Pirelli & C — Investor Presentation 2015

May 13, 2015

PIRELLI 1Q 2015 RESULTS

MILANO – MAY 13, 2015

AGENDA

KEY MESSAGES

> A solid 1Q 2015 with Premium outperformance despite market trends

• - Slow start of the year in European and North American markets
• - Truck and Non-Premium tyre markets show no signs of recovery in South America and Russia

• > Best price/mix in the industry : +3.7% in 1Q 2015 vs. negative peers average

• > FY 2015 targets confirmed based on our focused business model and regional volatility management

• Faster growth in APac and NAFTA offsetting the market weakness in South America and Russia

AGENDA

KEY MESSAGES

1Q 2015 RESULTS

2015 OUTLOOK & TARGETS

1Q 15 TYRE OVERVIEW

APPENDIX

PIRELLI KEY FINANCIAL RESULTS

	1Q '14	1Q 15	Δ YOY
Revenues	1,473.2	1,568.4	+6.5%	• Premium outperformance (+10% Pirelli volume vs. +6% of the Premium market) delivers sound revenue
Organic Growth*			+2.4%	growth and price/mix improvement
EBITDA before Restr. Costs	277.3	291.9	+5.3%	• Non-premium and Industrial business impacted by the negative market trend in South America and Russia
Margin	18.8%	18.6%	-0.2 p.p.	• Supportive FX (strong USD and GBP)
EBIT before Restr. Costs	206.7	213.4	+3.2%
Margin	14.0%	13.6%	-0.4 p.p.	• Ebit improvement on the back of operating levers quality, efficiency gains and lower raw mats
Restructuring Costs	(5.7)	(3.3)		• Stable margin overall: growth in Consumer balances
EBIT	201.0	210.1	+4.5%	impact of market weakness and lower utilization rate in
Margin	13.6%	13.4%	-0.2 p.p.	the Industrial business
Results from Equity Investments	(13.8)	(2.5)
Financial Income / (Charges)	(43.3)	(52.1)		• Slightly higher financial charges discount Bolivar
PBT	143.9	155.5		impact on trade receivables, in line with guidance, and interest rate increase in Russia
Tax Rate	37.2%	34.8%		• Tax rate in line with FY guidance
Net income before discontinued operations	90.4	101.4	+12.2%	• Double-digit increase in Net Income before
Discontinued operations	1.1	(16.8)		discontinued operations
Net Income	91.5	84.6		• Discontinued Operations: one-off impact due to FX losses related to the Turkish Steelcord activities***
Attributable Net Income	89.7	82.0
Investments**	65.3	85.6		• Net Debt trend in line with seasonality of the net
Net Debt	1965.6	1,732.9		working capital to be reversed in the following quarters

* Excluding exchange rate effects

** Tangible and Intangible investments

*** These losses, recorded in previous financial years, were already booked in the net equity and reclassified in the 1Q '15 profit & loss statement following the disposal of the Turkish company in Feb. '15

1Q 2015 PERFORMANCE BY REGION

* Excluding exchange rate effects

PREMIUM PERFORMANCE BY REGION

* Excluding exchange rate effects

PIRELLI NET INCOME 1Q 2015 VS 1Q 2014

PIRELLI DEBT STRUCTURE AS OF MARCH 31, 2015

Gross Debt Maturity

Liquidity Profile

Liquidity Margin	1,689.8
Total committed lines not drawn due 2015	883.3
Liquidity position	806.5
€/Mln

Debt Profile

• ~ 48% of the debt maturity beyond 2016
• Cost of debt 6.17% as of March 31, 2015
• Gross debt profile ~75% Fixed and ~25% Floating
• Average debt maturity: ~ 2.6 years

PIRELLI 1Q 2015 NET FINANCIAL POSITION

Strong cash generation expected in the following quarters, in line with our track record and seasonality of the business

* Tangible and intangible investments

AGENDA

KEY MESSAGES

1Q 2015 RESULTS

2015 OUTLOOK & TARGETS

1Q 2015 TYRE OVERVIEW

APPENDIX

2015 REGIONAL TARGETS

Tyre Market (	yoy)	2015 Pirelli Tyre Business Target		What has changed vs. the previous guidance
		Revenues	EBIT Margin**
c a P A	Car ≥+4% o/w Premium > +10% Truck* > +1%	= Mid-teen organic = growth (>20% in €) =	Twenties increasing YOY	• Faster growth in Super Premium
A T F A N	Car ~ -2% (lower imports) o/w Premium >+5% Truck* > +2%	Mid single-digit organic growth = (>20% in €)	= High-teens increasing YOY	• Supportive ForEx and mix improvement
AI E M	Car ~ +5% o/w Premium ~+7% Truck* > +2%	High single-digit organic growth = (high teens in €)	High-teens = stable YOY	• Better than expected growth in both Consumer and Industrial
E P O R U E	Car ~ +2% o/w Premium ~ +10% Truck* ~ +1%	Mid single-digit organic growth	= = Mid-teens stable YOY	• Super Premium growth compensating for a slow start of Truck market
M A T A L	Car OE ~ -10%, Repl. ~+1% o/w Premium ~ +15% Truck* OE -16%, Repl. flat	Mid single-digit = organic growth (~ flat in €)	Low-teens stable YOY	• Market weakness in non-Premium and OE, unchanged focus on value
A SI S U R	Car ~ -15% o/w Premium ~ -19% Truck* ~ -6%	Mid single-digit organic growth (high teen decline in €)	= High single-digit increasing YOY	• Coping with market contraction by focusing on mix and higher exports
TOTAL	Car ~ +1% o/w Premium +7% Truck* ~ +1%	=
=	 vs previous guidance	* All steel only	** Before Restructuring Costs

FY 2015 GUIDANCE

	2015 targets February 2015	2015 targets May 2015
Revenues	~ 6.4 € bln	confirmed		(yearly	2015 FX Guidance avg)
• Volumes	≥ +3%	~+2%		Old	New
- o/w Premium	≥+10%	confirmed	EUR/USD	1.22	1.10
• Price/mix	≥ +4%	~+4%	EUR/RUB	65.0	confirmed
• Foreign Exchange	~ -1%	~+1%	USD/BRL	2.65	3.0
			USD/VEF	20	confirmed
Total revenues growth	~ +6%/+6.5%	~ +6.5%/+7%	USD/ARS	11.5	confirmed
EBIT post restructuring	~ 930 € mln	confirmed
• Non-recurring expenses	~40	confirmed
2015 EBIT risk of 30€/mln in Venezuela and volumes -10/-15% YoY in Argentina	should Venezuela and Argentina scenarios further deteriorate, with utilization rate down to 30%	confirmed
Capex	< 400 € mln	confirmed
Net cash flow before dividends and Steelcord disposal	≥ 300 € mln	confirmed
Net Financial Position		~850 € mln

2015 CONSUMER & INDUSTRIAL GUIDANCE

Industrial Business
	2015 targets February 2015	2015 Targets May 2015
Revenues	~1.5 € bln	~1.4 € bln
• Volumes	+4.5%/5%	~+1%
• Price/mix	~ +4.5%	>+2.5%
• Forex	~ -2%	confirmed
Total	+7%/+7.5%	~+1.5%
EBIT margin before non-recurring items	~12%	~11%

AGENDA

1Q 2015 RESULTS

2015 OUTLOOK & TARGETS

1Q 2015 TYRE OVERVIEW

APPENDIX

KEY TYRE RESULTS

	1Q'14	∆ %	1Q'15	∆ %
Revenues	1,469.5	-2.4%	1,565.3	+6.5%
o/w Premium	639.9	+12.9%	726.9	+13.6%
EBITDA before restr. costs	280.3	+8.7%	293.5	+4.7%
Margin	19.1%	+2.0 p.p.	18.8%	-0.3 p.p.
EBIT before restr. costs	210.3	+12.2%	215.3	+2.4%
Margin	14.3%	+1.8 p.p.	13.8%	-0.5 p.p.
EBIT	204.9	+11.2%	213.3	+4.1%
Margin	13.9%	+1.7 p.p.	13.6%	-0.3 p.p.

Revenue drivers	1Q'14	2Q'14	3Q'14	4Q'14	FY'14	1Q'15
∆ Price/Mix	+4.6%	+6.0%	+3.3%	+2.8%	+4.2%	+3.7%
∆ Volumes	+3.8%	-0.2%	+3.1%	+1.6%	+2.0%	-1.3%
o/w Premium	+22.2%	+20.9%	+17.3%	+10.7%	+17.8%	+10.0%
∆ Revenues (before exchange rate impact)	+8.4%	+5.8%	+6.4%	+4.4%	+6.2%	+2.4%
∆ Exchange Rate	-10.8%	-9.4%	-3.1%	-3.1%	-6.6%	+4.1%

PIRELLI TYRE OPERATING PERFORMANCE

€/Mln

CONSUMER BUSINESS: PIRELLI PERFORMANCE

€/Mln

	1Q'14	∆ %	1Q'15	∆ %
Revenues	1,128.7	+1.1%	1,237.4	+9.6%
o/w Premium	639.9	+12.9%	726.9	+13.6%
% revenues	56.7%	+5.9 p.p.	58.7%	+2.0 p.p.
EBITDA before restr. costs	219.4	+12.6%	246.3	+12.3%
Margin	19.4%	+2.0 p.p.	19.9%	+0.5 p.p.
EBIT before restr. costs	162.7	+17.9%	182.0	+11.9%
Margin	14.4%	+2.0 p.p.	14.7%	+0.3 p.p.
EBIT	158.8	+16.8%	180.4	+13.6%
Margin	14.1%	+1.9 p.p.	14.6%	+0.5 p.p.

Revenue drivers	1Q'14	2Q'14	3Q'14	4Q'14	FY'14	1Q'15
∆ Price/Mix	+4.4%	+5.8%	+3.1%	+2.5%	+3.9%	+4.7%
∆ Volumes	+5.9%	+4.3%	+5.3%	+4.5%	+5.0%	+0.4%
o/w Premium	+22.2%	+20.9%	+17.3%	+10.7%	+17.8%	+10.0%
∆ Revenues (before exchange rate impact)	+10.3%	+10.1%	+8.4%	+7.0%	+8.9%	+5.1%
∆ Exchange Rate	-9.2%	-8.3%	-3.5%	-3.0%	-6.0%	+4.5%

INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE

€/Mln

	1Q'14	∆ %	1Q'15	∆ %
Revenues	340.8	-12.2%	327.9	-3.8%
EBITDA before restr. costs	60.9	-3.3%	47.2	-22.5%
Margin	17.9%	+1.7 p.p.	14.4%	-3.5 p.p.
EBIT before restr. costs	47.6	-3.8%	33.3	-30.0%
Margin	14.0%	+1.3 p.p.	10.2%	-3.8 p.p.
EBIT	46.1	-4.6%	32.9	-28.6%
Margin	13.5%	+1.1 p.p.	10.0%	-3.5 p.p.

-2.7pp vs. 1Q 2014 excl. Steelcord business

Revenue drivers	1Q'14	2Q'14	3Q'14	4Q'14	FY'14	1Q'15
∆ Price/Mix	+5.4%	+6.5%	+4.0%	+3.9%	+5.0%	-0.1%
∆ Volumes	-2.2%	-12.2%	-3.6%	-7.3%	-6.5%	-6.7%
∆ Revenues (before exchange rate impact)	+3.2%	-5.7%	+0.4%	-3.4%	-1.5%	-6.8%
∆ Exchange Rate	-15.4%	-12.4%	-1.8%	-3.3%	-8.0%	+3.0%

2015 PROFITABILITY GUIDANCE

Driver	2015 targets February 2015 Impact	2015 targets May 2015 Impact
Volumes	≥3% of sales	+2% of sales
Price/Mix	≥+4% of sales	~+4% of sales
Forex	-1% of sales	+1% of sales

	Δ YoY on EBIT	Δ YoY on EBIT
Efficiencies	~+90 €/mln	confirmed
Raw Materials	+6 €/mln	+30 €/mln
Other Input Costs	~ -135 €/mln	confirmed
D&A, Other Costs	-80 €/mln	-90€/mln including 10 €/mln of cost of Industrial BU separation
Minor businesses	~  YoY slightly positive (FY15E EBIT: < -10 €/mln )	confirmed
Restructuring costs	-10 €/mln	confirmed
Ebit	930 €/mln	Confirmed

2015 RAW MATERIAL GUIDANCE

Raw material breakdown 1Q 2015

AGENDA

KEY MESSAGES

1Q 2015 RESULTS

2015 OUTLOOK & TARGETS

1Q 2015 TYRE OVERVIEW

APPENDIX

PIRELLI GROUP – 1Q 2015 RESULTS

Profit & Loss Statement and Net Financial Position by Business Unit

	Pirelli tyre		Other		Pirelli	& C. Cons.
	1Q'14	1Q'15	1Q'14	1Q'15	1Q'14	1Q'15
SALES	1,469.5	1,565.3	3.7	3.1	1,473.2	1,568.4
EBITDA before Restr. Costs	280.3	293.5	(3.0)	(1.6)	277.3	291.9
% of sales	19.1%	18.8%			18.8%	18.6%
EBIT before Restr. Costs	210.3	215.3	(3.6)	(1.9)	206.7	213.4
% of sales	14.3%	13.8%			14.0%	13.6%
Restructuring Costs	(5.4)	(2.0)	(0.3)	(1.3)	(5.7)	(3.3)
EBIT	204.9	213.3	(3.9)	(3.2)	201.0	210.1
% of sales	13.9%	13.6%			13.6%	13.4%
Results from equity participations					(13.8)	(2.5)
Financial income/charges					(43.3)	(52.1)
EBT					143.9	155.5
Fiscal Charges					(53.5)	(54.1)
Net income before discontinued operations					90.4	101.4
Discontinued operations					1.1	16.8
Net Income					91.5	84.6
Attributable Net Income					89.7	82.0
Net Financial Position					1,965.6	1,732.9

PIRELLI GROUP – 2014 QUARTERLY RESULTS

	Q1'14		Q2'14		Q3'14		Q4'14		FY'14
	Tyre	Group	Tyre	Group	Tyre	Group	Tyre	Group	Tyre	Group
SALES	1,469.5	1,473.2	1,511.3	1,513.7	1,539.2	1,541.8	1,487.5	1,489.4	6,007.5	6,018.1
EBITDA before Restr. Costs	280.3	277.3	308.7	305.5	287.2	284.9	300.7	300.3	1,176.9	1,168.0
% of sales	19.1%	18.8%	20.4%	20.2%	18.7%	18.5%	20.2%	20.2%	19.6%	19.4%
EBIT before Restr. Costs	210.3	206.7	236.1	232.2	211.7	208.9	222.3	221.4	880.4	869.2
% of sales	14.3%	14.0%	15.6%	15.3%	13.8%	13.5%	14.9%	14.9%	14.7%	14.4%
Restructuring Costs	(5.4)	(5.7)	(7.0)	(7.0)	(5.4)	(5.4)	(10.0)	(13.2)	(27.8)	(31.3)
EBIT	204.9	201.0	229.1	225.2	206.3	203.5	212.3	208.2	852.6	837.9
% of sales	13.9%	13.6%	15.2%	14.9%	13.4%	13.2%	14.3%	14.0%	14.2%	13.9%
Results from equity partecipations		(13.8)		(13.4)		(5.1)		(54.7)		(87.0)
Financial Income / (Charges)		(43.3)		(48.8)		(43.6)		(126.7)		(262.4)
EBT		143.9		163.0		154.8		26.8		488.5
Fiscal Charges		(53.5)		(61.3)		(49.5)		(9.0)		(173.3)
Net Income before discontinued operations		90.4		101.7		105.3		47.8		350.4
Discontinued Operations		1.1		0.6		0.9		15.0		17.6
Net Income		91.5		102.3		106.2		32.8		332.8
Attributable Net Income		89.7		99.4		101.4		28.8		319.3
Net Financial Position		1,965.6		1,935.2		2,003.9		979.6		979.6

PIRELLI GROUP CASH FLOW

€/Mln	1Q'14	2Q'14	3Q'14	4Q'14	FY '14	1Q'15
EBIT before restructuring costs	206.7	232.2	208.9	221.4	869.2	213.4
Depreciation / Amortization	70.6	73.3	76.0	78.9	298.8	78.5
Net investments	(65.3)	(78.3)	(101.1)	(133.4)	(378.1)	(85.6)
Working capital / other variations	(686.6)	77.4	(155.0)	714.6	(49.6)	(895.2)
OPERATING CASH FLOW	(474.6)	304.6	28.8	881.5	740.3	(688.9)
Financial income / (expenses)	(43.3)	(48.8)	(43.6)	(126.7)	(262.4)	(52.1)
Taxes	(53.5)	(61.3)	(49.5)	(9.0)	(173.3)	(54.2)
NET OPERATING CASH FLOW	(571.4)	194.5	(64.3)	745.8	304.6	(795.1)
Financial investments/divestments	(3.7)	2.8	(12.1)	(6.4)	(19.4)	(14.4)
Other dividends paid	(0.5)	(2.9)	-	-	(3.4)	(7.6)
Cash-out for restructuring	(12.9)	(5.9)	(8.0)	(4.3)	(31.1)	(6.4)
Deval. Venezuela incl. in financial charges	-	-	-	72.1	72.1	-
Deferred tax assets incl. in fiscal charges	-	-	-	(30.2)	(30.2)	-
Net cash flow from discontinued operations	(8.7)	10.5	2.5	(4.3)	-	-
Exchange rate differentials / others	(46.0)	(11.9)	13.2	63.7	19.0	45.8
Dividends paid	-	(156.7)	-	-	(156.7)	-
Impact on NFP Steelcord units disposal	-	-	-	187.9	187.9	24.4
NET CASH FLOW	(643.2)	30.4	(68.7)	1,024.3	342.8	(753.3)

PIRELLI BALANCE SHEET

€/Mln	FY'14	1Q'15
FIXED ASSETS	3,874.0	4,055.3
Inventories	1,055.0	1,142.5
Trade receivables	673.8	1,063.7
Trade payables	(1,394.4)	(1,072.4)
NET OPERATING WORKING CAPITAL	334.4	1,133.8
Other payables/receivables	33.9	111.5
Net Working Capital	368.3	1,245.3
Net Invested Capital held for sale	30.8	-
NET INVESTED CAPITAL	4,273.1	5,300.6
Total Net Equity	2,611.5	2,877.1
Provisions	682.0	690.6
Net Financial Position	979.6	1,732.9
TOTAL	4,273.1	5,300.6
Attributable Net Equity	2,548.3	2,811.4
Equity per Share (euro)	5.22	5.76

CONSUMER BUSINESS: KEY MARKET TRENDS

1Q 2015 RESULTS 26

INDUSTRIAL BUSINESS: KEY MARKET TRENDS

* Turkey included and Russia excluded

** Non-pool members' imports not included

1Q 2015 PIRELLI TYRE MIX

1Q 2015 RESULTS 28

MARCH 2015 PIRELLI PEOPLE

PIRELLI PLANTS IN THE WORLD

RAW MATERIALS

Raw Material Price Trend

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

1Q 2015 Mix (Based on Purchasing Cost)

1Q 2015 RESULTS 31

DISCLAIMER

This presentation contains statements that constitute forward-looking statements based on Pirelli & C SpA's current expectations and projections about future events and does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned and is directed to professionals of the financial community.

These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company.

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those expressed in or implied by these forward looking statements as a result of various factors, many of which are beyond the ability of Pirelli & C SpA to control or estimate precisely. Consequently it is recommended that they be viewed as indicative only.

Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation.

Pirelli & C. SpA undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Pirelli & C. SpA business or acquisition strategy or to reflect the occurrence of unanticipated events.

Statement

\

The Manager mandated to draft corporate accounting documents of Pirelli & C. SpA. Francesco Tanzi, attests – as per art.154-bis. comma 2 of the Testo Unico della Finanza (D.Lgs. 58/1998) – that all the accounting information contained in this presentation correspond to the documented results, books and accounting of the Company.