle, grip in acceleration, handling on the limit, response when leaning and braking stability in the complete braking phase with ABS.

The motorcycles selected for the test were a Honda CBR600F ABS and a Suzuki Bandit 1250 ABS. The test took place at the Vizzola Ticino track network last January and February in the dry in slightly cloudy weather.

The Metzeler Roadtec Z8 Interact™ was not only the safest tyre in the wet, but also the fastest over the timed lap. Considering all the values taken into account, the Motorrad TestCenter crowned the Metzeler Roadtec Z8 Interact™ superior to its competitors in its segment.

This is an important award, because it contributes to strengthening our image in a significant market like Spain.

Neumáticos y Mecanica Rápida has been one of the most prestigious tyre magazines for almost the last decade. The Tyre of the Year project is its own initiative and has become a point of reference for both the sector’s manufacturers and clients.

The winners of the various categories are decided by the votes of numerous experts, including specialist shops, distributors and journalists.

The presentation ceremony will take place in Madrid on Thursday 22 March.

GOVERNANCE METRICS INTERNATIONAL (GMI) CONFIRMS 10/10 JUDGEMENT FOR CORPORATE GOVERNANCE ON THE ITALIAN MARKET

Francesco Chiappetta, Group General Counsel, receives the 2012 World Finance Corporate Award at the London Stock Exchange.

Since 2007 the award recognizes the leading companies in corporate governance and the management of their financial activities.

All of which for Pirelli is a reason satisfaction and pride, as reflected in the words of Francesco Chiappetta during an interview at the award ceremony.

Video: Award ceremony and interview

The excellence award was offered by the local press as part of the Merit deci Exist event.

Slatina television and newspapers presented awards to the city’s people and companies that have contributed to its development.

Pirelli’s award was for being the most active company in the social field during 2011.

For more than five years, Pirelli Romania has developed numerous social and cultural activities, from its partnership with the universities on matters such as technological innovation; a project for the diffusion of the Italian culture in Slatina; its support for the collaboration between the Milan Niguarda and Slatina hospitals; and the InterCampus project in conjunction with FC Internazionale of Milan for children who come from various social environments.

This follows the transfer, also from SIBUR, in December of the Kirov tyre plant. The joint venture has invested a total of 222 million euros in the transfer operations and will spend a further 200 million from 2012 to 2014 on plant improvement and business development. Annual revenues are expected to be around 300 million euros in 2012 and more than 500 million by 2014.

Voronezh will specialize in top-of-the range tyres with an output of 2 million pieces a year in 2012 to reach 4 million in 2014, while Kirov already produces 6.5 million pieces annually. While its production will remain flat, over 60% will be converted to the Pirelli brand.

The SAM Group is a Swiss asset management company in Switzerland, focused on sustainable and responsible investment for the evaluation used for admission to the Dow Jones sustainability indices. The assessment made by SAM Group, indeed, saw Pirelli obtaining a rating of 91 versus a sector average of 53.

Their Sustainability Yearbook is one of the most complete and authoritative reference instruments for sustainability finance operators. It only includes the world’s top sustainability-scoring companies, amounting to 15% of those companies belonging to no fewer than 58 sectors assessed by the SAM Group within the Dow Jones Sustainability Assessment.

2012 Sustainability Yearbook at http://www.sam-group.com/int/sustainability-insight/the-sustainability-yearbook.jsp

Sam Group at http://www.sam-group.com/int/index.jsp

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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