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Pirelli launches new truck tyre production unit in Brazil

Total investment of 50 million dollars to bolster the
production of radial truck tyres for the Brazilian and Latin
American markets. Completes investment plan for the Industrial
segment, bringing additional and more competitive production
capacity. Following 2005′s excellent results, Pirelli Tyre
continues with its strategy of worldwide growth

Gravata, Milan , 22 March 2006Pirelli
today launched a new production unit
for radial truck and bus tyres in
Gravata , in the Brazilian state of Rio
Grande do Sul. The unit is located inside the Group’s principle
development and production centre for conventional motorcycle tyres
worldwide: it covers approximately 573,000 square
metres, adds approximately 500 employees , both
direct and ancillary, to the existing 1,500 and will have full
production capacity of 12,000
a year, in addition to the present 64,000.

Of Gravatai’s production, 80% will be for the
local market and 20% for export, chiefly within
Latin America.The new production unit requires
total investment of 116 million reais (over
50 million dollars ) and, when fully operatonal,
will account for 8% of revenues for Pirelli Tyre
in Brazil .

The opening of the production unit in Gravata
further strengthens Pirelli’s presence in the
radial Truck segment and follows the launch in
China in the second half of 2005. With these
units, Pirelli Tyre completes its investment plan
in the Industrial segment, which can now count on new and more
competitive production capacity to satisfy growth
for the period 2006-2008.

The investment in Gravata is part of the Pirelli Tyre’s
strategy of worldwide growth , which foresees
expansion in emerging markets in the Industrial segment, together
with a focus on the Premium Auto and Motorcycle segments. This
strategy saw the Company close 2005 with a
significant increase in key economic
and achieve its
profitability target (ROS at 9%), forecast in the
3-year plan for 2006, one year ahead of schedule. In particular,
revenues amounted to 3,633
euros ( +11.7% ), the
operating profit was 329 million
euros (+ 19.6% ) and the net
was 198 million euros
(+18.6% ).

During the inauguration ceremony, in the presence of the
Governor of the State of Rio Grande do Sul ,
Germano Rigotto , and local authorities, the
Chairman of Pirelli Brazil , Giorgio Della
, said: “the opening of this new production unit
in Brazil is proof of the Pirelli Group’s confidence in a country
which has hosted us for 77 years. Rio Grande do Sul is a strategic
area for us with its qualified labour force, excellent
infrastructure and the entrepreneurial spirit of its state and
municipal governments, all of which allow Pirelli to achieve its
goals in Brazil and at the same time contribute to the region’s
economic development”.

Carlos Redondo , Pirelli Tyre’s director
for Latin America
added: “the region’s industrial
culture, the presence of already installed infrastructure,
favourable market conditions and proximity to the countries of the
Mercosul constitute an ideal scenario to guarantee new
opportunities for the development of both Pirelli and the
The new production unit will flank Pirelli’s other radial Truck
facilities in Italy , Turkey , Egypt and China , as well as the
Brazilian plant in Santo Andr.

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