Pirelli & C — Investor Presentation 2023

Feb 22, 2023

FY 2022 preliminary unaudited results

February 22nd, 2023

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 forwardlooking 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.

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 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.

The data contained in this presentation are preliminary in nature and refer to the date hereof and, therefore, may be subject to further variations. Please note that these preliminary data are subject to review by the independent auditors that still have to complete their necessary analysis in order to release their report. The 2022 final results will be approved by the Board of Directors scheduled on the 23rd of March 2023 and will be disclosed to the market according to, and in the terms set for by, the applicable laws and regulations.

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.

Fabio Bocchio, 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

> FY 2022 performance above targets supported by:

• A strong commercial performance (market share gain in High Value, especially in ≥19", and record price/mix)
• Internal levers (price/mix & efficiency) covering ~1.3x external headwinds
• Solid cash generation driven by efficient working capital management

> Sustainability: progressing on 2025 targets with a strong push on de-carbonization

> FY 2023 outlook

• Macro uncertainties due to geopolitical tensions; recession risks in EU and US, while China expected to rebound
• Persisting inflationary pressure on input costs (raw materials, energy, labour and logistics)
• High Value market (~+4% yoy) confirming its resilience vs. a weak Standard market (~-2% yoy)

> Pirelli strategy & 2023 targets

• Intensifying strategy implementation to navigate external scenarios:
• fully seizing High Value growth (with strong focus on ≥19" and EV)
• efficiencies and price/mix will offset raw mat, inflation and FX
• supply chain de-risking leveraging on our well balanced geographical footprint (~86% Local for Local)
• Deleverage path confirmed (~1.65x ÷ 1.7x NFP / adj. EBITDA) through a solid net cash flow

FY 2022 results highlights

Performance above company targets (upgraded during the year) and Tier 1 peers …

€ billion	2022 (Target 3-Nov-22)	2022 A	Average Tier 1 peers2 2022 A
Net Sales Δ YoY	~6.5	6.6 +24.1%	+17.6%
adj. EBIT margin Δ YoY	~15%	14.8% -0.5pp	11.1% -2.1pp
CapEx % of Sales	~0.39 ~6%	0.40 6.0%	6.6%
Net Cash Flow bef. Dividends % of Sales	~0.48	0.52 7.8%	-2.2%
Net Financial Position NFP / adj. EBITDA	~2.6 ~1.9x	2.55 1.8x	1.3x
ROIC1 post taxes	~19%	20.3%	n.a.

4 FY 2022 prel. unaudited results 1. Adjusted for goodwill and PPA intangibles; 2. Simple average Tier 1 peers (Michelin, Bridgestone, Continental, Goodyear, Nokian)

FY 2022 results highlights

… ending Ind. Plan 1st phase with a superior delivery vs. targets and peers, despite volatile scenarios

FY 2022 sustainability achievements

2022 main achievements

• Energy: 100% procured renewable electricity in EU & NA
• Bio & Circular materials: rice husk silica reached 5.5% of total silica (+4pp vs '21) targeting 10% by 2023⁷
• Tyre Wear & Innovation: 2021-22 new product lines⁸ featuring up to 30% wear rate improvement vs previous ones
• Science Based Target: new SBTi approved target in line with 1.5°C, Commitment to Net Zero SBTi formalized
• Sustainable Finance: release of Sustainability-linked financing framework (May 2022)

Leading positions in ESG Indexes

6 FY 2022 prel. unaudited results 1. RR: Rolling Resistance, WG: Wet Grip and ICE, focus on new labelled IPcodes; 2. IP codes: Identification Product Codes, extra EU labelling scales are converted to EU labelling grades, for WG the ICE Pictogram is included; 3. Reference tyre: 235/45R20 100H XL S-ZERO(MO) IP 17884, official target 3% excl. Metals; 4. Figure including both share from direct procurement (51%) and national electric grid mix based on IEA data (23%); 5. Target approved by the Science Based Target Initiative in line with "1.5° Scenario"; 6. Target approved by the Science Based Target Initiative in line with "2° scenario"; 7. Investments already activated in 2022 to reach 10% in

2023. 8. Cinturato in 2021 and Scorpion in 2022.

Agenda

Car tyre market and Pirelli performance in FY/4Q 2022

Market share gain in High Value, with a strong focus on ≥19''; lowered exposure on Standard

Industrial Plan delivery well on track in 2022 despite external headwinds impact

Main programs	2022 targets	FY'22 main achievements	Δ vs. Ind. Plan
Commercial	• Focus on H.V. outperforming market in ≥18" • Car ≥18": +7.6% vs. +5.4% with: Replacement • solid Repl. demand across regions • O.E. strong focus on 19'' and EV • More selective approach to O.E. • Car Std. weight to ~39% (-3pp YoY) in line with FY target • Lowering exposure to Standard
Innovation	• Expanding homologations in ≥19"/Specialties • Product renewal	• 300 new car homolog. (85% ≥19", 45% Spec., mainly EV) • 9 high performance Car products, focus on regional needs • 2 Wheels portfolio enriched to meet consumer demand
Competitiveness	• Progressing with Wave 2 efficiencies plan	• €136M in line with FY'22 target
Operations	• Increasing High Value capacity • Further improving capacity saturation	• Capacity deployment in line with FY target: • Total cap: 74 mln pcs, +1 mln yoy, ~90% saturation • H.V.: 54 mln pcs, +3mln yoy; >90 saturation • Mitigation actions to minimize headwinds (e.g. Covid, energy crisis, etc) and ensure business continuity	Not foreseen in the Industrial Plan

2022 Commercial program delivery

Overperformance vs. market, driven by ≥19" and Specialties

2022 Innovation program delivery on Car

Securing future High Value volumes, gaining share in Repl. through our product pipeline …

2022 Innovation program delivery on Car

New labelled products strongly focused on A/B¹ grade

2021

... with a strong focus on sustainability

Rolling Resistance/

>

Energy Efficiency 49%

Eco & Safety performance products Sustainable materials shift to reduce fossil content

e.g. use of rice husk silica in plants and products reduce CO² emission up to 90% vs. quartz-sand one

Leading in Safety while reducing Wear Particles

• Towards EURO 7 (particles emission): proactive engagement with all stakeholders on methodology development. >
• Leveraging on virtual development technology & measurement in real driving conditions to quickly advance on Pirelli performances. >
• 2021-22 new product lines already featuring up to 30% improvement on wear rate vs previous generation. >

12 FY 2022 prel. unaudited results 1. Extra EU labelling scales are converted to EU labelling grades; 2. Car tyres which fall exclusively into classes A, B, C for rolling resistance and wet grip, standardized according to the European labelling parameters; 3. Tyre available on the market with the highest % of renew. & recycled: reference tyre in 2022 is 235/45R20 100H XL S-ZERO(MO) IP 17884.

2022 2025E

50% >70%

2022 Innovation program delivery on two-wheels

Enhancing our positioning on both Moto and Cycling business

Competitiveness programs progress

FY achievements in line with expectations

	2021			2022 E
	FY ACT	Focusing on:	FY GUI	FY ACT
Product Cost		 Modularity  Design speed and virtualization
Manufacturing		 Footprint optimization  Industrial IOT and flexible factory
SG&A		 Logistics network redesign and service differentiation  Procurement rationalization
Organization		 Digital processes and organization transformation
Total Gross Impact as % of baseline	~€155M ~4.0% of baseline '20		~€140M ~3.1% of baseline '21	€136M ~3.0% of baseline '21

FY 2022 Sales bridge

Solid Price/mix delivery across quarters thanks to price hikes and product mix improvement

FY/4Q 2022 adjusted EBIT bridge

Profitability supported by price/mix & efficiency covering ~1.3x Raw Mat & Inflation headwinds in FY

€ million

FY 2022 Net Income bridge

Earnings driven by improving operating performance

€ million

FY/4Q 2022 Net Financial Position

Better yoy cash flow trend driven by the solid operating performance and working capital management

• ➢ Capex: in line with Target, with the bulk in 4Q (52% of FY) due to reallocation of projects (following the RU-UKR crisis) and delay in the delivery of machineries (chip shortage) >
• ➢ Inventory at ~22% of sales in FY'22, -1pp vs. 9M, mainly benefitting from raw mat inventory reduction in 4Q >
• ➢ Receivables at ~10% (-2.8pp vs yoy) due to lower sales growth vs. 9M >
• ➢ Payables at ~30% (-0.7pp yoy) discounting the significant stock reduction in Raw Materials occurred in 4Q >

Total Gross Debt structure as of December 31st 2022

€ million Liquidity margin fully covering debt maturities up to 1Q'25; ESG-financing weight on gross debt at ~50%

Agenda

2023 global economic outlook

High volatility due to a tough geopolitical scenario; recession risks in EU/US, China expected to rebound

• Monetary tightening and cooling demand are easing Consumer inflation
• Inflationary pressure remains on input costs (raw mat, energy, labour and regional transportation)

2023 global car tyre market outlook

High Value resilience confirmed, expected to outperform the Standard market by 6pp

Main highlights

> Repl. ≥18'': trend in line with 2022 with a different trend across the year (softer 1H in EU, N.A. and China; rebounding in 2H)

> Car ≤17": demand trend on OE and Repl. reflecting a weak economic environment

How Pirelli is navigating this scenario

Issues	Pirelli's actions in 2023
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), strong focus on sustainability  Solid pricing discipline
Inflation	 Price/mix and efficiency fully offsetting raw mat, inflation and forex  Energy costs (~4.8% of sales in 2023, +1pp yoy), labour contract negotiation in 1H'23  Efficiency program Wave 3: ~€100 mln gross savings supported by Company digitization
Operations	 Capacity saturation at ~90%, with H.V. mitigating the lower saturation on Std. (RU)  High Value capacity projects ongoing (e.g. Romania and N. America) with full deployment by 2025, strengthening our Local-for-Local strategy  Energy consumption containment program progressing, coherently with our decarbonization strategy
Working Capital & Interest rate hike	 Efficient inventories management leveraging on the full integration of all company processes (e.g. Integrated Business Planning), the strong cooperation with our suppliers (further diversified) and clients, and the flexibility of our plants  Limited interest rate hike impact due to a balanced fixed/floating debt mix; liquidity covers debt maturities up to 1Q 2025

FY 2023 targets

		2022 A	2023 E
€ billion
	Net Sales	6.62	~6.6 ÷ ~6.8	• Vol.: flat / ~+1% • Price/mix: ~+4.5% ÷ ~+5.5% • Forex: ~-4.5% ÷ ~-3.5%
	adj. EBIT margin	14.8%	>14%÷ ~14.5%
	CapEx (% of Sales)	0.40 (6.0%)	~0.40 (~6%)
	Net Cash Flow bef. Dividends	0.52	~0.44 ÷ ~0.47
	Net Financial Position NFP / adj. EBITDA	2.55 1.8x	~2.35 ~1.65x ÷ ~1.7x
	ROIC1 Post taxes	20.3%	~20%

Agenda

Key car market trends: Europe

Key car market trends: North America

27 FY 2022 prel. unaudited 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

Economic results summary

€ million	4Q 2022	4Q 2021	∆ YoY	FY 2022	FY 2021	∆ YoY
Net Sales	1,582.4	1,352.2	+17.0%	6,615.7	5,331.5	+24.1%
Organic variation			+14.8%			+18.7%
EBITDA1 adjusted	329.1	316.7	+3.9%	1,408.3	1,210.7	+16.3%
% of net sales	20.8%	23.4%	-2.6 p.p.	21.3%	22.7%	-1.4 p.p.
reported EBITDA	292.5	278.9	+4.9%	1,335.7	1,085.7	+23.0%
% of net sales	18.5%	20.6%	-2.1 p.p.	20.2%	20.4%	-0.2 p.p.
EBIT1 adjusted	224.3	217.0	+3.4%	977.8	815.8	+19.9%
% of net sales	14.2%	16.0%	-1.8 p.p.	14.8%	15.3%	-0.5 p.p.
reported EBIT	159.3	150.8	+5.6%	791.5	577.1	+37.2%
% of net sales	10.1%	11.2%	-1.1 p.p.	12.0%	10.8%	+1.2 p.p.
Net income / (loss) from equity investments	2.7	2.4	+12.5%	5.8	4.0	+45.0%
Financial income / (expenses)	(56.6)	(37.4)	+51.3%	(201.7)	(144.3)	+39.8%
EBT	105.4	115.8	-9.0%	595.6	436.8	+36.4%
Taxes	(28.8)	(30.4)	-5.3%	(159.7)	(115.2)	+38.6%
Tax rate %	-27.3%	-26.3%		-26.8%	-26.4%
Net Income / (loss)	76.6	85.4	-10.3%	435.9	321.6	+35.5%
Earnings / (loss) per share (€ per share)	0.08	0.08		0.42	0.30
Net income / (loss) adjusted	124.6	108.7		570.4	468.8

30 FY 2022 prel. unaudited results 1. Adjustments refers to one-off, non recurring and restructuring expenses to the amount of €72.6M (€101.4M in FY 2021). In FY 2021 were included expenses relative to the retention plan approved by the Board of Directors on February 26, 2018 to the amount of €4.7M and COVID-19 direct costs to the amount of €18.9M. With reference

only to EBIT, amortization of intangible assets recognized as a consequence of Business Combinations amounting to €113.7M (€113.7M in FY 2021).

Net Cash Flow

€ million	4Q 2022	4Q 2021	FY 2022	FY 2021
adjusted Operating income (EBIT)	224.3	217.0	977.8	815.8
Amortiz. & depreciations (excl. PPA amortiz.)	104.8	99.7	430.5	394.9
Investments in tangible and intangible assets (Capex)	(209.0)	(132.3)	(397.7)	(345.6)
Increase in right of use	(29.2)	(62.8)	(79.7)	(122.4)
Change in working capital/other	830.5	756.5	77.9	50.9
Operating Cash Flow	921.4	878.1	1.008.8	793.6
Financial income/(expenses)	(56.6)	(37.4)	(201.7)	(144.3)
Taxes paid	(54.3)	(26.8)	(205.5)	(125.6)
Dividend paid to minorities	0.2	-	(24.4)	-
Cash-out for non recurring items and restructuring costs / other	(11.8)	(19.0)	(58.3)	(121.7)
Exchange rates difference/other	39.8	13.0	(3.4)	25.4
Net Cash Flow before extr. oper. / equity transactions / divid.	838.7	807.9	515.5	427.4
Extraordinary operations	-	-	-	3.8
Net Cash Flow before dividends	838.7	807.9	515.5	431.2
Dividends paid by Parent	(0.8)	(0.1)	(161.0)	(79.9)
Net Cash Flow	837.9	807.8	354.5	351.3

Raw material costs trend and mix

Main raw materials price trend

Pirelli FY 2022 mix (based on purchasing cost)

Pirelli manufacturing footprint