Sustainability Channel

Pirelli: at the Rio+20 conference, presents projects with the Italian Environment Ministry and the Brazilian State of San Paolo to reduce the climate impact resulting from car tyre production at its Campinas plant

THE BRAZILIAN PLANT ALREADY AWARDED BY FIESP (SAN PAOLO INDUSTRIALISTS’ FEDERATION) FOR THE TOTAL RE-USAGE OF INDUSTRIAL PROCESS WATER

During the RIO+20 United Nations International Conference for Sustainable Development, Pirelli presented a number of projects which will be implemented in Brazil in cooperation with the Italian Ministry for the Environment and Tutelage of Land and Sea together with the Brazilian state of San Paolo, to analyze and reduce the climate impact resulting from car tyre production at its Campinas plant. The projects were presented by Pirelli’s Director of Sustainability and Risk Governance Filippo Bettini as one of the initiatives at the Italian pavilion during the Rio+20 Conference and in the presence of the Italian Minister Corrado Clini and the Chairman of Pirelli Brasile Paolo Dal Pino.

The projects are part of a number of commitments taken by the company during its “Sustainability Day”, which took place at the company’s Milan headquarters on 23 January 2012, and underline, in line with the sustainability targets of the 2012-2014 Industrial Plan presented in London last November, the company’s commitment to the realization of a sustainable and efficient growth model.

As a part of the projects presented today, Pirelli has committed to calculating, using internationally recognized calculation methods, the carbon footprint relative to the entire life cycle of one its tyres representing the production at its Campinas car tyre plant, in the Brazilian state of San Paolo. This study will also include the identification of the most economically sustainable and efficient interventions for the reduction of global warming gases linked to the tyre’s life cycle.

In March 2012, Pirelli’s Campinas plant, which covers an area of 120,000 square metres and employs over 2,000 people, received an award from FIESP (San Paolo’s Industrialists’ Association) for its project for the total re-utilization of water used in tyre production.

The carbon footprint will also be calculated for the bio-silica of the rice husk which is processed at Pirelli’s plant in the city of Meleiro, in the Brazilian state of Santa Catarina. This process developed by Pirelli, both innovative and eco-compatible, uses the left-overs of rice processing to produce the first essential material for tyre compounds, as a substitute for the silica produced by conventional methods, which today has a greater environmental impact. A further project presented today entails the technical and economic analysis for the integration of solar thermal technology into some phases of the tyre production process, in place of fossil fuels.

In 2011, the various actions taken by Pirelli to reduce its environmental impact enabled the group to reduce both its specific consumption of energy and its specific CO2 emissions by 8% from 2009, with 28% lower specific drawing of water. Pirelli is also actively committed to the management of the collection chain and the devising of new collection methods for the recovery of tyres no longer in use (PFU). In Brazil, through the sector association ANIP, the company is a participant in the Riciclanip Consortium which in 2011 collected around 320,000 tons of used tyres.

With over 80 years’ presence in Brazil, Pirelli today has five factories for the production of tyres there: Gravataí (RS), Campinas (SP), Santo André (SP), Sumaré (SP) and Feira de Santana (BA). In total, the company employs about 9,000 people in these plants.

By 2015, the sustainability targets call for a reduction of both specific energy consumption and specific CO2 emissions of 15% and a reduction of 70% in the specific drawing of water compared with 2009.

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Pirelli and PT Astra Otoparts Tbk establish a joint venture (60% Pirelli, 40% PT Astra Otoparts) to build new moto tyre factory in Indonesia

JV’S ESTIMATED 2012-2014 TOTAL INVESTMENT 120 MILLION DOLLARS

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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PIRELLI ACQUIRES 60% OF THE BRAZILIAN DISTRIBUTION NETWORK “CAMPNEUS” TO STRENGTHEN ITS MARKET LEADERSHIP

Pirelli announces that it has signed an agreement with the Faria da Silva family to acquire 60% of the company equity of Campneus, one of Brazil’s major tyre distribution networks, for a value of approximately 54 million reais, equal to 22.5 million euro, and subject to adjustment on the basis of the asset situation on the closing date.

In line with the 2012-2014 industrial plan presented in London last November, with this operation Pirelli intends to strengthen its leadership in the Brazilian market both in retail and wholesale distribution, focusing on the higher growth Premium segment and increasing the number of Pirelli owned (Pirelli Pneuac) points of sale from the present 48 to 102.

The 54 Campneus points of sale included in the agreement are already part of Pirelli’s distribution network in Brazil, which counts over 600 points of sale in total. The Campneus stores, which will continue under the same brand even after the closing of the operation, are located in the states of São Paulo, Minas Gerais, Paraná, Mato Grosso do Sul, Santa Catarina and Rio Grande do Sul. They sell the complete range of Pirelli tyres for cars, light-trucks, trucks, buses and agricultural machinery, as well as for earth moving and off road equipment.

The agreement is subject to approval by CADE, the Conselho Administrativo de Defesa Econômica brasiliano, and finalization is expected at the end of the first half of 2012.

CAMPNEUS

The first Campneus point of sale was opened in the Brazilian city of Campinas on September 19th, 1975 and the following year extended to three resellers in the sates of São Paulo and Minas Gerais. At present, the company employs around 600 people in seven Brazilian states.

PIRELLI IN BRAZIL

With over 80 years’ commercial presence in Brazil, Pirelli has five tyre production factories in the country: in Gravataí (RS), Campinas (SP), Santo André (SP), Sumaré (SP) and Feira de Santana (BA). The company employs around 9,000 people in its Brazilian plants and has its own testing grounds in Sumaré city for its R & D activities. As well as official Pirelli resellers, the commercial structure in Brazil includes the Pirelli owned Pneuac chain with 48 points of sale in 14 states.

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