GROUP FINANCIAL OVERVIEW

Claudio De ContoGeneral Manager Operations – Pirelli & C. S.p.A.

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Agenda

Pirelli Group 2008 Key Financial Results

Pirelli Group ‘09 –‘11: Net Financial Position Targets

2|

Pirelli Group – 2008 Key Financial ResultsPre closing – Unaudited figures

Euro / Mln

FY- '08

4,648

3978.5%

1884.1%

(144)

44

1,028

YoY %

-0.5%(*)

-31%

-48%

-88%

Q4 - '08

980

6

(44)

(95)

(139)

YoY %

-10%(*)

-95%

n.m.

n.m.

deterioration of market conditions for both tyre & real estate business

Raw material cost impact as high as in Q3 combined with volume slowdown

acceleration of restructuring initiatives on both Tyre and PRE

stable vs. 9M08 figure

4Q08 Results Drivers

Revenues

EBITDA beforere structuring- %

EBIT before restructuring- %

Restructuring

EBIT after restructuring

Net Financial Position

(*) Homogeneous terms variation, not including exchange rate effects and, in 2007, DGAG assets deconsolidation.

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Pirelli Group – 2008 Net Financial PositionPre closing – Unaudited figures

(302.1)

FY07NFP

173.3

Financial Income& Fiscal Charg.

SpeedAcquisition

835.5

168.0

Dividends

108.3

Fin. Invest.& Other

(81.3)

Change inCons. Area

1,028.1

FY08NFP

126.4

OperatingCash Flow

Euro / Mln

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Pirelli Group – 2008 Net Financial Position by BusinessPre closing – Unaudited figures

OtherBusiness

29

27

(17)

(3)

9

P&CGroup Cons

2,110

(699)

(383)

1,028

1,609

432

(121)

(222)

1,266

TYRE

911

492

(573)

(49)

289

PRE

511

(938)

(109)

(536)

CorporateEuro / Mln

Gross Debt

to Corporate

Financial receivables

Cash and cash equivalents

Net Financial Position

5|

Pirelli Group – Debt StructurePre closing – Unaudited figures

Total CommittedLines not drawn

150

170

69

681

434

136

92

228

150

734

306

161

909

13610

639

Euro / Mln

Committed LineDrawdown

Other Borrowing

Corporate bond

1,082

Fin. Assets *

1,070

890

150

2,110

Gross Debt

1,028

Net Fin. Position

Net Financial Position Gross Debt Maturity

0

2009 2010 2011 20122008

Total785

*Financial receivables,cash and cash equivalents

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Agenda

Pirelli Group 2008 Key Financial Results

Pirelli Group ‘09 –‘11: Net Financial Position Targets

7|

Pirelli Group: ’09 –’11 : Net Financial Position Target

PRE : Gross Debt reductionDisposal of “Non Core” AssetsNFP Stable

TYRE :Investments

Continuous selectionOn going controlRatio Inv/Deprec. ~1/1

NWC ManagementStocks reductionEfficiency on ReceivablesSales/Average NWC from 9 to 11

Other Business :Cash NeutralOpportunity sales of financial assets

Guidelines - Actions Target

€/Mln

1,028

1,000

250

< 800

NFP 08Pre Clos.

NFP 2009 ~

Cash Flow 09-11Before Dividends ~

NFP 2011 Before Dividends

PIRELLI RE FINANCIAL TURNAROUND

Claudio De ContoCEO Finance – Pirelli Real Estate

1|

Agenda

Pirelli RE straightforward financials

Pirelli RE financial turnaround

2|

Pirelli Real Estate – Preliminary 2008 ResultsUnaudited figures

€/mln

775.6 949 1,043.7

365.1 334.1 428.8

(17.7) 12 33.4

(42) 71.6 71.6

(59.7) 83.6 105.1

(135.8) 67.5 67.5

(44.2)

200720082007 Net of

DGAG temporary Consolidation

Pro quota aggregate revenues

Consolidated revenues (*)

Operating Income before layoffs & Real estate revaluation/ devaluation

Income from equity particip. before layoff &Real estate revaluation/ devaluation

Operating Income incl. Income from equity particip. before layoffs & Real estate revaluation/ devaluation(**)

Real estate revaluation/ devaluation

Lay Offs

Operating Income incl. Income fromequity participations (**) (239.7) 151.1 172.6

(*) 2007 values do not include sales at cost of DGAG real estate assets amounting to 1.295,6 €/mln(**) Excluding Facility management result for 74.6 €/mln, which is included in "discontinued operations“ (in 2007 discontinued operations worth 49.5 €/mln) and financial interests on participations (23.0 €/mln vs. 24.1 €/mln in 2007)

3|

Details on 2008 Operating resultsUnaudited figures

€/mln

Change in Operating income including income from equity participations (excluding real estate devaluation/ revaluation and layoffs)

(113.6)83.6Income from equity participations

(29.7)(21.6)

(74.0)(18.0) (59.7)*

Derivatives on SPVs

2007actual

Success Fees

2008 Pre-closing

SPVs resultsEBIT

SPVs= special purpose vehicles(*) Excluding Facility management result for 74.6 €/mln, which is included in "discontinued operations“ (in 2007 discontinued operations worth 49.5 €/mln) and financial interests on participations (23.0 €/mln vs. 24.1 €/mln in 2007)

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Disposal Facility Mgmt

816 808 810

935862

289324271300290

Dec-07 Mar-08 Jun-08 Sep-08 Dec-08Estimate

€/mln

Highstreet acquisition

Net Debt excluding Shareholders' loans (2007-2008)Unaudited figures

Net Debt Net Debt excluding Shareholders’loans

5|

Financial Situation of Funds/SPVs participated by Pirelli RE as of ’08 FYUnaudited figures

100%13.0 3.6

0.6 0.42.6

SPVs DEBT Pro-Quota PRE

Shareholders’Loans

NPL RE Assets

2,577 154

*

176778

High Street 1,469425

2009 2010 2011 Beyond

Euro / bn

* Of which NPls 0,2 €/mln.

MA

TUR

ITY

RE Assets

Ero B o M??Euro / mln

6|

Pirelli Real Estate: Net Asset Value as of Dec 2008Unaudited figures

Real Estate NAV Pro quota (€/bn)*Real Estate NAV at 100% (€/bn)*AUM RE participated

3.7

11.315.014.1 3.5 3.8 3.0

0.8

Book ValueBook Value Mkt Value Net Debt NAV

10.1 2.6

Mkt Value Net Debt NAV

0.4 SHL**

1.2 SHL**

Despite devaluation in 2008, the real estate portfolio shows a pro quota implied capital gain (difference between Market value and Book value) of approx. 260 €/mln, with a total real estate NAV of 0.8 €/bn

* excluding non participated RE AUM** SHL=Shareholders’ Loan

7|

Agenda

Pirelli RE straightforward financials

Pirelli RE financial turnaround

8|

The SGR role: 2008-2011 evolution

Italy Germany

Poland

Residential Asset Mgm &

Services

Commercial Asset Mgm & Services

Development Asset Mgm &

Services

Residential Asset Mgm & Services

Commercial Asset Mgm & Services

Residential Develop Asset

Mgm & Services

SGR

NPLs

9|

Net Debt excluding Shareholders' loans 2009-2011

816862

~350~200

0100200300400500

600700800900

1000

2007 2008 2009 E 2011 E

Capital increase for 400€/mln

Significant reduction in 2009 also thanks to:Sale of non core assets (NPLs portfolios)Value enhancing of Fund & Asset Management through a strategic partnership

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Targets 2009-2011

2008

14.4

(60)

2009 ACTIONS

slight decrease no acquisitons1 €/bn disposals

RE assets

20/30 50 €/mln costssavings

Fund Mgmt.valorization

2011

stable

~100

€/bnAsset Under Management (BV)

Operating Income Including Income from equityparticipations€/mln