Pirelli & C — Investor Presentation 2018

May 14, 2018

DISCLAIMER_

In General. This disclaimer applies to this document and any oral comments of any person presenting it. This document, taken together with any such oral comments, is referred to herein as the "Presentation". This document has been prepared by Pirelli & C. S.p.A. ("Pirelli" or the "Company" and, together with its subsidiary the "Group"). The Presentation is being furnished to you for information purposes only and for use in presentations of the results and strategies of the Group.

No distribution of this Presentation. This Presentation is being furnished to you solely for your information and may not be reproduced, in whole or in part, or redistributed to any other individual or legal entity.

Forward-looking statement. ""Forward-looking statements" (which expression shall include opinions, predictions or expectations about any future event) that may be contained in the Presentation are based on a variety of estimates and assumptions by the Group, including, among others, estimates of future operating results, the value of assets and market conditions. These estimates and assumptions are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive and financial risks that are outside of the Group's control. There can be no assurance that the assumptions made in connection with the forward-looking statements will prove accurate, and actual results may differ materially. The inclusion of the forward-looking statements herein should not be regarded as an indication that the Group considers the forward-looking statements to be a reliable prediction of future events and the forward-looking statements should not be relied upon as such. Neither the Group nor any of its representatives has made or makes any representation to any person regarding the forward-looking statements and none of them intends to update or otherwise revise the forward-looking statements to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the forward-looking statements are later shown to be in error.

No update. The information and opinions in this Presentation is provided to you as of the dates indicated and the Group does not undertake to update the information contained in this Presentation and/or any opinions expressed relating thereto after its presentation, even in the event that the information becomes materially inaccurate, except as otherwise required by applicable laws.

Verbal explanation. This Presentation has to be accompanied by a verbal explanation. A simple reading of this Presentation without the appropriate verbal explanation could give rise to a partial or incorrect understanding.

No offer to purchase or sell securities. The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.

Rounding. Due to rounding, numbers presented throughout this Presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

This Presentation has been prepared on a voluntary basis since the financial disclosure additional to the half-year and annual ones is no longer compulsory pursuant to Law 25/2016 in application of Directive 2013/50/EU. Pirelli is therefore not bound to prepare similar presentations in the future, unless where provided by law.

Neither the Company nor any member of the Group nor any of its or their respective representatives, directors, employees or agents accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.

Francesco Tanzi, the manager in charge of preparing the corporate accounting documents, declares that, pursuant to art. 154-bis, paragraph 2, of the Legislative Decree no. 58 of February 24, 1998, the accounting information contained herein correspond to document results, books and accounting records.

Non-IFRS and Other Performance Measures

This Presentation contains certain items as part of the financial disclosure which are not defined under IFRS. Accordingly, these items do not have standardized meanings and may not be directly comparable to similarly-titled items adopted by other entities.

***

Pirelli management has identified a number of "Alternative Performance Indicators" ("APIs"). These APIs (i) are derived from historical results of Pirelli & C. S.p.A. and are not intended to be indicative of future performance, (ii) are non-IFRS financial measures and, although derived from the Financial Statements, are unaudited and (iii) are not an alternative to financial measures prepared in accordance with IFRS.

The APIs presented herein are [EBIT, EBIT margin, EBITDA, EBITDA margin, net income and net income margin.

In addition, this Presentation includes certain measures that have been adjusted by us to present operating and financial performance net of any non-recurring events and non-core events. The adjusted indicators are EBITDA adjusted, EBITDA adjusted without start up costs, EBIT, EBIT adjusted, EBIT adjusted without start up costs,, net income adjusted.

In order to facilitate the understanding of our financial position and financial performance, this Presentation contains other performance measures, such as Fixed Assets related to continuing operations, Provisions, Operating Working Capital related to continuing operations, Net Working Capital related to continuing operations, Net Financial (liquidity) / debt Position.

These measures are not indicative of our historical operating results, nor are they meant to be predictive of future results.

These measures are used by our management to monitor the underlying performance of our business and operations. Similarly entitled non-IFRS financial measures reported by other companies may not be calculated in an identical manner, consequently our measures may not be consistent with similar measures used by other companies. Therefore, investors should not place undue reliance on this data.

KEY MESSAGES_

>

1Q'18 RESULTS: GOOD PERFORMANCE IN SPITE OF EXTERNAL HEADWINDS

• ▬ Strengthening in High Value: +13% volume growth with a market share gain
• ▬ Significant reduction of exposure to less profitable standard products and shift towards higher rim sizes
• ▬ Top-of-the-Industry price/mix improvement (+7.2%) leading to profitability enhancement (Adj Ebit margin before start-up costs at 17.5%, +1.1pp YoY)

>

CONSISTENT EXECUTION OF OUR STRATEGY:

• ▬ High Value strengthening: new homologations, additional capacity and tighter control over distribution, acceleration program in China
• ▬ Transformation programs: improving predictivity along the value chain, leading to better service levels
• ▬ New Organization improving inter-functionality and operational control of execution

> FY'18 OUTLOOK:

• ▬ The robustness of our value drivers, HV volume and Price/Mix, is confirmed in line with our Feb guidance
• ▬ Top line organic growth expected to be ≥9% (~10% February guidance) due to a lower exposure to less profitable standard products
• ▬ Profitability and cash flow guidance confirmed

1Q'18 RESULTS HIGHLIGHTS & FY'18 OUTLOOK

1Q'18 RESULTS IN DETAIL

APPENDIX

1Q 2018 RESULTS

1Q 2018 RESULTS HIGHLIGHTS_

€ million

NET INCOME before discontinued operations NET FINANCIAL POSITION

1Q 2018 PERFORMANCE BY HIGH VALUE REGIONS_

1 Before amortization of PPA, non-recurring items, restructuring costs and other adjustments; 2 Standard & others (including Controlled Distribution & Other)

1Q 2018 PERFORMANCE BY STANDARD REGIONS_

PROGRESSING ALONG THE 3 PILLARS OF OUR IPO PLAN…_

1Q 2018 achievements

I PILLAR 1: HIGH VALUE	▬ More than 120 High Value homologations ▬ +0.7 mln High Value capacity (Europe, NAFTA and LatAm) ▬ Increasing share of Car Dealer + Pirelli Retail + Tier 1 clients in our distribution network, reaching 53% in 1Q 2018 from 51% of FY 2017
II
PILLAR 2: TRANSFORMATION PROGRAMS	All 4 programs in line with IPO plan ▬ Integrated Forecasting: first pilots of predictive forecasting tools showing encouraging results ▬ Smart Manufacturing and Flexible Factory: people engagement program proceeding ▬ Prestige: new production planning approach raising service level ▬ Supply Chain: launched "First class network" for top retail clients
III PILLAR 3: STANDARD CAPACITY REDUCTION	Acceleration in the Standard reduction: ▬ OE: supporting industry rim size upgrade, switching production from 17" to ≥18" ▬ REP: reduction in less profitable products in lower rim sizes (≤16")

…SUPPORTED BY NEW A ORGANIZATIONAL STRUCTURE_

Greater operational effectiveness by assigning all the key levers to the General Manager Operations

2018 HIGH VALUE MARKET OUTLOOK CONFIRMED_

O.E. + REPLACEMENT ≥18'' TYRE MARKET

Source: Company elaborations based on third party data relative to car market and on data provided by local associations of tyre producers; 2016 A market figures restated

FY 2018 OUTLOOK UPDATE_

€ million	2017A	2018E (26 Feb. 2018)	2018E (14 May. 2018)	• - 0.5 p.p. on total volume
Revenues	5,352	≥+6% YoY	~+4% YoY	(due to -1pp on Standard) • - 1.0 p.p. linked to FX • - 0.6 p.p. IFRS 15 impact2
High Value weight	58%	~+10% Net of FX ~60%	≥+9% Net of FX ≥60%	Top line impact (volumes and FX) offset by lower
Adjusted EBIT w/o start-up1 High Value weight	927 ~83%	>€ 1,0 bln ≥83%	confirmed confirmed	raw mat headwind (~80 € mln vs ~95 € mln)
Start-up costs	50	~40	confirmed
Adjusted EBIT	876	~€1,0 bln	confirmed
Net financial position / Adjusted EBITDA w/o start-up costs	2.7X	~2.3X	confirmed
CapEx on Revenues	9.1%	~8%	confirmed

1 Before amortization of PPA, non-recurring items, restructuring costs, other adjustments and start-up costs; 2 In accordance with IFRS 15 (starting from January 1st, 2018), some costs for variable considerations paid or payable to indirect customers and mainly linked to achieving sale targets are recognized as a reduction of revenues

1Q'18 RESULTS HIGHLIGHTS & FY'18 OUTLOOK

1Q'18 RESULTS IN DETAIL

APPENDIX

1Q 2018 RESULTS

PIRELLI, GLOBAL HIGH VALUE

1Q 2018 NET SALES BRIDGE_

€ million

1 In accordance with IFRS 15 (starting from January 1st, 2018), some costs for variable considerations paid or payable to indirect customers and mainly linked to achieving sale targets are recognized as a reduction of revenues

1Q 2018 RESULTS

1Q 2018 OPERATING PERFORMANCE_

€ million

1 Aeolus Car, Velo, Cyber & digital transformation; 2 Other costs related to high value development

1Q 2018 NET INCOME BRIDGE_

1 Mainly related to the gain on re-pricing of unsecured facilities

1Q 2018 CASH FLOW AND NET FINANCIAL POSITION_

€ million

1 Before amortization of PPA, non-recurring items, restructuring costs and other adjustments

CURRENT CAPITAL STRUCTURE (MARCH 2018)_

€ million

1 Covers ~2.2 years of forthcoming maturities

1Q'18 RESULTS HIGHLIGHTS & FY'18 OUTLOOK

1Q'18 RESULTS IN DETAIL

APPENDIX

1Q 2018 RESULTS

PIRELLI, GLOBAL HIGH VALUE

1Q 2018 RESULTS HIGHLIGHTS_

€ million

	1Q '17 reported	1Q '18 reported	Δ YoY
Revenues	1,339.3	1,310.3	-2.2%
Organic Growth1			+5.7%
High Value Revenues	775.4	833.9	+7.5%
Organic Growth1			+13.4%
% on total Revenues	57.9%	63.6%	+5.7 p.p.
EBITDA adjusted w/o start-up costs2	281.7	298.0	+5.8%
Margin	21.0%	22.7%	+1.7 p.p
EBITDA adjusted3	270.4	288.1	+6.5%
Margin	20.2%	22.0%	+1.8 p.p.
EBIT adjusted w/o start-up costs2	219.5	229.4	+4.5%
Margin	16.4%	17.5%	+1.1 p.p.
EBIT adjusted3	205.0	218.4	+6.5%
Margin	15.3%	16.7%	+1.4 p.p.
EBIT	168.7	184.0	+9.1%
Margin	12.6%	14.0%	+1.4 p.p.
Results from Equity Investments	(3.1)	0.8
Financial Income / (Charges)	(77.0)	(55.2)
EBT	88.6	129.6
Tax Rate	44.1%	28.7%
Net Income before disc. operations	49.5	92.4
Net Income adjusted before disc. operations	75.7	113.3

1Q Highlights
	Solid organic growth on the back of:
▬	Sound High Value volumes (+12.8% in 1Q'18, +17.1% in Q'17), with market share increase in all Regions
▬	Strong price/mix (+7.2%)
▬	Negative FX, with the EUR strengthening vs. USD and the volatility of emerging countries currencies
▬	EBIT adj. improvement, with internal levers more than compensating for rising raw mat. costs, inflation and other costs related to business development
▬	Decreasing financial charges, thanks to the improving financial profile of the company after the recent refinancing

1 Excl. FX / perimeter; 2 Before non-recurring items, restructuring costs, other adjustments and start-up costs; 3 Before amortization of PPA, non-recurring items , restructuring costs, other adjustments

▬ Tax rate in line with FY'18 target

1Q PIRELLI BALANCE SHEET_

€ million

	31/03/2017	31/12/2017	31/03/2018
Fixed assets related to continuing operations	9,214	9,121	8,958
Inventories	925	941	940
Trade receivables	1,045	653	876
Trade payables	(1,062)	(1,674)	(1,062)
Operating net working capital related to continuing operations	908	(80)	754
Other receivables / payables	158	(42)	90
Net Working Capital related to continuing operations	1,066	(122)	844
Net invested capital held for sale	78	60	51
Total net invested capital	10,358	9,059	9,853
Equity	3,003	4,177	4,268
Provisions	1,830	1,663	1,646
Net Financial Position	5,525	3,219	3,939
Total financing and shareholders' equity	10,358	9,059	9,853
Attributable net equity	2.929	4,117	4,206

FY PIRELLI GROUP CASH FLOW_

€ million

	1Q'17	1Q'18
EBIT adjusted1	205	218
Depreciation & Amortization (excl. PPA amortization)	65	70
Capital expenditures	(98)	(85)
Change in working capital / other	(892)	(929)
Operating Cash Flow	(720)	(726)
Financial income / (expenses)	(77)	(55)
Taxes paid	(46)	(31)
Financial investments	(2)	-
Financial asset disposals	-	155
Purchase of Pneuac shares2	-	(19)
Cash-out for non recurring items and restructuring costs	(12)	(38)
Minorities	(6)	-
Exchange rates difference / other	(20)	(12)
Net cash flow before extraordinary operations	(882)	(726)
Industrial reorganization	269	5
Net cash flow	(612)	(720)

1 Before amortization of PPA, non-recurring items, restructuring costs and other adjustments ; 2 2 nd tranche for the acquisition of 36% stake in Pneuac in September 2017 to reach 100% of the company

2018E RAW MATERIAL GUIDANCE_

2018E FOREX GUIDANCE_

€ million

KEY CAR MARKET TRENDS: EUROPE_

Source: Pirelli tyre market estimates based on main data provider for the Region; historical market data may be subject to restatement

KEY CAR MARKET TRENDS: NAFTA_

Source: Pirelli tyre market estimates based on main data provider for the Region; historical market data may be subject to restatement; 1 NAFTA Replacement includes imports

KEY CAR MARKET TRENDS: APAC_

25

Source: Pirelli tyre market estimates based on main data provider for the Region; historical market data may be subject to restatement

KEY MARKET TRENDS: RUSSIA & CIS AND SOUTH AMERICA_

Source: Pirelli tyre market estimates based on main data provider for the Region; historical market data may be subject to restatement; 1 South America Replacement restated to include Brazilian imports

RAW MATERIAL COSTS TREND AND MIX_

MAIN RAW MATERIALS PRICE TREND

1Q 2018 MIX (BASED ON PURCHASING COST)

PIRELLI, GLOBAL HIGH VALUE

PIRELLI MANUFACTURING FOOTPRINT AS OF MARCH 31ST 2018