Pirelli & C — Investor Presentation 2022

Aug 4, 2022

1H 2022 Financial Results

1H 2022 Financial Results

August 4th, 2022

Disclaimer

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The forward-looking statements does not take into account any additional negative effects that may arise from impacts on the global market in which Pirelli operates and more generally on the macroeconomic scenario, also following (i) any further governmental measures related to the eventual new waves of spreading of the virus COVID-19 (SARS-CoV-2) and (ii) the worsening of the crisis in Ukraine.

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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.

Miscellanea. This Presentation has been prepared on a voluntary basis. 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.

Giorgio Luca Bruno, 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 unaudited non-IFRS financial measures derived from the Financial Statements, 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, EBIT adjusted and net income adjusted. In order to facilitate the understanding of our financial position and financial performance, this Presentation contains other performance measures, such as Net Financial Position, Operating Cash Flow, Net Cash Flow before Dividends and extraordinary Operations, Net Cash Flow before Dividends, Net Cash Flow, CapEx (Capital Expenditure), Liquidity Margin and ROIC (Return On Invested Capital).

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.

Agenda

Key Messages

> Strong 1H 2022 Result supported by

• High value outperformance (market share gains across all channels; strengthening of ≥19'' and EV)
• Record high price/mix fully covering raw mat. & inflation headwinds
• Better yoy cash flow trend due to efficient working capital management

> Volatile global scenario expected to persist

• Lower GDP growth expectation impacted by tightening financial conditions, China lockdowns and geopolitical tensions
• High Value Demand growth (+7%) confirmed, outperforming the Standard segment
• Solid price discipline to mitigate high raw mat., energy and logistics costs

> Pirelli strategy & 2022 targets

• Main programs implementation progressing well (continue seizing market opportunities in ≥19'' and EV)
• Quick mitigation actions in response to external scenarios across regions, ensuring operational continuity
• Guidance upgrade mainly driven by price/mix

Update on China and Russia

Key issues	Pirelli's actions
Easing mobility restrictions but Zero Covid policy confirmed GDP (+0.4% in 2Q'22; +2.5% in 1H'22) Strong impact on but first signs of demand recovery in June driven by O.E.: tyre1 O.E. : +31% in June vs. –43% in April, -2% in May tyre1 Repl. : -15% in June vs. –37% in April, -32% in May Aggressive government stimulus on the auto industry	Fully back to Shanghai office; plants saturation progressively increasing Leadership position confirmed in 2Q in Car ≥18'' 2H strategy: Replacement: pricing power to offset inflation, careful trade inventories management O.E.: seizing H.V. mkt opportunities (focus on EV)
Export ban of selected raw mat to Russia and no export of finished product to EU from 10th July Some of our peers announced exit plans from Russian market	Activated alternative Std. production flow from Romania and Turkey for European markets Secured alternative raw mat suppliers to keep operational continuity in Russia; Stabilized production focusing on local demand

China slowdown and RU-Ukraine conflict impact on Pirelli Adj Ebit & net cash flow, indicated on May 10th 2022, confirmed

1. All rims

Europe - Pirelli mitigation actions on Potential Russian gas shortage

5 1H 2022 Financial Results Source: IEA, GRT Gaz, Ministere de la Transiction Ecologique, Snam, ARERA, Sedigas, Entsog data from European Commission, Digest of UK Energy Statistics

1H 2022 Results highlights

Solid delivery in a challenging environment

Sustainability: 1H update on our journey

ESG increased weight on Management Remuneration: • STI (15% weight, +5pp vs 2021): Gender Balance, Eco & Safety perform. revenues² , other functional ESG targets

• LTI (20% weight): CO² total emission reduction; S&P Dow Jones Sustainably ranking

7 1H 2022 Financial Results 1. Science Based Target initiative; 2. sales of Eco & Safety Performance tyres on the total value of sales of Group car tyres. Eco & Safety Performance products identify the car tyres that Pirelli produces throughout the world and that fall under rolling resistance and wet grip classes A, B, C measured according to the labelling parameters set by European legislation; 3. Identification Product Codes

Agenda

Pirelli vs. market – outperforming on High Value and on Std. Repl. confirmed in 2Q

► H.V.: share gain across channels, seizing O.E. rebound across regions and a solid Repl. demand in EU & N.A.

► Std. : more selective approach on O.E. while gaining share especially in South America

2022 Strategy implementation: 1H 2022 delivery in line with targets

Main programs	2022 targets	1H'22 main achievements
Commercial	• Focus on H.V. outperforming the market in ≥18" Replacement • More selective approach to O.E. • Lowering exposure to Standard	• Car ≥18": +8% vs. +5% of the mkt seizing: • Repl. solid demand trend in EU and North America • O.E. mkt rebound in 2Q, with strong focus on 19'' and EV • Car Std. weight to ~40% (-3pp YoY) in line with FY target
Innovation	• Expanding homologations in ≥19" and Specialties • Product renewal (+10 new Regional lines)	• ~160 new homolog. ~80% ≥19", ~30% Specialties, mainly EV • 4 new high performance products: New Scorpion for SUV (Summer, Winter, All Season), extreme winter tyre product
Competitiveness	• Progressing with Wave 2 efficiencies plan (€150M gross efficiencies)	• €52M gross savings, 35% of FY target, consistent with projects development and objectives
Operations	• Increasing High Value capacity (+2M pcs, to 53M pcs, ~72% of tot. Car capacity) • Further improving capacity saturation	• Capacity deployment in line with FY target, saturation at 90% due to China and Russia in 2Q • Implementation of Industrial IoT in major plants to improve production efficiency • Programs launched in EU to control energy consumption

Commercial Program delivery in 1H 2022

Strong over-performance driven by ≥19" & Specialties

Innovation Program:

Ready for the new winter season focusing on higher mileage, top safety and performance

The new Scorpion Winter 2 completes the renewed range of Scorpion tyres Winter tyres replacement range expanded

1

2

Winter tyre for SUVs focused on safety in all winter conditions Designed for Car/SUVs for the extreme rigid winter

• Outstanding wet and snow performance
• High comfort and excellent mileage
• 3 Value A in wet grip

Outstanding performance on ice and snow

Long lasting performance

Excellent noise and RR in its class

Innovation Program: update on EVs

Pirelli EV homologation portfolio further enhanced

280 EV homologations worldwide, with the following main partners¹ :

Elect Replacement product portfolio enriched

0

20

40

Competitiveness program progress

1H achievements in line with expectations and consistent with programs quarterly targets

1H 2022 Net Sales bridge:

Record price/mix confirmed for the second quarter in a row; solid High Value performance

1H 2022 adjusted EBIT bridge

Profitability supported by price/mix and efficiency covering 1.3x Raw Mat & Inflation headwinds

1H 2022 Net Income bridge

Earnings driven mainly by improving operating performance and lower non-rec. / rest. costs

1H 2022 Cash Flow and Net Financial Position

Better yoy cash flow trend driven by solid operating performance

1H highlights

• Inventory at 23% on sales (+3pp vs FY'21) mainly related to an increase in raw material inventories >
• Payables at 24% (+4 pp yoy) coherently with the level of inventories and capex >
• Receivables at 16% stable yoy >

Total Gross Debt structure as of June 30th 2022

€ 2 bn of ESG financing raised in 1H2022 confirming our commitment to Sustainability Sound liquidity margin covering maturities until 2H 2024

2022 external scenario update: volatility expected to persist

21 1H 2022 Financial Results Source: Pirelli Insight GDP growth estimates based on third party data; Pirelli Car Tyre market estimates based on third party and associations of tyre producers market data

2022 Car Tyre market: High Value trend confirmed, strongly outperforming the Standard High Value: O.E. improved trend supported by China and EU; more cautious view on China Repl.

HOW PIRELLI IS NAVIGATING THIS SCENARIO

Issues	Pirelli's actions in 2H
Demand trend	 Fully seizing HV mkt growth leveraging on: • a rich homologation portfolio (strong focus on EV) • a regional tailor-made product offering (6 new launches in 2H) • a high service level through 5 dedicated supply chain/digital customers integration  Solid pricing discipline
Inflation	 Price/mix and efficiency fully offsetting raw mat and inflation  Energy costs: hedging contracts in Europe covering most of the 2H  Logistics: int'l shipping contracts renewed up to 1Q'23
Operations	 2H total capacity saturation at 90% (stable vs 1H), with H.V. mitigating the lower saturation on Std. (RU)  Energy consumption containment program launched in EU
Working Capital & Interest rate hike	 Efficient inventories management (raw mat and finished products) thanks to the strong cooperation with our clients and our manufacturing flexibility  Limited interest rate hike impact due to a balanced fixed/floating debt mix

Pirelli FY 2022 targets update

Price/Mix and FX are driving guidance upgrade

€ billion	2021 A	2022 E
		Target @ 10-May-22	Target @ 4-Aug-22
Net Sales	5.33	~5.9 ÷ ~6.0	~6.2 ÷ ~6.3	• Vol. ~+0.5%÷~+1.5% Confirmed • Price/mix ~+13.5%÷~+14.5%
adj. EBIT margin	15.3%	~15%	confirmed	(old: +10%/+11%) • Forex +~2.5% (old: ~flat)
CapEx (% of Sales)	0.35 (6.5%)	~0.39 (~6.5%)	confirmed
Net Cash Flow bef. Dividends	0.43	~0.45	~0.45 ÷ ~0.47
Net Financial Position NFP / adj. EBITDA	2.91 2.40x	~2.6 ≤2.0x	confirmed
ROIC1 Post taxes	17.6%	~19%	confirmed

1. adjusted for goodwill and PPA intangibles

Agenda

A GLOBALLY ACKNOWLEDGED SUSTAINABILITY LEADERSHIP

Major ratings (May-22)

Positioning in the reference sector
Top ranking ATX Auto Components
6% of the Auto components in AA

26 1H 2022 Financial Results Source: third party official rankings = leading the ranking or initiative

Key Car Market Trends: Europe

Key Car Market Trends: North America

28 1H 2022 Financial Results Source: Pirelli tyre market estimates based on main data provider for the Region; historical market data may be subject to restatement; 1. N. America Replacement includes imports

Key Car Market Trends: Asia Pacific

Key Car Market Trends: Russia, Nordics, MEAI / South America

30 1H 2022 Financial Results 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

Pirelli financial results highlights

	1Q 2021	1Q 2022	Δ YoY	2Q 2021	2Q 2022	Δ YoY	1H 2021	1H 2022	Δ YoY
Revenues	1,245	1,521	+22.2%	1,320	1,676	+26.9%	2,565	3,197	24.6%
Organic Growth1			+19.0%			+19.8%			19.4%
High Value Revenues (% on total)	72.6%	73.7%		71.2%	70.9%		71.9%	72.2%
adj. EBITDA2	267	333	+25.0%	307	362	+17.8%	574	695	21.2%
Margin	21.4%	21.9%	+0.5 pp	23.3%	21.6%	-1.7pp	22.4%	21.7%	-0.7pp
adj. EBIT3	169	229	+35.4%	209	253	+21.3%	377	482	27.6%
Margin	13.6%	15.0%	+1.4 pp	15.8%	15.1%	+0.7pp	14.7%	15.1%	+0.4pp
PPA amortization	(28)	(28)		(28)	(28)		(57)	(57)
Non recurring & restructuring costs	(43)	(7)		(29)	(12)		(72)	(20)
EBIT	97	193	+97.8%	151	213	+40.6%	249	405	+63.0%
Margin	7.8%	12.7%		11.5%	12.7%		9.7%	12.7%
Results from Equity Investments	(0)	0.8		2.1	1.5		2.0	2.3
Financial Income (Charges)	(40)	(44)		(32)	(46)		(72)	(90)
EBT	57	150		121	168		179	318
Tax Rate	26.4%	26.7%		26.4%	26.7%		26.4%	26.7%
Net Income	42	110	+160.5%	89	123	+37.9%	132	233	+77.1%
Net Income adjusted4	94	136		130	152		224	288

Pirelli Balance Sheet

	30-Jun-2021	31-Dec-2021	30-Jun-2022
Fixed assets	8,888	8,912	9,017
Inventories	957	1,092	1,397
Trade receivables	803	659	936
Trade payables	(1,047)	(1,626)	(1,454)
Operating net working capital	712	125	879
% of net sales1	14.1%	2.3%	14.7%
Other receivables / payables	48	1	100
Net working capital	761	126	979
% of net sales1	15.1%	2.4%	16.4%
Total net invested capital	9,648	9,038	9,996
Equity	4,799	5,043	5,420
Provisions	1,031	1,089	1,046
Net financial position	3,819	2,907	3,531
Total financing and shareholders' equity	9,648	9,038	9,996

Pirelli Cash Flow

	2Q 2021	2Q 2022	1H 2021	1H 2022
Adjusted Operating income (EBIT1 )	209	253	377	482
Amortiz. & depreciations (excl. PPA amortiz.)	99	109	197	214
Investments in tangible and intangible assets (Capex)	(63)	(67)	(153)	(116)
Increase in right of use	(23)	(33)	(50)	(41)
Change in working capital/other	73	139	(644)	(703)
Operating Cash Flow	295	401	(273)	(165)
Financial income/(expenses)	(32)	(46)	(72)	(90)
Taxes paid	(35)	(72)	(72)	(104)
Cash-out for non recurring items and restructuring costs / other	(40)	(12)	(69)	(36)
Dividend paid to minorities	-	(24)	-	(24)
Exchange rates difference/other	(15)	(38)	1	(45)
Net Cash Flow before extr. oper. / equity transactions / divid.	173	209	(485)	(464)
Extraordinary operations	-	-	4	-
Net Cash Flow before dividends	173	209	(481)	(464)
Dividends paid by Parent	(79)	(160)	(79)	(160)
Net Cash Flow	93	49	(560)	(624)

Raw Material costs trend and mix

Main raw materials price trend

Pirelli 1H 2022 mix (based on purchasing cost)

Pirelli manufacturing footprint

1. 49% Joint Venture with the Hixih Group