In General. - Amazon S3...In General. This document (the “Presentation”) has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company” and, together with its subsidiary

▬ In General. This document (the “Presentation”) has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company” and, together with its subsidiary the “Group”) and is being

furnished for information purposes only in order to generally present the Group and its business. This presentation does not purport to be completed or exhaustive.

▬ 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.

▬ 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.

▬ Financial information. Some financial information contained in this Presentation derives from carve-out financial statements prepared in the context of the IPO and listing of the

Company’s shares on Mercato Telematico Azionario organised and managed by Borsa Italiana S.p.A.. Therefore, such information may not be fully comparable with past and

future performance of the Group. 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.

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.

DISCLAIMER_ (1/2)

1

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.

DISCLAIMER_ (2/2)

2

AGENDA_

3

1. PIRELLI TODAY

2. GOVERNANCE

3. KEY INVESTMENT HIGHLIGHTS

4. MARKET AND COMPETITION

5. HIGH VALUE STRATEGY: LEVERS AND REGIONAL DEPLOYMENT

6. HIGH VALUE STRATEGY: START-UPS

7. TRANSFORMATION PROGRAMS

8. STANDARD PROGRAMS

9. TARGETS

10. 9M’17 FINANCIAL RESULTS

11. APPENDIX

PIRELLI AT A GLANCE (2016A)_

Revenues

€4,976 Mln

55% 45%

Standard

High Value2

Car

93% of

revenues3

Moto 7% of

revenues

140+ years of heritage >40%

Market Share Prestige Car

Manufacturers

1Excluding non recurring, one-off and extraordinary items; 2Include prestige, new premium (≥18”), specialties and super specialties; 3Percentage based on 2016 Consumer revenues net of Moto only Source: FY 2016 carve-out Consolidated financial statements consumer business only, Pirelli estimates on third party data

REVENUE BY

CHANNEL

2016A

Adj. EBIT1

€844 Mln

(Margin 17%)

REVENUE BY

REGION

2016A

PRODUCTION

CAPACITY

2016A 19 plants

in 13 countries

81%

19%

Standard

High Value2

74%

26%

Original

Equipment

Replacement

LATAM

17%

Europe

42%

NAFTA

19%

APAC

14%

Russia

3%

MEAI

5%

23%

77%

Low Cost

Countries

Mature

Countries

12,500 PoS

In 160+ countries

Long standing partnership with

and exclusive supplier

75%

GLOBAL PREMIUM TYRE LEADER WITH UNIQUE FOCUS ON CONSUMER SEGMENT

#1

4

23% Industrial1 100% Consumer 77% Consumer1

68% 32% 81% 19%

Standard High Value2 Standard High Value

Revenues 45% 55%

Standard High Value2

Adj. EBIT3

Revenues4 55% 45%

Standard High Value

Adj. EBIT3,4

17% Adj. EBIT3 Margin 15% Adj. EBIT3

Margin

1Pirelli Group product view figures as at 31st December 2014; 2High Value contribution calculated on Pirelli Consumer carve-out figures as at 31st December 2014; 3Before

amortization of PPA, non recurring items and restructuring costs; 4Pirelli Consumer carve-out figures as at 31st December 2016

Enhanced Financial Profile with a

Significantly Improved Profitability

2016A 2014A

PIRELLI EVOLUTION: FROM PIRELLI GROUP TO PIRELLI CONSUMER IN LESS THAN TWO YEARS_

5

The Only Tyre Company Focused On Serving Consumers Only

FROM FOCUS ON PREMIUM… …TO A NARROWER FOCUS ON “HIGH VALUE”

1Weight on total consumer business carve-out revenues as at 31st December 2016; 2Including motorsport and Specialties ≤17”; 3Radial, Custom Touring, Off Road and Sport

Touring X-ply with speed index ≥H

Old

Premium

(≥17’’)

≤16’’

20161

Actual

100%

Start-up

in 2017

CYBER VELO

45% ≤17’’ excluding

Specialties

Non

Premium

New Premium (≥18’’)

Prestige

Specialties &

Super Specialties2

Premium3

CAR MOTO

55%

% on 2016A total revenues1

(~100 mln customers)

Specialties

≤17’’

≥18’’

17’’

~65%

35%

65%

18’’

HIGH VALUE

STANDARD

NEW FOCUS ON «HIGH VALUE»_

6

AGENDA_

7

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

Technological know-how is to

remain owned by Pirelli and

never to be transferred to any

third parties, unless approved by

an overwhelming majority equal to

90% of Pirelli shareholders

In line with Pirelli

fundamental legacy, traditions and

entrepreneurial culture, Pirelli

headquarters is to remain in

Milan (Italy) unless approved by

an overwhelming majority equal to

90% of Pirelli shareholders

PIRELLI GOVERNANCE AFTER RE-LISTING_

Pirelli By-Laws shall set forth that

the corporate governance of

Pirelli will be inspired to the

international best practices

In the future one-fifth of the

board will be appointed by

minority shareholders

BY-LAWS BOARD OF DIRECTORS SHAREHOLDERS AGREEMENT

Internal committees in line

with the best practices of

international and Italian

listed companies, with

independent directors having

a key role.

Highly qualified Members

and suitable mix of

competences and

key role of independent

directors: the majority of the

Board will be made up of

Independent Directors

Transactions with related

parties to be governed by

principles and procedures in

line with the best practices

with a key role of the

Committee for Related

Parties Transactions

The partnership recognize that (i) Pirelli is a

company specialised in high quality and

technology products, (ii) the loyalty,

professional competence and expertise of the

management as key factor for the success and

growth of Pirelli and its business

Pivotal role of the top management to

maintain its quality standards, essential to

preserve and value Pirelli industrial history

Pirelli Chief Executive Officer to lead

top management and ensure Pirelli

business culture continuity

Pirelli Recruiting and Career Plans and its

incentive schemes to match management

and shareholders interests. Incentive plan

targets consistent with Pirelli New Strategic

Plan (e.g.: cumulated profitability),

and in line with the best practices for listed

Companies (e.g.: TSR, sustainability)

Leading role of Marco Tronchetti Provera

in the designation of his successor

8

AGENDA_

9

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

12

GLOBAL REPLACEMENT TYRE MARKET

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

The Global Tyre Market Has Proved Resilience to Past Economic Cycles

+2.7%

+14.9%

+3.5%

CAGR

09A-16A

Mln pieces

+2.5%

+3.5%

CAGR

16A-20E

37 37 39

48

54 59

69

78 91

104 116

129

145

161

2014A 2018E 2008A 2020E

836 832

799 795 899 867

952

2007A

914

794

834

2019E

1,055

1,216

2009A

999

1,170

1,025

1,031

939

1,087

955

1,059

971

1,128

928

892 869

961 1,002

924

2010A 2011A 2016A 2015A 2017E 2012A 2013A

<=17’’ >=18"

~4x

-0.3%

+2.9%

-0.2%

CAGR

07A-09A

+11.5%

STRATEGIC POSITION IN A PROFITABLE AND RESILIENT SECTOR WITH GROWTH POTENTIAL_

1

10

KEY INVESTMENT HIGHLIGHTS_

11

Strategic Position in a Profitable and Resilient Sector with Growth Potential

Leadership Position in High Value Markets

Iconic Brand with Focus on Consumer Engagement Beyond Tyres

Solid Business Relationship with Prestige and Premium Car Makers

Pioneering Technological Innovation

Growing High Value Footprint

Experienced Management Team

Proven Ability to Generate Cash Flow from Operations

1

2

3

4

5

6

7

8

(Mln vehicles)

(Mln pieces)

EU, APAC,

NAFTA

EU, APAC,

NAFTA

+8.3%

+8.5%

CAGR

14A–16A

▬ Focus segments and regions reflect the market

▬ Aiming to continue to outperform the market in 2016-

2020

(Mln pieces)

+13.3%

+13.6%

▬ Expected to reach 154 Mln vehicles in 2020

▬ Europe, APAC and NAFTA ~93% of total parc by 2020

▬ Expected to reach 278 Mln tyres in 2020

▬ Europe, APAC and NAFTA contributing 95%

EU, APAC,

NAFTA

+19.5%

+19.3%

CAGR

16A–20E

CAGR

14A–16A

CAGR

16A–20E

CAGR

14A–16A

+4.6%

+4.5%

+9.2%

+9.2%

110 129 154

93% 93% 93%

152 196

278

95% 95%

95%

Source: Company elaborations based on third party data relative to car market and on data provided by local associations of tyre producers, FY 2014 and FY 2016 consolidated

financial statements (consumer business only)

PRESTIGE & PREMIUM CAR PARC

2016A

>34

2020E

21

93%

15

94%

2014A

≥18’’ O.E. + REPLACEMENT TYRE MARKET

≥18’’ PIRELLI O.E. + REPLACEMENT VOLUMES

2014A 2016A 2020E

Other regions

Other regions

Other regions ≥13%

CAGR

16A–20E

92%

Russia , Gulf

and LATAM

2014A 2016A 2020E

2 STRONG FOCUS ON PRESTIGE & PREMIUM GEOGRAPHIES_

12

1Car tyres with rim size ≥18”; 2Data referred to Pirelli and Metzeler brands combined; 3Radial, Custom Touring, Off Road and Sport Touring X-ply with speed index ≥H; 4Perimeter includes Italy, Spain, France, UK and Germany

Note: all market positions refer to 2016 full year data, except China New Premium that refers to 10 selected cities analyzed through Jan 2016–Aug 2016

Source: Pirelli estimates on third party data

PRESTIGE

RADIAL TYRES

FOR MOTO2

PREMIUM TYRES3

FOR MOTO2

NEW PREMIUM1

REPLACEMENT

GLOBAL LEADER

GLOBAL LEADER

LEADER4 LEADER LEADER THIRD

LEADER4

AMONG TOP 4 IN USA

Leader in marked tyres

LEADER IN

CHINA

1 3

LEADER IN

BRAZIL

EUROPE NAFTA APAC LATAM

2 LEADERSHIP POSITION IN HIGH VALUE MARKETS_

13

ICONIC BRAND GLOBALLY RECOGNISED_

PERFORMANCE INNOVATION HERITAGE CULTURE &

LIFESTYLE DESIGN

3

14

# OF MARKED TYRES HOMOLOGATIONS*

Source: *Tyre players price List Germany May 2017, for Continental price list Germany April 2017

PIRELLI YEARLY HOMOLOGATIONS

406 412

652

866

360 287

~ +33% ~ +110% ~ +113% ~ +141% ~ +202%

Example of marked

2000

1990

1980

2010

2015

Standard Products

New Premium Products

165

207

281

315

2013A 2015A 2016A

327

2014A 2012A

176

139

247

284 288

26 31 34 43 27

MARKED TYRES TIMELINE

OE marked tyres, introduced with Porsche in the 80s, are now requested by all top car

manufacturers to help customers finding the right tyre for their car

~2x

SOLID BUSINESS RELATIONSHIP WITH PRESTIGE AND PREMIUM CAR MAKERS_

4

15

28 collaboration projects with University

15 JDAs and more than 50 NDAs with suppliers/universities

Over 100 co-operations with Premium OEMs projects on cutting edge

technology

Unique motorsport know-how

Over 150 external projects on Materials, Process, Software and Electronics

More than 5,000 patents

~7.4% of High Value revenues devoted to R&D in the last three years

1 Modular Integrated Robotized System

R&D OPEN INNOVATION PLATFORM BUILT ON A HOLISTIC MODEL…

REPLACEMENT

MARKET

O.E. CUSTOMERS

SUPPLIERS

UNIVERSITIES

LEGISLATION

Pirelli R&D

PRODUCTS

▬ Homologation portfolio: >1,900 prestige &

premium items

▬ Wide offer on Specialties and

SuperSpecialties

▬ Advanced Virtual Modeling

▬ Next generation MIRS1

▬ New mixing technology

▬ Wide adoption of automation

PROCESSES

MATERIALS

▬ Carbon Nanotubes

▬ Innovative Natural Nanofibers

▬ Functionalize Lignine

▬ Development of renewable materials

…ACHIEVING TECHNOLOGICAL INNOVATION

BEST-IN-CLASS R&D PLATFORM_ 5

16

IMPROVED MARKET PENETRATION STRONG CAR CAPACITY INCREASE ON ≥18’’

Mln pieces # PoS

46% 54% High Value

% of total

38*

88%

+6

2014A

32

86%

2016 A

~12,500

73%

2016A

+2,500

69%

~10,000

2014A

LATAM, MEAI, Russia PoS

EU, APAC, NAFTA PoS

Source: FY 2014 and 2016 consolidated financial statements consumer business only

*Integer results might not reflect actual sum due to rounding

LATAM, MEAI, Russia Car ≥18’’

EU, APAC, NAFTA Car ≥18’’

+20%

+25%

HIGH VALUE MANUFACTURING AND RETAIL FOOTPRINT_ 6

89%

17

CEO has been

managing Pirelli for

the last

International

Management

Team

Research

&

Development

Senior

Management Team

average tenure in

Pirelli

Source: Pirelli Internal data

Global

and local

“talents”

EXPERIENCED MANAGEMENT TEAM_

25 years 26 nationalities ~1,800 people 16 years > 680

7

18

Source: company annual reports; Note: for Pirelli Consumer carve out data was used; *Definition: (EBITDA – CapEx) / EBITDA; **Adjusted excluding PPA amortization, non recurring,

one-off and extraordinary items

FCF CONVERSION*

TIER 1 2016A ADJ. EBIT MARGIN AND 2014A-2016A

ADJ. EBIT GROWTH

closing the gap vs Nokian, ~+10pp vs EU Tier 1

2016 A

69%

2014 A

67%

2016 A

73%

2014 A

80%

2016 A

56%

2014 A

43%

2016 A

57%

2014 A

60%

8 PROVEN ABILITY TO GENERATE CASH FLOW FROM OPERATIONS_

25.0%

15.0%

-5.0%

25.0% 20.0% 15.0% 10.0%

Adj.

EBIT**

Margin 2016A

Adj. EBIT** CAGR

2014A-2016A

Pirelli

High

Value

5.0%

19

AGENDA_

20

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

(Mln pieces)

REPL. TYRE

MARKET

Premium Growth To Continue Outpacing Non-Premium Growth Both In O.E. And Replacement


2020E

1,216

14.4%

13.2%

2016A

1,059

13.4%

9.8%

2014A

1,002

12.5% 7.8%

2014A

23.4%

2016A 2020E

18.6%

502

432 459

22.4%

20.0%

20.6%

17.2%

(Mln pieces)

O.E. TYRE

MARKET

16.2% +15.4%

+6.2%

+0.9%

+11.5%

+5.5%

+2.0%

+3.5% +2.8%

CAGR

16A-20E

CAGR

14A-16A

Total

≥18”

17”

16.2%

16.2% +11.1%

+8.6%

-0.9%

+6.4%

+4.4%

0.0%

+2.3% +3.1%

CAGR

16A-20E

CAGR

14A-16A

Total

≥18”

17”

≤16”

16.2% >3x

≤16”

>3x

TYRE MARKET SHIFTING TOWARDS HIGHER RIMS_

21

KEY DRIVERS OF GLOBAL HIGH VALUE TYRE MARKET GROWTH_

Increase in

number

of homologations

2

Rising

penetration

of SUVs

4

Growing demand

for specialties

3

Car evolution

5

New Car

technologies

6

Penetration of

Premium &

Prestige cars

1

22

(Mln vehicles) +10.7%

+8.4%

+2.6%

+4.7 %

+3.8%

+1.6%

CAGR

14A-16A

CAGR

16A-20E

NEW REGS. +1.9% +3.3% Total

Prestige

Premium

Synergic


2020E

99

12.7% 0.4%

2016A

92

11.8% 0.3%

2014A

86

10.7% 0.3%

(Mln vehicles) +12.5%

+8.2%

+3.6%

+7.8%

+4.5%

+3.3%

CAGR

14A-16A

CAGR

16A-20E

CAR PARC +3.4% +4.1% Total

Prestige

Premium

Standard

2020E

1,372

11.0% 0.3%

2016A

1,200

10.5% 0.2%

2014A

1,108

9.7% 0.2%

DRIVER 1: RISING PENETRATION OF PREMIUM & PRESTIGE CARS_

23

Number of Models by OEM 1

Source: Company elaborations based on third party data relative to car market and on data provided by local associations of tyre producers; Porsche disclosure 1Only includes model derivatives of which more than 5,000 units are sold in a year; 2Pirelli Fitments

INDIVIDUALIZATION LEADING TO MORE VEHICLE MODELS…

9 10 15

3

24

16 16 20

6

36

18 22

25

7

39

25 30

33

9

47

Audi BMW Daimler Porsche Volkswagen

2000A 2010A 2014A 2020E

DRIVER 2 & 3: INCREASE IN NUMBER OF HOMOLOGATIONS AND IN DEMAND FOR SPECIALTIES_

Expanding Range Of Homologations Supports High Value Market

Cayenne

MY 2013

18’’- 21’’

Macan

18’’- 21’’

8 2 28 2

Porsche SUVs illustrative example

…AS WELL AS MORE FITMENTS PER MODEL

KEY BENEFITS

NOISE CANCELLING SYSTEMTM

Sp

ec

ialt

ies

S

up

er

Sp

ec

ialt

ies

RUNFLAT

SEAL INSIDETM

RACING TYRES

COLLECTION TYRES

COLOR EDITION

CONNESSOTM

MAINLY

REQUESTED

BY CAR

MANUFACTURERS

▬ Car manufacturing cost reduction

▬ Total mobility approach

▬ Higher car appeal

▬ Satisfaction of specific needs

▬ Distinctive luxury product

▬ Advanced digital technology

PRODUCTS

MAINLY

REQUESTED

BY END

CUSTOMERS

MY 2010

24

5 8

10

26

34

10% 12% 14% 29% 34%

0%

10%

20%

30%

40%

.0

10.0

20.0

30.0

40.0

2000A 2005A 2010A 2016A 2020E

SUV Sold Penetration

SUV sales (Mln vehicles and weight on total sales), Worldwide

RISING SUV PENETRATION


DRIVER 4 & 5: SUV POPULARITY AND CAR DEVELOPMENT TOWARDS HIGHER RIMS_

M5

E-28 1985-

1987

M5

E-34 1988-

1995

M5

E-39 1998-

2003

M5

E-60 2006-

2011

M5

F-10 2011-

2017

HP 286 315 400 507 560

Front

fitment

225/60

VR 15

235/45

ZR 17

245/40

ZR 18

255/40

ZR 19

265/35

ZR 20

Rear

fitment

225/60

VR 15

255/40

ZR 17

275/35

ZR 18

285/35

ZR 19

295/30

ZR 20

BMW M5 SERIES

25

2020E 2025E

Ultra Low Rolling Resistance

Electric

Autonomous1

Connected

Shared

3% 8% Share of

parc

Share of registrations 12% 20%

30% 52% Share of

parc


Share of miles driven 3% 5%

1% 8% Share of

parc


Homologation of «Green» tyres

(A-label RR), specifically

designed for electric cars

Integrated real-time analysis of

tyres and car performance, for

the safest autonomous drive

Cloud based solutions for

fleets, enabling TCO reduction

and higher uptime of vehicles

Monitoring of tyres’ conditions,

including wear and load, via

smartphone or car electronics

1Figures refers to autonomous driving levels 3, 4, 5 Note. “Connected” refers to cars with mobile data connection (e.g. 2G, 3G, LTE), which might be provided by either embedded car systems or car hardware paired with external devices (e.g. smartphone) All data refers to Prestige & Premium cars Source: company analysis on consulting and investment banks research reports

DRIVER 6: NEW CAR TECHNOLOGIES_

PRESTIGE & PREMIUM CAR EVOLVES IN FOUR MAIN DIRECTIONS PIRELLI IS RESPONDING WITH SPECIFIC SOLUTIONS

26

2020E 2025E

3% 8% Share of

parc


30% 52% Share of

parc



1% 8% Share of

parc


Electric

Autonomous1

Connected

Shared

Note. “Connected” refers to cars with mobile data connection (e.g. 2G, 3G, LTE), which might be provided by either embedded car systems or car hardware paired with external devices (e.g. smartphone) All data refers to Prestige & Premium cars Source: company analysis on consulting and investment banks research reports

CONNECTED CAR CONSUMERS HAVE ALL TYPES OF

INFORMATION AVAILABLE, APART FROM THEIR TYRES…

…AND THEY ARE VERY INTERESTED IN CONNECTED TYRES

Pirelli consumer survey

38% 38% Total Very interested Somewhat interested

76%

▬ The new technological frontier of the

intelligent tyre for the replacement and

O.E. market

▬ Tyre parameters sent to an app or to car

electronics

▬ Several services will be available

PIRELLI SPECIFIC SOLUTIONS

DRIVER 6: CONNECTED PRESTIGE & PREMIUM CAR_

PRESTIGE & PREMIUM CAR EVOLVES IN FOUR MAIN DIRECTIONS

27

2020E 2025E

3% 8% Share of

parc


30% 52% Share of

parc



1% 8% Share of

parc


Electric

Autonomous1

Connected

Shared


ELECTRIC VEHICLES DEMAND

VERY COMPLEX TYRES…

…RAISING THE BAR FOR TECHNOLOGY AND INNOVATION

Higher

load

Lower

Rolling R.

Higher

grip

Lower

noise

Ultra Low Rolling Resistance

▬ Development of “Green” tyres with low

rolling resistance and high performance

▬ Partner with traditional brands moving into

electric, pure established electric brands

and new electric players


DRIVER 6: ELECTRIC PRESTIGE & PREMIUM CAR_


28

TYRE COMPETITIVE ARENA: TIER1 ONE PLAYERS LEADING THE INDUSTRY WITH DIFFERING ROLES_

1 Tier 1 panel: Bridgestone, Michelin, Goodyear, Continental, Pirelli, Nokian; 2 Tier 2 panel: Sumitomo, Yokohama, Hankook, Cheng Shin, Cooper, Kumho, Toyo, MRF, Apollo, Nexen,

Titan, Brisa, Mitas, Trellleborg; 3 Tier 3 panel: remaining companies as listed by “tyre business” ; 4 2016, Group financial data

Tier 1 Players Maintaining Their Grip on Half of the Market

TIER 11

TIER 22

2016 Industry Sales4

TIER 33 High-single digit

EBIT Margin4

11%

EBIT

Margin4

13%

EBIT

Margin4

>17%

EBIT

Margin4

“FULL-LINERS”

“GLOBAL HIGH VALUE”

“CORE BUSINESS IN WINTER”

>150 players

4 players

2 players

50%

23%

27%

14 players

Δ vs 2013

=

-1pp

+1pp

“MAINLY

MASS-MARKET”

“LOW-COST

PLAYERS”

29

TIER 1 COMPARISON: PIRELLI PLAYING A VERY DIFFERENT GAME VS EUROPEAN “FULL-LINERS”_

1Source: company annual reports, Carve-out data for Pirelli, Tires for Continental (data from factbook 2016); 2Source: 2016 Factbook for Continental, company presentation for

Michelin; 3Source: Germany wholesaler / dealer product list (May 2017); 4 Group data for Michelin, Tires for Continental; 5Source: Pirelli elaboration on company official data: 2016

annual report for Michelin (data refers to Group total capacity), 2016 factbook for Continental (data refers to Passenger capacity only); 6Source: broker’s estimates

Pirelli Totally Focused on Consumer Business, High Value Products and Final Consumer

Leader on Prestige, on ≥18” in Europe and China

Europe NAFTA APAC LATAM RoW

Consumer

Focus1

Distribution

coverage

Product

portfolio3:

High value

≥18

# of Marked Tyre

Homologations

R&D

Expenditure1

(on Sales)

Key

Brands2

Business

Model1

(replacement)

Brand

Focus

Geographical

Sales

Concentration4

Global

manufacturing

footprint5

100%

58%

~80%6

74%

75%6

70%

▬ Strong brand:

▬ Performance

▬ Motorsport

▬ Italian flair

▬ More mass

market oriented

▬ German

technology

▬ Visibility

beyond tyres

▬ Motor sport

▬ More mass

market oriented

3.3%

2.3%

4.0%

o/w HV

7.5%

~1,050

o/w ~320

SUV

~650

o/w ~180

SUV

~790

o/w ~290

SUV

~410

o/w ≥18” ~300

~650

o/w/ ≥18” ~460

~870

o/w ≥18” ~710

~12,500

PoS

42%

19% 14%

17% 8%

39%

37%

24%

57% 26%

10% 7%

High Cost

Low Cost

Low Cost

High Cost

High Cost

Low Cost

30

▬ “Mild” Winter

(Europe): ~500

▬ “Extreme”

Winter4:

Nordics ~110,

Russia ~230;

currently

improving it

▬ “Mild” Winter

(Europe) ~250

▬ “Extreme”

Winter4:

Nordics ~300,

Russia ~410

Consumer

Focus1

R&D

expenditure1

(on Sales)

Business

Model1

(replacement)

Brand

Focus2

Key

Brands2

Geographical

Sales

Concentration1

Global

manufacturing

footprint5

Distribution

coverage1

Product

portfolio3: High

value

≥18

# of Marked

Tyre

Homologations

Product

portfolio1:

Winter

Range

100%

89%6 100%

74% ▬ Strong brand:

▬ Performance

▬ Motorsport

▬ Italian flair

▬ Long-lasting

reputation in

Winter tyres

▬ Regional focus

1.3%

4.0%

o/w HV

7.5%

~1,050

o/w ~320

SUV

~170

o/w ~100

SUV

~870

o/w ≥18”

~710

2

(o/w ≥18”)

~12,500

PoS

~3,100

PoS

16% 29%

10%

1% 43% High Cost

Low Cost

EU+NA+AP

75%

Russia & Nordics

59%

High Cost

Low Cost 19% 14%

17%

8%

42%

1Source: Nokian annual report / financial results presentation, Carve-out data for Pirelli; Source: company website; 3Source: Germany wholesaler / dealer product list (May 2017); 4Source: Source: Russia / Nordics price list (2017); 5Pirelli elaboration on Nokian official data (FY16 results presentation); 6Sum of Passenger Car and Vianor business units on total

group sales

Pirelli Consumer Business and High Value focus, Captive in Growing SUV Demand

Europe NAFTA APAC LATAM RoW Nordics Russia Other Europe

TIER 1 COMPARISON: PIRELLI PLAYING ALSO A VERY DIFFERENT GAME VS NOKIAN…_

Europe NAFTA APAC LATAM Nordics Russia Other Europe RoW

31

Pirelli Wider Geographical Exposure and High Value Focus Lead to Faster Growth

2016A

Revenues

14A-16A

CAGR

2016A

Adj. EBIT margin

14A-16A

CAGR

€5.0 Bln +5% 17% +14% Consumer

€2.8 Bln +16% 25% +24% o/w

High Value

Group €1.4 Bln +0% 22% +0%

o/w

Car €1.0 Bln -1% 31% +2%

1Source: Nokian annual report / financial results presentation, Carve-out data for Pirelli; 2Pirelli internal estimates of ≥18” (O.E. + Repl.) world tyre market; 3Winter Repl. world tyre

market, and o/w Russia and Nordics; source: Nokian estimates (from 2015 Investor Day)

~10X ~16X

~3X

~3X

...WITH DIFFERENT PAST FINANCIAL PERFORMANCE, MARKET SPACE & SPEED_

MAIN FINANCIALS1 MARKET SPACE

Core tyre market (Mln tyres)

2020E

278

2016A

196

EU+APAC

+NAFTA

≥18"

O.E.+Repl.

2018E

152

2015E

137

Winter all

Rim Sizes Repl. Russia

& Nordics

+3%

+9.2%

18% 18%

95% 95%

CAGR

CAGR

32

AGENDA_

33

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

HIGH

VALUE

RUSSIA & CIS EUROPE NAFTA APAC MEAI LATAM EBIT Adj. Margin Revenues 2020E

STANDARD

EBIT Adj.

Margin

20E 16A

20E 16A

20E 16A 20E 16A 20E 16A 20E 16A 20E 16A 20E 16A

High

teens Twenties Twenties

Mid single

digit

Mid

teens

Break

even

Mid

teens

High single

digit

Mid

twenties

~ ~ ~

20E 16A

“VALUE MAP” GUIDING OUR PRIORITIES_

34

CAPEX 17E-20E

Avg. ~7% on yearly

sales

* Digital, Logistics, Commercial, etc.; ** Baseload HSE and loss prevention, R&D, IT, Logistics and other

Europe APAC NAFTA LatAm MEAI Russia

High Value 82%

Standard 3%

Common* 15%

100%

Conversion of existing capacity

towards High Value to support

NAFTA growth

2x investment if we include the acquisition of Aeolus Car plant

(4Mln pcs) in 2016

Maintenance**:

25% on total Capex

2017E-2020E STRATEGIC RESOURCE ALLOCATION, FOCUSED ON HIGH VALUE_

35

▬ Romania / Mexico further

expansions

▬ Brazil upgrade to High Value

▬ Upgrading and reshaping of

China ex Aeolus

Increase/conversion High Value capacity

Technology upgrade to High Value, Specialties, moulds and quality

Plant and business maintenance

Capex on revenues

€ Mln

% of revenues

Source: Pirelli consumer figures 2011-2013, carve-out 2014-2016

CAPEX / REVENUES OVER TIME_

2014A 2013A 2012A 2011A 2021E 2020E 2019E 2018E 2017E 2016A 2015A

Simultaneous capacity

increase initiatives:

▬ Kick off new Mexico plant

▬ Settimo Torinese new «Polo»

▬ China Car phase 3

▬ Romania further expansion

Mexico additional building and

capacity (ready to satisfy future

NAFTA demand)

36

Source: company data

YEARLY TREND - ITEMS KEY BENEFITS OF HOMOLOGATIONS

165

207

281

315

2013A 2015A 2016A

327

2014A 2012A

176 139

247 284

288

26 31 34 43 27

2017E 2018E 2019E 2020E

Standard Products

New Premium Products

Projects in homologation phase

▬ Strengthen competitiveness in Replacement

thanks to “pull through effect”

▬ Provide visibility in advance on future Car

Manufacturers demand

▬ Support product innovation and co-

development of cutting edge technology

Homologation Portfolio Almost Doubled in the Last 5 Years

KEY STRATEGIC LEVER #1: ACCELERATING HOMOLOGATION PIPELINE_

~1,150 O.E. PROJECTS

ALREADY ONGOING:

(June 2017)

~2X

37

IN 2017-2020 TIMEFRAME:

Winter

6

Global

9

Specialties

9

18

Summer &

All Season

12

Regional

9

Traditional

9

SALES AREA SEASONALITY TECHNOLOGIES

new product lines

of which:

KEY STRATEGIC LEVER #2: NEW PRODUCT INNOVATION_

vs 14 in past period

~+20%

Different sizes YoY

38

SALES PLANS

LEVERS #1 AND #2 WILL HELP US CAPTURE A HIGHLY PREDICTABLE AND COPIOUS TYRE DEMAND FOR ≥18’’…_

…To the point that >60% of our Replacement High Value Volumes (and >50% our O.E. High Value Volumes) in our Three Year Plan to 2020 are already linked to our current (30th June) Homologation Portfolio

DEMAND PLANNING

FACTORIES

SUPPLY CHAIN

TRADE ENGAGEMENT

CONSUMER ENGAGEMENT

Product

Develop.

O. E.

Tyres Market

Replacement

Tyre Market

Push through

Demand

New

Registrations

Car Parc fitting

≥18’’ tyres

Pull through

Demand

Homologation

44 60

BRANDS

104 M 161 M

TYRES

+36% vs. 2016

+54% vs. 2016

LEGEND: 2016A 2020E FIGURES

Replacement High Value Plan volumes linked

to Homologation portfolio as of June ’17 [%]

Avg >60%

2020 2019 2018

Avg >50%

2020 2019 2018

O.E. High Value plan volumes linked to

homologation portfolio as of June ’17 [%]

39

33 26

38 (54%)

-7

+3

+11 -2 +2

53 (67%)

71

79

Standard to New

Premium

New Premium conversion to

≥21’’

Standard reduction

New Premium growth

2016A 2020E

High Value Car (≥18” & Specialties)

Other Car (≤17” Marked, Homologated,

technological and regional lines)

Capacity ≥18’’

CAR CAPACITY PRODUCTION SPLIT

2016A 2020E

~ 90% > 90%

Mln pcs Capacity ≤17’’

AVERAGE SATURATION

PRODUCTION SPLIT

High Value Car (≥18” & Specialties)

Other Car (≤17” Marked, Homologated,


Note: rounding might occur

STRATEGIC LEVER #3: SHIFTING CAR CAPACITY TO HIGH VALUE_

40

1Other wholesale (not Tier 1), Other retail chains, Competitor equities, etc.

10%

9%

22%

~30%

~20%

~15% Car Dealer

Pirelli Retail

Tier 1

Increase control on

Demand and Pricing

Increase penetration through

coverage and share of wallet

Improve Collaboration and data

sharing

Leverage Pull-trough on New

Premium and Specialties

~1%

e-commerce

Develop on-line channel

through own properties and

partnership with eTailers

Sales On-line

across channels

Other channels1

66%

41%

Brand

eCommerce

~10%

Specialized eTailers

MarketPlaces

Chains eCommerce

Specialized

eTailers

Own Retail

eCommerce

8%

2%

18% 28%

2014A 2016A 2020E

STRATEGIC LEVER #4: MORE CONTROL OVER LAST MILE FOR PUSH THROUGH AND INCREASE COVERAGE OF CAR DEALERS FOR PULL THROUGH_

41

ROADMAP 2017-2020: COVERAGE AND SHARE OF WALLET

LOW

(<15%)

MEDIUM

(15%-30%)

HIGH

(>30%)

Pirelli share

of wallet

Europe

Russia

APAC

MEAI

LatAm

NAFTA

6.000

4.000

2.000

0

# PoS

‘16

‘20

‘16 ‘20

‘16 ‘20

‘16

‘20

‘16

‘20

‘16 ‘20

2017-2020 PLAN

2017-2020

Key Strategy

▬ Continuous increase in APAC

▬ Expand distribution network in NAFTA

▬ Strong positioning as Tyre Expert with a high Premium Network recognition in mature Regions

2020 PLAN

~17,000

28%

18%

31%

4%

6%

14%

3% 5%

2016A

~12,500

APAC

Europe

LatAm

MEAI

Russia

NAFTA

22%

19%

35%

16%

73%

73%

# PoS

STRATEGIC LEVER #4: RETAIL NETWORK EXPANDING, MAINLY IN APAC AND NAFTA_

42

▬ O.E. marking ▬ Rim sizes growing ▬ Seasonality:

Winter-Summer and All Season ▬ Extended mobility:

Run Flat, Self Sealing

▬ Trade consolidation ▬ Specialties now important for

differentiation ▬ Car dealers gaining market share

▬ Fleet highlights:

▬ 20% company fleets ▬ 8% leasing companies ▬ 2% rent a car

Expected competitive dynamics

PRODUCT TRADE CONSUMER

PRESTIGE & PREMIUM CAR PARC (Mln vehicles)

≥18’’O.E. + REPL.

TYRE MARKET (Mln pieces)

+9.5%

46.370 55.560 59.640

2020E 2016A 2014A

+1.8%

+16.0% +8.7%

▬ More online access, but buying offline

33.820 45.550

63.50

+12 +18

2020E 2016A 2014A

CAGR

’14A-’16A

CAGR

’16A-’20E

CAGR

’14A-’16A

CAGR

’16A-’20E

EUROPEAN MARKET_

43

12016 data

PIRELLI EUROPE TODAY

▬ Prestige Market Leader

▬ Partner of Premium Car Makers, #1 in marked tyre

homologations

▬ Cutting edge products

▬ ~3,500 PoS1

▬ Market Share replacement ≥18’’: close to 20%

Pirelli

Revenues

€ Bln

≥6.5% 6.2%

2020E 2016A

2.1

2014A

1.9

EUROPE STRATEGY

CAGR

14A-16A

OEM relationships

▬ Reinforce Prestige leadership

▬ Maintain position in Premium segment

▬ Expand collaborations in relevant EV projects

Product lines

▬ Grow Specialties, Super Specialties and new Premium

Distribution

▬ PoS expansion focused on Franchising

▬ Strengthen High Value price positioning

▬ Deploy Tier 1 integration to improve mix and business predictability

Consumer engagement

▬ Target New Premium and Prestige consumers with PZero World Shops

▬ Enhance consumer engagement and retention via:

▬ Digital and CRM

▬ Events sponsorships and new contents

▬ Connesso and PZero Velo to attract new segments

CAGR

16A-20E

High Value Standard

EUROPE PLAN_

44

*Excudes imports: CAR, 4x4, Light Truck and Runflat tyres (**) LeasePlan, ALD, Alphabet, Arval, Daimler Financial Services


PIRELLI STRATEGY BY CHANNEL FLEETS & PRIVATE CONSUMERS GO TO MARKET - EUROPE

Company Fleets

▬ Pirelli selective approach: targeting Premium car parc

▬ Leveraging Premium & Prestige O.E. pull-through with retail coverage

▬ CONNESSO – CYBERFLEET opportunities

Rent a Car

▬ No focus on tyre service to consumers

▬ Channel not sensitive to distinctive service/product offer

Car Sharing

▬ Developing channel, Pirelli selective approach

▬ Urban/low mix not aligned with Pirelli high-end consumer strategy

Leasing Companies

▬ Pirelli partner supplier of all key global players**

▬ Premium brand, mix-oriented offer

▬ Integrated tyre and service proposition – Pirelli-controlled retail

▬ WEB-Platform dedicated solution - B2Fleet portal

▬ CONNESSO – CYBERFLEET opportunities for B2B and B2C

TREND

MIX

Leasing Companies

8.0%

Private owners 69.0%

Car Sharing

1.0%

Rent a Car 2.5%

Company Fleets 19.5% European

Car Market*

PIRELLI: FLEET STRATEGY_

45



▬ ≥18’’ market confirms double digit growth

rate

▬ SUV and Electric segments fastest

growing

▬ Investment for Local-for-local production

to catch joint ventures with car producers

▬ Distribution channel mostly based on

wholesalers

▬ From network development and

maintenance to network management

▬ Car Dealer channel gaining market share

and starting regional tyre programs

▬ Shift from product to experience

▬ Digitalization of customer journey

▬ Start of on-line sales


≥18’’O.E. + REPL.


+14.8% 20.440 26.940

41.0

2020E 2016A 2014A

+11.1%

+18.2% +11.4% 32.690 45.660

70.420

+25 +13

2020E 2016A 2014A

CAGR

’14A-’16A

CAGR

’16A-’20E

CAGR

’14A-’16A

CAGR

’16A-’20E

APAC MARKET_

46

PIRELLI APAC TODAY APAC STRATEGY

▬ Very successful overall growth story

▬ Solid partner of Premium Car Makers

▬ Significant Network Expansion Strategy, supported

by geo-marketing

▬ #2 in Top of Mind in China

OEM relationships

▬ Consolidate leadership with Premium car makers

▬ Diversification of OEMs client base

Product lines

▬ Undisputed leader in Run Flat through O.E. pull-through

▬ Fast growing in other specialties (colored, PNCS)

▬ Grow Prestige sales in China

Manufacturing

▬ Increase fast and cost-efficient capacity to catch growth opportunities

Distribution

▬ Enhance trade engagement enlarging network and increasing quality

network

▬ Transfer China retail development best practice to South East Asia

Consumer engagement

▬ Focus communication to new Premium and Prestige consumers

Pirelli

Revenues

€ Bln

≥14.5%

17.2%

2020E 2016A

0.7

2014A

0.5

Standard High Value

CAGR

14A-16A

CAGR

16A-20E

APAC PLAN_

47

* Crossover Utility Vehicle

▬ Largest 18’’+ market (55% of worldwide volumes), continuously growing

▬ For the great majority “all season” market

▬ Investment in capacity

▬ Import from China down vs 2014 due to duties

▬ Independent Tyre Dealers strongest distribution channel

▬ Car Dealers gaining Market Share, while mass merchandiser decline

▬ Market highly concentrated within Top Player

▬ Service demanding, mainly checking online – buying offline

▬ Brands starting selling on-line

▬ Higher digital marketing investments targeting millennials


TRADE CONSUMER


≥18’’O.E. + REPL.


+3.3%

35.360 37.720 42.630

2020E 2016A 2014A

+3.1%

+10.6% +8.3% 77.690 95.020

130.770

+36 +17

2020E 2016A 2014A

CAGR

’14A-’16A

CAGR

’16A-’20E

CAGR

’14A-’16A

CAGR

’16A-’20E

NAFTA MARKET_

PRODUCT

48

▬ Prestige & European Premium Market Leader

▬ O.E. selective approach

▬ Solid and profitable Local for local industrial footprint entirely

focused on high-value production

▬ «All-season» product portfolio well perceived by the market

▬ Distribution focused on Premium customers and car dealers

▬ Retail affiliation targeted at Premium locations

PIRELLI NAFTA TODAY NAFTA STRATEGY

* Sport Utility Vehicle and Crossover Utility Vehicle (**) Run Flat, Seal Inside, Pirelli Noise Cancelling System

OEM relationships

▬ O.E. growth with key partners in HV segment and new EV players

Product lines

▬ New product lines introduction completing All Season and SUV-CUV* and

all season

▬ Grow Specialties, Super Specialties (Connesso) and new Premium

Manufacturing

▬ Growing capacity in Mexico

▬ LATAM plants conversions to HV

Distribution

▬ Widen distribution to Premium retailers in Premium areas

▬ Expand cooperation with Tier1 Customers

▬ Car Dealer business expansion

▬ Winter regional growth

▬ Strengthen High Value price positioning

Consumer engagement

▬ Consumer Engagement and Retention, with:

▬ Digital and CRM leveraging on strong Brand advocacy

▬ Strong Partnership with eTailers

▬ Connesso and PZero Velo to attract new segments

Pirelli

Revenues

€ Bln

≥13%

17.4%

2020E 2016A

0.9

2014A

0.7

High Value Standard

CAGR

14A-16A

CAGR

16A-20E

NAFTA PLAN_

49

RUSSIA

& CIS

MEAI

LATAM

NEW PREMIUM TYRE

REPLACEMENT MARKET

2016

Mln Tyre

2.5

3.7

1.4

2020

Mln Tyre

3.3

5.1

1.8

PIRELLI PRESTIGE

MARKET SHARE

high single

digit

2016

twenties

mid teens

PRESTIGE & PREMIUM

CAR PARK

2016

Mln vehicles

3.4

4.3

1.1

2016

% of Total

6.1%

4.5%

1.5%

2020

Mln vehicles

3.8

5.7

1.4

2020

% of Total

6.6%

4.8%

1.8%

PIRELLI ≥18''

MARKET SHARE

2016

GLOBAL

LEADER

PIRELLI WELL POSITIONED IN EMERGING HIGH VALUE MARKETS_

50

AGENDA_

51

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

Source: Management elaboration based on several consulting and investment banks research reports

Apps and services

Full library of applications from third parties

Alternative business models

Autonomous vehicle sharing, new service offerings, etc.

Data analytics

Connected cloud processing, data feeds for manufacturers

$ Bln, global market size

SERVICES MARKET GROWS FAST IN MULTIPLE SEGMENTS

2015A 2025E 2020E

% of total car market

~5% ~7% ~11%

+13%

~6x vs rest

of car market

CAR SERVICES MARKET

Pirelli is Positioning Itself in Order to Be the First Tyre Player Offering a Consumer App & Services

2020E-2025E SCENARIO: CAR SERVICES MARKET_

52

KEY CUSTOMER CONCERNS ARE:

Source: Pirelli survey and Management elaboration based on consulting research reports

COMFORT TIME PERFORMANCE VALUE FOR

MONEY

CONVENIENCE SAFETY INTEGRATION

WITH SMARTPHONE

ON-THE-GO

PROFESSIONAL WEEKEND RACER

WORRIED

PARENT

TYRE INFO

76% OF END USERS WOULD LIKE DATA ABOUT THEIR TYRES_

53

*Passenger cars, commercial vehicles; **Total Cost of Ownership

APPLICATION SOLUTIONS WHAT THEY DO

App notification to the driver on tyre performance and safety data (e.g. tyre wear, pressure, temperature), service enabler

Tyre performance and safety data (tyre wear, pressure, temperature, load) directly displayed on car dashboard and car maker app

Real-time technology providing advanced info (e.g. grip, acqua planing, forces) on tyre and car performance to in-vehicle electronics

Platform to reduce development time and cost of car-tyre development and integration

Fleet tyre performance and safety data transmitted to Pirelli web portal and accessible to fleet managers

CYBER TECHNOLOGY

SOLUTIONS

FLEET

APPLICATIONS*

CAR

APPLICATIONS

O.E. SOLUTION

AFTERMARKET SOLUTION

CONNESSO

CYBERFLEET

CYBERCAR

CYBERTYRE

CYBERTYRE Development kit

CYBER TECHNOLOGY LAUNCHING 5 NEW PLATFORMS_

54

▬ Pressure loss

ALERTS

SAFETY PERFORMANCE LIFESTYLE PREVENTION TYRE

DATA

TYRE

ASSISTANCE

TAYLOR-MADE SERVICES

SENSOR

APP

TYRE DEALER

TAILOR MADE

CONTENT

▬ Excessive tread wear

▬ Seasonal tyre change

▬ Overload

CLOUD

CONTROL UNIT

TYRE DATA

▬ Pressure

▬ Temperature

▬ Vertical load

▬ Tyre wear

▬ Tyre residual mileage

PIRELLI “CONNESSO”: HOW IT WORKS_

55

What is going to happen? What will it look like? Single lane capacity1

1Number of users per hour on a 3.5m road lane. In picture, from top to bottom: Stockholm, New York, Buenos Aires 2E.g., CyberFleets Source: World Business Council for Sustainable Development

Car Car restrictions will become standard and cars

will be used for the first / last mile

Bike Citizens will demand broader

access to urban areas for leisure and cultural activities

Bus Local authorities will optimize space use by

shifting users towards public transport

Pirelli Intends to Expand its Offer to Hybrid and Electric Car Tyres, Connectivity Solutions2, and Bike Tyres

NEW MOBILITY PARADIGMS (INTEGRATED, ACTIVE, AFFORDABLE) WILL LEAD LOCAL AUTHORITIES TO CURB PRIVATE CAR USAGE

2020-2025 SCENARIO: URBANIZATION_

56

NEW GENERATIONS BECOME AN IMPORTANT LONG-TERM TARGET

Baby boomers (1945-1964)

▬ “Climb corporate ladder”

▬ Buy now, pay later

Generation X (1965-1979)

▬ “Rely on yourself”

▬ Cautious and conservative

Generation Z (1995-?)

▬ “Stay connected”

▬ Grown up during 2008 crisis

Millennials/Gen. Y (1980-1994)

▬ “Appreciate work life balance”

▬ Earn to spend

Source: UN WPP 2015, Web research

World population 20 to 70 years old (Bln) 2020E 2025E 2015A

1.2

1.7

1.4

0.7

1.7

0.6

1.4

1.0

1.8

1.4

1.2

Pirelli is already engaging millennials through appealing storytelling on social media

2020-2025 SCENARIO: GENERATIONAL TURNOVER_

57

Pirelli Car consumers:

average age 50 years,

30% F-70% M gender split

CONSUMER MAP

NEW

CONSUMER TARGET:

▬ Younger audience

▬ More balanced gender

▬ Conscious about new

mobility solutions

▬ Social networker

▬ Modern and trendy

lifestyle

HEROES

ONLY HUMAN

TASK BREAK OUT

Performance

Leisure

Commuting

Training and wellness

Road Racers

Mountain Bikers

eBike and urban Bikers

30% - 70%

35-44 Age

40% - 60%

25-54 Age

45% - 55%

25-54 Age

45% - 55%

25-44 Age

CURRENT

CONSUMER TARGET:

▬ Pirelli consumers: additional

product for a comprehensive

offer

▬ Prospects: create awareness

around Pirelli (Velo as a new

entry point into Pirelli world)

CREATES INTERACTION WITH NEW CONSUMER TARGET AND CONSOLIDATES PRESENCE IN ESTABLISHED SEGMENTS

“VELO” SUPPORTING CONSUMER-CENTRIC APPROACH_

58

CAPITALIZE INTERNAL ASSETS AND INNOVATE TO SUPPORT OUR COMPETITIVE ADVANTAGE

HOW WE ARE PLAYING

Stand-alone profitable business At the end of the 3y plan profitability in line with the Premium arena Premium price positioning

Capitalize organization best practices Product excellence; E-commerce infrastructure; Prestige delivery model

Fully integrated inter-functional team Average age: 30 years 50% from cycling industry, 50% Pirelli 40% female, 60% male

Innovative Go-To-Market: 40% eCommerce, 60% traditional

WHERE WE ARE COMPETING

Product Strategy: Racing First, Ebike to Follow Key Mobility Trends. Target Top Competitors Across Segments.

PREMIUM

ARENA

▬ Worldwide awareness

▬ Focus on innovation

▬ Price leadership

PIRELLI “VELO” FOCUSES ON PREMIUM_

59

AHEAD OF THE CLOCK

Designed for speed.

AHEAD OF THE LIMITS

Train. Race. Win. Unbeatable performance, all year round.

RollingResistance

wet grip

mileage

punctureresistance

weight

comfort

P ZERO VELO TT P ZERO VELO 4S P ZERO VELO

KEY CHARACTERISTICS

AHEAD OF THE ELEMENTS

THE P ZERO VELO PRODUCT FAMILY: THE FIRST TO BE LAUNCHED_

60

AGENDA_

61

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

Product

Develop.

O. E.

Tyres Market

Replacement

Tyre Market

Push through

Demand

New

Registrations

Car Parc

Pull through

Demand

Homologation

Product

Develop.

S

A

L

E

S

P

L

A

N

S

D

E

M

A

N

D

P

L

A

N

N

I

N

G

F

A

C

T

O

R

I

E

S

S

U

P

P

L

Y

C

H

A

I

N

T

R

A

D

E

E

N

G

A

G

E

M

E

N

T

C

O

N

S

U

M

E

R

E

N

G

A

G

E

M

E

N

T

2. Smart Manufacturing and

Flexible Factory

3. Prestige

4. Supply Chain

1. Integrated Forecasting

4 KEY DIGITALLY ENABLED TRANSFORMATION PROGRAMS, SUPPORTING HORIZONTAL PROCESSES_

62

MKT. POTENTIAL OE-RE INTEGRATED FORECASTING

Cross-functional

team

OE

Potential

REP

Potential

Data Lake

INTEGRATED BUSINESS PLANNING

▬ Increased rolling Demand Planning Accuracy

▬ Back Order and Service Level improvement

▬ Minimization of Lost Orders

▬ Optimization of Purchasing Costs

▬ Optimization of Allocation and Logistic flows

▬ Increased Demand Planning Reliability

▬ Minimization of Bottlenecks and Plant Transfers

▬ Reduction of O.E. Arising / Obsolescence

▬ Optimization of investment in capacity and critical processes

KEY BENEFITS

Rolling

Forecasting

baseline

Area of focus

Long

term

Short-medium

term

Data Science

Predictive Engines

Data lake and

Analytics

Key enablers

Key client data

sharing

O.E. - REPLACEMENT INTEGRATED FORECASTING, ENABLED BY PREDICTIVE MODELLING & ANALYTICS, SOLID BASELINE FOR INTEGRATED B.P._

Integrated

forecasting

63

FLEXIBLE FACTORY SMART

MANUFACTURING

DESIGN

TO COST

NEW PREMIUM

CAPACITY

FLEXIBILITY COMPLEXITY

MANAGEMENT PRODUCTIVITY NEW PREMIUM MIX

STRATEGIC VISION

PROGRAMS

BENEFITS

Focus of following slides

MARKET

PRODUCT COMPLEXITY

RF NCS SI Colored Connesso

PLANT MISSION DIGITAL TRANSFORMATION

DIGITAL TRANSFORMATION IN MANUFACTURING RESPONDING TO MARKET EVOLUTION_ Smart manuf.

& flex. factory

64

MA

RK

ET

Smart manuf.

& flex. factory

Variety Lot size

MANUFACTURING DIGITAL TRANSFORMATION: DELIVERING BETTER SERVICE WHILE MANAGING COMPLEXITY_

PIR

EL

LI M

AN

UF

AC

TU

RIN

G

FLEXIBLE FACTORY SMART MANUFACTURING

Pit Stop

Shopfloor Organization

Planning

Frictionless flow

Asset

For zero cost set-up

Semi-finishing Building Curing Finishing Mixing

DATA SCIENCE AND ANALYTICS

DATA LAKE

CUSTOMER

65

Replacement

Services (Marketing, Digital

Marketing, Motorsport Activation)

Supply Chain Original

Equipment

HeadQuarter

Regions

…AND LEVERAGING ON DIGITAL AND BEST PRACTICES

Digital marketing

Retail Analytics on

car parc Predictive forecast

“OVERLAY UNIT” COVERING THE WHOLE VALUE CHAIN,

INTERFACING WITH KEY FUNCTIONS AND REGIONS…

Cyber Tyre

APAC

NAFTA EUROPE

CAGR 16A-20E Market Volumes

CAGR 16A-20E Pirelli Volumes

pcs

2020E 2016A

10%

PRESTIGE (O.E. + REPLACEMENT)

+6%

PRESTIGE CORE TEAM LEVERAGING ON FUNCTIONAL PROJECTS & LOCAL SKILLS TO REACH TARGETS_ Prestige

66

Moto and Velo

businesses will leverage

the best practices of Car

Supply Chain

MAIN FOCUS KPI

IMPACTS ON

Improve customer retention through B2C

▬ Customize to order ▬ # end-users activations

Improve on-shelf daily availability

▬ Mix coverage ▬ FCST predictivity

Improve CAR makers forecast through predictive forecasting tools

▬ On time delivery

▬ FCST predictivity

Improve demand predictability

▬ % on sales 18’’ and up

▬ Fill rate

improve unpredictable demand forecasting through predictive forecasting tools

▬ Cost to serve

▬ Improve FCST accuracy E

D

C

B

A Specialties

Prestige

O.E.

Tier 1

Repl.

New

pre

dic

tiv

e

fore

casti

ng

to

ol

FIVE SUPPLY CHAINS SUPPORTING SPECIFIC BUSINESS AREAS_ Supply Chain

67

AGENDA_

68

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

VOLUMES CONSISTENT WITH:

▬ Requests from O.E. Customers with

Premium and Standard Range

▬ Retailers assortment

▬ Geographic car parc peculiarities

(LATAM, Russia)

Mln pcs

LATAM

MEAI

others

% of reduction:

Pruning of:

▬ Customers

▬ Std. Products 33.0

26.0

2016A

-7

2020E

CONTINUOUSLY REDUCING CAPACITY IN STANDARD CAR TYRES_

69

▬ Economic downturns since 2009 have

been longer and deeper than usual also

due to the political crisis and weak raw mat

scenario

▬ Recovery depends on both stability of the

Government and structural reforms and

may be postponed until after 2019

Source. Company analysis on 3° party data

▬ Car registrations: still 40% below 2012

peak

▬ Recovery could start in 2019

CAR REGISTRATION IN BRAZIL

Mln vehicles

REAL GDP GROWTH IN BRAZIL

YoY quarterly GDP growth (%)

+10

+5

0

-5

-10 2020 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000

Forecast Actual

4

3

2

1

0 2020

2.2

2018

2.0

2016

2.0

2014

3.3

2012

3.6

2010

3.3

2008

2.7

2006

1.8

2004

1.5

2002

1.4

2000

1.3

1.0% 1.8% 1.3% 0.7% 0.7% 1.0% 1.1% 2.0% 2.7% 2.8% 3.4%

Weight of

Prestige

& Premium

LATAM: FOCUS ON BRAZIL_

70


▬ Premium growing at a moderate

pace

▬ European OEM investments still

on going (Audi, Land Rover)

▬ Migration from Monobrand to

Multibrand retail

▬ Digital becomes more important

TOT O.E. + REPL.


+0.4% 69.850 70.450 77.290

2020E 2016A 2014A

+2.3%

-1.0% +2.8%

2%

2014A

86

94% 4%

2%

+10

-2

2020E

94

89%

8%

3%

2016A

85

92%

6%

TOTAL CAR PARC (Mln vehicles)

1.6% % Prestige & Premium

(o/w 50% in Brazil) 1.9% 1.6% 1.6%

+13.0% +10.0%

+11.5% +12.4%

-1.9% +1.9%

=17’’

≤16’’

≥18’’

CAGR

’14A-’16A

CAGR

’16A-’20E

CAGR

’14A-’16A

CAGR

’16A-’20E

REGION DEPLOYMENT LATAM_

71

PIRELLI LATAM TODAY LATAM STRATEGY

▬ Brand #1 Top of Mind (since 14 years)

▬ Strong presence in O.E., moving to Premium

fitments and SUV

▬ Relevant retail network with >2,300 PoS

▬ Growing coverage in Multibrand channel

▬ Brazil to become an integrated source for NAFTA

▬ Avoiding Mexico concentration

▬ Ramping up ≥18" capacity further from existing plant

▬ Cut standard production capacity, and low value O.E. contracts

▬ Capacity ready to capture High Value growth when materializes

▬ Launch of extensive cost containment plan

Pirelli

Revenues

€ Bln

≥5.0%

1.0

2020E 2014A 2016A

-9.6%

0.8

CAGR

14A-16A

CAGR

16A-20E

High Value Standard

LATAM PLAN_

72

▬ Economic recovery from 2017 supported by

Private Consumption upswing and a lower

inflation rate (4% in 2017, 5% in 2018

onwards vs. 16% in 2015)

▬ Car registrations: still 60% below 2014 peak

▬ Recovery is expected to start in 2017

Premium and Prestige weight stable at 9%

CAR REGISTRATION IN THE REGION

Mln vehicles

MAIN MACROECONOMIC INDICATORS (RUSSIA ONLY)

2.5 1.6 01 1.6 1.8 2.0 2.2

2014 2015 2016 2017 2018 2019 2020

8% 10% 10% 9% 9% 9% 9%

Real GDP growth

Real Private Consumption Growth

2.0% -9.6% -4.5% 0.5% 1.8% 1.7% 1.6%

Weight of Prestige & Premium

2020

2.0%

2019 2016 2015 2017

2.1%

2018

-0.2%

1.8% 1.5% 0.8%

-2.8%

2014

Source. Company analysis on 3° party data

RUSSIA & CIS_

73


▬ Seasonal markets, with winter share of

~65%, linked with new car registrations

▬ In winter products, high share of

studded (~75%) and friction (~20%)

segments

▬ Increasing share of second brands

▬ Car dealers still marginal but with

growing trend

▬ Consolidation of tyre dealer

chains linked with top distributors

▬ All main customers developed

their online shops

▬ Increasing search for information

and purchase of tyres online

▬ In retail, purchase still driven by

dealers’ recommendations

TOT O.E. + REPL.


+0.2% 55.630 55.890 58.390

2020E 2014A 2016A

+1.1%

-16.9% +7.1%

89%

6%

60 4%

2014A

85%

8%

41

54

7%

+13

2020E

9%

84%

2016A

7%

-18

TOTAL CAR PARC (Mln vehicles)

1.6% % Prestige &

Premium 6.6% 5.2% 6.1%

+3.6% +8.9%

-3.9% +8.9%

-19.0% +6.8%

=17’’

≤16’’

≥18’’

CAGR

’14A-’16A

CAGR

’16A-’20E

CAGR

’14A-’16A

CAGR

’16A-’20E

REGION DEPLOYMENT RUSSIA & CIS_

74

▬ Improving mix:

▬ Phasing out of legacy brands

▬ Focus on Pirelli high mix to improve share in ≥17”

▬ Winter range extension

▬ Strengthening price positioning

▬ Export flexibility: correct balance between local / export sales

according to FX trend

▬ Extend network focusing on strategic locations and partnership

with Rosneft

▬ Co-marketing with Prestige / Car Dealers

▬ Recognized as Premium / Sport brand fitted on

high-end cars

▬ Winter image improvement through Ice Hockey

World Championship sponsorship

▬ 2 local production plants

▬ >800 PoS, with qualified Marketing support

▬ Partnership in distribution

Phase out of legacy brands

PIRELLI TODAY RUSSIA STRATEGY

Pirelli

Revenues

€ Bln

≥6.5% -13.9% 0.22

2020E 2016A

0.16

2014A

High Value Standard

CAGR

14A-16A

CAGR

16A-20E

RUSSIA & CIS PLAN_

75

AGENDA_

76

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

TARGETS_ € Mln

1 EBITDA margin adjusted excluding non recurring, one-off and extraordinary items; 2 EBIT margin adjusted excluding PPA amortization, non recurring, one-off and extraordinary

items; 3 Margin to be impacted by start-up costs up to 1% in 2017 and 2018; 4 ROI calculated as EBIT Adjusted / average Net Invested Capital w/o financial assets and intangibles

from PPA

Revenues

High Value weight on Revenues

4,976 ≥ 9% CAGR 16-20

55% ~63%

Adjusted EBIT margin2,3

High Value weight on EBIT

17.0%

81% ~ 85%

~ 18.5% ÷ ~ 19.5%

Adjusted EBITDA margin1 21.7% ~ 23% ÷ ~ 24%

ROI4 27% ~ 35%

Net financial position/ Adjusted EBITDA 4.6X < 2.0X

CapEx on Revenues ~ 7.0%

on average ’17-20 ~ 6.8%

2016A 2020E

77

MATERIALS

▬ Raw materials cost optimization

▬ Product simplification

▬ Tyre weight reduction

LABOUR

▬ Productivity improvement thanks to Smart Manufacturing and Flexible Factory programs

▬ Process streamlining

OTHERS

▬ Energy efficiency thanks single machine efficiency (SmartME program)

▬ Optimized cost control

ALLOCATION MIX

▬ Higher volume allocated to low cost plants

41%

14%

19%

26%

Cumulated Efficiencies (4 years, 2017-2020)

~1pp on Cumulated ‘17-’20 sales

COST EFFICIENCY PLAN WILL FURTHER STRENGTHEN OUR COMPETITIVENESS_

78

STRATEGIC PLAN ADJUSTED TAX RATE (17-20)

Tax Rate before tax incentives 17 – 20 ~ 34%

ACE & Patent Box** incentives (perpetual) ~ -6%

Indicative Strategic Plan Tax rate < 30%

IPO PERIMETER 2014 2015 2016

Tax rate post adjustments* 32% 32% 31%

*Adjusted to consider (i) Income/Loss from Equity Investments (ii) Venezuela deconsolidation and hyperinflation impact, (iii) write-off of the deferred tax assets in 2015

** A.C.E.: Italian Allowance for Corporate Equity; Patent Box: tax relief on intangible income

▬ Tone at the top: The Board of Pirelli is engaged in the development of appropriate tax policy principles and in the

implementation of internal tax control systems, to ensure that the financial and reputational risks associated with

taxation are fully identified and evaluated.

▬ Transparency and cooperation with Tax Authorities: Pirelli aims to develop strong and long lasting relationships with

tax authorities based on transparency and trust. Where applicable, we are considering available forms of enhanced

cooperation with the relevant tax authorities and advanced pricing agreements for transfer pricing where we operate

in accordance with best-practice rules.

▬ De Risking: Pirelli’s approach is aimed at achieving an overall de-risking in tax affairs with undisputable long-term

benefits: our target is to be «Prestige» in tax as well.

PIRELLI’S APPROACH TO TAX IN THE STRATEGIC PLAN

TAX RATE_

79

Source: IHS Markit regional macro outlook June 2017

BUSINESS PLAN - GDP, INTEREST, INFLATION ASSUMPTIONS_ %

UNITED STATES EUROPE

BRAZIL

CHINA

.0

2.0

4.0

6.0

8.0

10.0

2020E

4.9 4.8

2.0

2019E

4.8 5.5

1.8

2018E

4.8

6.8

2.1

2017E

4.4

9.0

1.5

Inflation rates Interest rates Real GDP growth

.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2020E

3.2

4.3

6.0

2019E

2.8

4.1

6.1

2018E

2.5

4.1

6.3

2017E

1.8

4.4

6.6 3.0

2.5

2.0

1.5

1.0

0.5

0.0

2020E

2.8 2.9

2.2

2019E

2.3 2.5

2.2

2018E

1.8 1.7

2.7

2017E

2.2

0.9

2.3 2.0

1.5

1.0

0.5

0.0

-0.5

2020E

1.9

0.9

1.6

2019E

1.9

0.4

1.6

2018E

1.9

-0.1

1.8

2017E

1.9

-0.3

1.9

.0

2.0

4.0

6.0

8.0

10.0

12.0

2020E

4.3

7.2

3.9

2019E

4.4

7.5

3.7

2018E

4.1

8.0

1.6

2017E

3.6

10.5

0.1

RUSSIA

80

2017E 2018E 2019E 2020E

EUR/USD 1.084 1.050 1.100 1.150

USD/CNY 6.891 7.300 7.400 7.400

USD/BRL 3.180 3.550 3.650 3.750

EUR/RUB 62.054 64.050 70.400 73.600

2017E 2018E 2019E 2020E

Natural rubber

($US/metric ton) 1,912 2,200 2,500 2,800

Butadiene

(€/metric ton) 1,547 1,800 2,000 2,100

Brent

($US/barrel) 58.00 61.46 64.51 67.16

FOREX

RAW

MATERIALS

Source: FOREX Consensun March 2017, Oil: Reuters monthly-April 2017; Natural rubber: management assumption based on external studies

BUSINESS PLAN – FOREX AND RAW MATERIAL ASSUMPTIONS_

81

AGENDA_

82

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

83

KEY MESSAGES_

>

>

>

Pirelli back to the Financial Market as:

› The only Consumer Player focused on High Value products at global level

› Well placed in an attractive market, which should outgrow the Standard market 4X in the long term

› With a different game than European full-liners in a healthy sector with high barriers

9M 2017 Results – High Value strategy bearing the first fruits:

› Robust growth: +9% Top line, High Value at 58% of total revenues, +2pp YoY

› Unparalleled price/mix improvement: +6.5%, 2x peers average

› Solid internally driven profitability increase: EBIT adj. w/o start-up costs: +10% in 9M, +15% in 3Q

2017 Outlook - Well on-track to 2020 Targets:

› Increasing High Value weight on EBIT adjusted w/o start-up costs: 83%, +2pp YoY

› Deleveraging underway: Net Financial Position / EBITDA Adj. w/o start-up costs <3x (4.6x in 2016y.e.)

RECAP OF PIRELLI STRATEGY

9M 2017 APPENDIX

9M 2017 RESULTS

FULL YEAR 2017 OUTLOOK

9M’17 FINANCIAL RESULTS AGENDA_

84

85

HIGH VALUE: OUR NEW DISTINCTIVE FOCUS_

The Only Tyre Company Focused On Serving Consumers Only

Old

Premium

(≥17’’)

≤16’’

FROM FOCUS ON PREMIUM…

20161

Actual

100%

Start-

up

in 2017

CYBER VELO

…TO A NARROWER FOCUS ON “HIGH VALUE”

45% ≤17’’ excluding

Specialties

Non

Premium

New Premium

(≥18’’)

Prestige

Specialties &

Super Specialties2

Premium3

CAR MOTO

55%

% on 2016A

total revenues1

(~100 million customers)

Specialties

≤17”

≥18”

17’’

~65%

35%

65%

18’’

HIGH VALUE

STANDARD

<43%

>57%

~37%

~63%

% on

Total Revenues

2017E 2020E

1 weight on total consumer business carve-out revenues as at 31st December 2016; 2 including motorsport & Specialties ≤17”; 3 Radial, Custom Touring, Off Road and Sport

Touring X-ply with speed index ≥H

86

ATTRACTIVE TYRE MARKET: ≥18” OUTGROWING STANDARD ~4x ON

LONG-TERM SUSTAINED BY PREMIUM & PRESTIGE CAR PARC

EXPANSION_

(million vehicles)

(million tyres)

+12.5%

+8.2%

+3.6%

+13.3%

+1.6%

+7.8%

+4.5%

+3.3%

+9.2%

+2.2%

CAGR

14A-16A

CAGR

16A-20E CAR PARC

TYRE

MARKET

+3.4%

+3.1% +2.9%

+4.1% Total

Prestige

Premium

Standard

Total

≥18”

≤17”

~4x

2016A

10.6% 1,108

2014A

10.5%

1,200

9.7%

1,244

0.2%

0.2% 0.2%

2020E

1,372

11.0%

0.3%

2017E

2020E

1,719

84%

16%

2017E

1,556

86%

14%

2016A

1,518

87%

13%

2014A

1,435

89%

11%

CAGR

14A-16A

CAGR

16A-20E

Standard

New Premium

+8.3%

+4.6%

+3.5%

+10.2%

+1.4%


87

PIRELLI WELL PLACED IN HIGH VALUE MARKETS (EU, APAC &

NAFTA) TO KEEP OUTPERFORMING_

(million vehicles)

(million tyres)

+8.3%

+8.5%

CAGR ‘14A-’16A

+13.3%

+13.6%

+19.5%

+19.3%

CAGR ‘16A-’20E

+4.6%

+4.5%

+9.2%

+9.2%

PRESTIGE & PREMIUM

CAR PARC

O.E. + REPLACEMENT

≥18’’ TYRE MARKET

O.E. + REPLACEMENT

≥18’’ PIRELLI VOLUMES

≥13%

+4.7%

EU, APac, NAFTA

Other regions

2020E

154

93%

2017E

135

93%

2016A

129

93%

2014A

110

93%

Tot.

(million tyres)

+10.2%

EU, APac, NAFTA

Other regions

2020E

278

95%

2017E

216

95%

2016A

196

95%

2014A

152

95%

2020E

>34

92%

2017E 2014A

15

94%

2016A

21

94% EU, APac, NAFTA

Other regions

CAGR ‘14A-’16A CAGR ‘16A-’20E

CAGR ‘14A-’16A CAGR ‘16A-’20E

9M 2017 YoY +15%

Tot.

Tot.

9M 2017 YoY +11%

≥18’’ ~85-90% of

High Value

Car Volumes

+5%

+10%


88

PIRELLI STRATEGY BASED ON 3 PILLARS_

HIGH VALUE

FOCUS

TRANSFORMATION

PROGRAM

STANDARD

REDUCTION

1 2 3

89

PILLAR 1: HIGH VALUE FOCUS AND CURRENT ACHIEVEMENTS_

SHIFTING CAR

CAPACITY

TOWARDS HIGH

VALUE1

C 32 38 53

2014A 2016A 2020E

46% 54% 67% % HV on

tot. capacity

High Value

capacity,

million pcs

+6 +15 ▬ High Value capacity increase of >3 million tyres in 2017 FY

▬ HV weight on tot. from 54% in 2016 to 55% in 2017

▬ Started conversion of Standard capacity into High Value in

Brazil

NEW PRODUCT

INNOVATION

B 9 Global vs 9 Regional

9 Traditional vs 9 Specialties

12 Summer & All Season vs 6 Winter

▬ Regional: 2 new products for NAFTA and LatAm

▬ Super-specialties: Connesso available from this month at the

Pzero World in LA for Prestige customers

▬ Super-specialties: Working with Prestige O.E. on Color Ed.

▬ Velo: PZero Velo distributed since 3Q ‘17 in HV regions

18 new

product lines

in 2017-2020

165.0

315.0 ACCELERATING

HOMOLOGATION

PIPELINE

A # new homologations

>1,150

homologation

projects already

in pipeline for

2017-2020

▬ ~230 new High Value Homologations (~150 in 3Q)

▬ 20% Prestige

▬ 25% Winter

▬ New EV homologations with Premium & Prestige

▬ ~2,050 High Value homologations portfolio (o/w 86% marked) 2014A

~x2

2016A

CONSUMER

CENTRIC

APPROACH

D ▬ New consumer marketing unit

▬ Pirelli retail PoS from ~12.500 in 2016 to ~17.000 in 2020E

▬ Increase weight of selected channels (chart below)

Tier 1

Pirelli retail

e-Commerce

Car dealer 15%

20%

30%

▬ Increased commercial coverage and shifting channel mix

▬ +1,000 Pirelli retail PoS vs. 2016

▬ 2nd Pzero World launched in Munich, one of the richest cities

in terms of Prestige cars

▬ Increasing focus on Car dealer

66% 1%

2020 E 2014 A 2016 A

1 Note: More details on Pirelli capacity in appendix section

1

9% 10% 2% 8% 22%

18%

% on tot.

Repl. volumes 28% 41%

90

PILLAR 2: TRANSFORMATION PROGRAM WITH 4 KEY INITIATIVES_

O. E.

Tyres Market

Replacemen

t

Tyre Market

Push through

Demand

New

Registrations

Car Parc

Pull through

Demand

Homologation

Product

Develop.

S

A

L

E

S

P

L

A

N

S

D

E

M

A

N

D

P

L

A

N

N

I

N

G

F

A

C

T

O

R

I

E

S

S

U

P

P

L

Y

C

H

A

I

N

T

R

A

D

E

E

N

G

A

G

E

M

E

N

T

C

O

N

S

U

M

E

R

E

N

G

A

G

E

M

E

N

T

Smart Manufacturing and Flexible Factory

Prestige

Supply Chain

Integrated Forecasting 1

2

3

4

New integrated management of O.E. and Replacement along the whole vehicle life-cycle, supported by

predictive / forecasting tools, to optimize investments in capacity and in stock 1

Use of IoT1 data to optimize process and labour yields 2

Convergence of all key levers to optimize Prestige performance in a specific Business Unit 3

Five supply chains supporting specific business areas: Specialties, Prestige, O.E., Tier 1 and Replacement 4

1 Internet of Things

2

91

PILLAR 3: STANDARD CAPACITY REDUCTION AND PROFITABILITY

IMPROVEMENT UNDERWAY _

Volumes Consistent with:

▬ Requests from O.E. Customers with Premium and Standard Range

▬ Retailers assortment

▬ Geographic car parc peculiarities (LatAm, Russia)

million pcs LATAM

MEAI

others

% of

reduction

Pruning of:

▬ Customers

▬ Standard Products

33.0

26.0

2020E

-7

2016A

REDUCING CAPACITY… …AND IMPROVING PROFITABILITY

▬ Improving mix

▬ Phasing out of legacy brands

▬ Pruning of lower rim sizes

▬ Strengthening price positioning

▬ Limiting low value O.E. contracts

▬ Launch of extensive cost containment plan

▬ Brazil to become an integrated source for NAFTA

▬ Avoiding Mexico concentration

▬ Ramping up ≥18" capacity further from existing plant

▬ Capacity ready to capture High Value local growth when it

materializes

▬ Ongoing reduction of >2 million tyres Standard capacity in Standard Regions before 2017 year end

▬ Consolidation and ongoing conversion of Aeolus capacity into Pirelli brand

9M 2017 achievements

▬ Faster phasing out of low profitable products (e.g. secondary brand Amtel)

▬ Profitability recovery: Russia & CIS EBIT Adj. margin turned positive (from break even in 2016)

3


9M 2017 APPENDIX

9M 2017 RESULTS



92

93

9M 2017 RESULTS: HIGHLIGHTS_

REVENUES EBIT ADJ.1 w/o start-up costs2

NET INCOME ADJ. NET FINANCIAL POSITION

+9%

High Value

Standard

9M 2017

4,038

58%

9M 2016

3,706

56% +13%

-625

9M 2017

4,288

FY 2016

4,913

621.0 681.0

+10%

9M 2017 9M 2016

4.6 x4 3.7 x NFP /

EBITDA3

16.7% 16.9% Margin

133.0

258.0

+94%

9M 2017 9M 2016

€ million

1 before amortization of PPA, non-recurring items & restructuring costs; 2 Aeolus Car, Velo, Cyber & digital transformation ; 3 12 month trailing EBITDA adjusted w/o start-up costs; 4

2016 ratio calculated using the NFP relative to the sole Consumer business equal to €4,961 million

94

9M 2017 PERFORMANCE BY HIGH VALUE REGIONS_

1,591 1,698

693 756

506 597

43% 42%

9M17A 9M16A

19% 19%

14% 15%

SALES

Twenties

Mid-teens

Twenties

Adj. margin1

EBIT

+6.7%

+9.1%

+17.9%

YoY %

+10.8%

+9.2%

+20.2%

Δ

▬ Strengthen High Value

position, with market

share increase in ≥18“

and Specialties

▬ Proactive reduction to

Standard segment

▬ Sound performance,

despite O.E. market

slowdown

▬ Increasing High Value

sales, with products

introduction (all-season)

and further retail

penetration

▬ Strong High Value

performance driven by

pull-through effect

(especially on run-flat),

on both Car Premium

and Prestige brands

KEY HIGHLIGHTS

9M ’17 9M ’16

2,790 3,051

+9.4%

% on tot. HV rev.

93% 92%

+12.1%

EUROPE

NAFTA

APAC

HIGH VALUE REGIONS

SALES

Weight on tot. revenues High Value Standard

€ million

1 before amortization of PPA, non-recurring items and restructuring costs

95

9M 2017 PERFORMANCE BY STANDARD REGIONS_ € million

Adj. margin1

EBIT

Mid-teens

Mid-single

digit

Low-teens

+11.5%

-2.2%

+4.4%

+33.4%

+21.1%

+9.3%

YoY %

Δ

612

16% 17%

9M17A 9M16A SALES

5% 4%

3% 3%

682 612

186 190

119 114

▬ Accelerated exit from low

profitable products within

the Standard segment

▬ Increased exports to

North America

▬ Car market slow-down in

Argentina

▬ Reduction to low

profitable segments and

strong High Value

growth with market

share gain in ≥18”

▬ Currency volatility in the

area (especially in

Turkey)

▬ Mix improvement

(accelerated phase-out of

legacy brands) drove the

strong profitability

increase

9M ’17

+7.8%

987

9M ’16

916

% on tot. HV rev.

7% 8%

+22.8%

STANDARD REGIONS

SALES

KEY HIGHLIGHTS

LATAM

MEAI

RUSSIA & C.I.S

Weight on tot. revenues High Value Standard

1 before amortization of PPA, non-recurring items and restructuring costs

96

9M 2017 NET SALES BRIDGE_ € million

Price/Mix

26

Net Sales 9M ’17

239

FX

24

43

Net Sales 9M

’16 restated

Volume

4,039

Perimeter1

3,707

+1.0% +7.3% -3.1% +0.6%

-0.3% +6.5% +1.2% +0.6%

+2.9% +5.5% +4.0% +1.0%

3rd Quarter

2nd Quarter

1st Quarter

+5.8%

+8.0%

+13.4%

+1.2 %

+6.5 % +0.6 %

+0.7 % +9.0 %

o/w HV

+12.2%

+9.6%

+17.1%

+12.9%

+8.3%

+6.2%

+8.4%

+7.7%

o/w HV

o/w

organic

o/w

organic

1 Aeolus Car

97

9M / 3Q 2017 OPERATING PERFORMANCE_ € million

16.7% 16.9% 15.9% margin

16.2% 17.6% 16.7% margin

Internal levers ∑ +224 External levers ∑ -164

Internal levers ∑ +93 External levers ∑ -62

9M

3Q

201.40

34.0

EBIT adj 9M17A

642

start-up costs 1

(39)

EBIT adj 9M17A

w/o start-up

681

(31)

Price/mix Volume

20

Other input costs

621

Raw Mat.

2

(132)

(34)

FX Efficiencies D&A / Other2

EBIT adj 9M16A

207.50 90.80 238.20 226.0

EBIT adj 3Q17A

start-up costs1

(12)

EBIT adj 3Q17A

w/o start-up

FX

0

Other input costs

(11)

Raw Mat.

(51)

Efficiencies

9

D&A / Other2

(12)

Price/mix Volume

5

EBIT adj 3Q16A

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

98

9M 2017 NET INCOME BRIDGE_ € million

35.80 27.40

34.10

61.70

39.90

198.90

Net Income

Consumer

9M17A1

Δ Taxes Δ Financial

income /

charges2

Δ Net income /

loss from equity

participations

Δ EBIT Net Income

Consumer

9M16A

Non recurring / restr. costs + 28.6 + 20.2

Deferred tax assets recognition - 60.1

Net income adjusted 132.6 257.5

Tax impact on adjustment - 35.6 - 43.6

PPA amortization + 78.4 + 80.9

Non recurring fin. expenses + 25.41 + 61.22

35.8 198.9 Net Income

9M ’16 9M ’17

1 U.S. private placement early redemption fees; 2 Wash down fee BBC financing

99

9M 2017 CASH FLOW AND NET FINANCIAL POSITION_

327.60

900.10

289.90

Other Industrial

reorg.3

(305) 154

Interests ∆ WC

34

(1,189)

Capital

increase4

4,288

NFP 9M’17 Taxes CapEx EBITDA

adjusted2

(836)

NFP FY’161

4,913

∆ Working Capital impacted by the usual

seasonality of the business, to be absorbed

in 4Q

Interests

▬ include €61 million one-off cost related to wash-

down fees

▬ benefit from the new reduced all-in cost of the new

syndicated facility and the €1.2 billion capital

increase (end of June)

Op. Cash Flow: -391

4.6 x5 3.7 x NFP /

EBITDA adj.

1 reported; 2 before D&A (incl. amortization of PPA), non-recurring items and restructuring costs; 3 Industrial reorg: partial debt push down to Prometeon ; 4 Capital Increase made

by Marco Polo; 5 2016 ratio calculated using the NFP relative to the sole Consumer business equal to €4,961 million

€ million

100

1 covers ~ 2.4 years of forthcoming maturities; 2 Mexican peso

CURRENT CAPITAL STRUCTURE (SEPTEMBER 2017)_

NET FINANCIAL POSITION GROSS DEBT MATURITY

378.0

299.50 595.80

2022 &

beyond

1,815

1

1,814

2021 2020

1,730

0

1,729

2019

614

18

2018 2017

383

5 696.50

600.60

405.30

Net Fin.

Position

4,288

Fin.

Assets

147

Gross

Debt

4,841

3,543

LIQUIDITY PROFILE

Liquidity position

Total committed lines not drawn

Liquidity margin1

405

558

964

Loan

Bond

Other

BREAK-DOWN BY CURRENCY

EUR 81.0%

MXN2 3.7% other 4.0%

BRL 7.7%

RUB 3.6%

€ million

% on total

Gross Debt

Cash & Cash equivalents

Fin receivables

& Other

8% 6% 13% 36% 37%

COST OF DEBT

5.52% 6.16%

9M 2016 9M 2017

Cost on debt


9M 2017 APPENDIX

9M 2017 RESULTS



101

102

1 EBIT adjusted excluding PPA amortization, non recurring, one-off, extraordinary items and start-up costs; 2 EBIT adjusted excluding PPA amortization, non recurring, one-off and

extraordinary items;

3 EBITDA adjusted excluding non recurring, one-off, extraordinary items and start-up costs

FY 2017 OUTLOOK _ 2016A 2017E

▬ Romania / Mexico further expansions

▬ Brazil upgrade to High Value

▬ Upgrading and reshaping of China ex Aeolus

Revenues

High Value weight

4,976 ~+9% YoY

55% >57%

Adjusted EBIT w/o start-up1 844 ~930

Net financial position / Adjusted

EBITDA w/o start-up costs3 4.6X <3X

CapEx on Revenues

Adjusted EBIT2 844 ~880

~9% (~7% on average in ‘17-20) 6.8%

High Value weight 81% ~83%

€ million


9M 2017 APPENDIX

9M 2017 RESULTS



103

104

1 Excl. FX / perimeter; 2 Aeolus Car, Velo, Cyber & digital transformation; 3 before amortization of PPA, non-recurring items & restructuring costs;

9M 2017 RESULTS HIGHLIGHTS _

Revenues 3,706.5 4,038.5 +9.0% 1,279.6 1,353.2 +5.8%

Organic Growth1 +7.7% +8.3%

High Value Revenues 2,076.6 2,344.0 +12.9% 705.7 782.3 +10.8%

% on total Revenues 58% +2 p.p. 55% 58% +3 p.p.

EBITDA adjusted w/o start-up costs2 801.4 865.7 +8.0% 271.5 298.9 +10.1%

Margin 21.6% 21.4% -0.2 p.p 21.2% 22.1% +0.9 p.p

EBITDA adjusted3 801.4 836.3 +4.4% 271.5 289.9 +6.8%

Margin 21.6% 20.7% -0.9 p.p. 21.2% 21.4% +0.2 p.p.

EBIT adjusted w/o start-up costs2 620.7 681.2 +9.7% 207.5 238.2 +14.8%

Margin 16.7% 16.9% +0.2 p.p 16.2% 17.6% +1.4 p.p.

EBIT adjusted3 620.7 642.2 +3.5% 207.5 226.0 +8.9%

Margin 16.7% 15.9% -0.8 p.p. 16.2% 16.7% +0.5 p.p.

EBIT 513.7 541.1 +5.3% 172.2 222.9 +29.4%

Margin 13.9% 13.4% -0.5 p.p. 13.5% 16.5% +3.0 p.p.

Results from Equity Investments (52.7) (18.6) (3.9) (5.7)

Financial Income / (Charges) (351.6) (289.9) (99.2) (63.5)

EBT 109.4 232.6 69.1 153.7

Tax Rate n.m. 14.5% 38.9% 14.6%

Net Income (Consumer) 35.8 198.9 42.2 131.3

Net Income adjusted (Consumer) 132.6 257.5 67.4 98.5

3Q Highlights

Sound top-line growth sustained by:

▬ Strengthening High Value

▬ Strong price/mix (+7.3%)

▬ Volume growth +1.0% on total, +12.2% on

High Value, -5.8% on Standard given the

accelerated exit from low profitable

products

▬ EBIT adj. improvement, with internal levers

which more than compensated for rising

raw mat. costs, inflation and other costs

related to business development

▬ EBIT margin adj. w/o start-up at 17.6%

(+1.4pp YoY)

▬ Decreasing financial charges, thanks to

lower margin on 2016 financing

▬ 9M /3Q 2017 Tax rate impacted by

detection of deferred tax assets

€ million 9M ’16 restated Δ YoY 9M ‘17

3Q ’16 restated 3Q ‘17 Δ YoY

105

9M PIRELLI BALANCE SHEET _

31/12/2016

Carve-out

31/12/2016

Reported 30/09/2017

Fixed assets related to continuing operations 9,168 10,299 9,147

Inventories 874 1,056 969

Trade receivables 680 679 1,038

Trade payables (1,281) (1,499) (1,067)

Operating net working capital related to continuing operations 274 236 940

Other receivables / payables 19 (311) 147

Net Working Capital related to continuing operations 293 (74) 1,087

Net invested capital held for sale - - (1)

Total net invested capital 9,460 10,225 10,233

Equity 2,633 3,275 4,160

Provisions 1,866 2,037 1,785

Net Financial Position 4,961 4,913 4,288

Total financing and shareholders’ equity 9,460 10,225 10,233

€ million

106

1 before amortization of PPA, non recurring items and restructuring costs

9M PIRELLI GROUP CASH FLOW _

9M ‘16 restated 9M ‘17

EBIT adjusted1 620.7 642.2

Depreciation & Amortization (excl. amort. PPA) 180.7 194.1

Capital expenditures (221.9) (327.6)

Change in working capital / other (777.5) (900.1)

Operating Cash Flow (198.0) (391.4)

Financial income / expenses (351.6) (289.9)

Fiscal charges (73.6) (33.7)

Net operating cash flow (623.2) (715.0)

Financial investments / disinvestments 5.9 (2.5)

Partial purchase from Dasa of Pneuac shares - (15.4)

Asset disposals 16.1 -

Cash-out for non recurring items & restructuring costs (35.4) (23.3)

Impact of deferred taxation on PPA amortization & recognition of tax assets (21.9) (83.2)

Financial expenses already included in acquisition debt 122.2 -

Dividend paid to minorities - (12.9)

Minorities - (5.5)

Exchange rates difference / other (89.5) (11.1)

Net cash flow before extraordinary operations (625.8) (868.9)

Industrial reorganization 118.7 304.6

Variation of Bidco NFP from 1/1 to 31/5/2016 (134.3) -

Capital increase subscribed by Marco Polo - 1,189.4

Net cash flow (641.4) 625.1

€ million

107

1 Net operating working capital defined as Inventories + Trade receivables - Trade payables

2015-2016 NET INVESTED CAPITAL SEASONALITY: PIRELLI GROUP

REPORTED DATA _

COMMENTARY

Example based on former perimeter (Consumer + Industrial)

only for illustration purposes

▬ 4Q lowest level of working capital, consistent with

the wider Industry: high volumes of collections

linked especially to Winter sales in high seasonal

regions like Europe and Russia

▬ Net working capital decline in 2016 mainly due to

inflation effect (raw materials price increase in 4Q

2016 inflating payables more than revenues - time lag -

and stocks - fewer days outstanding):

▬ Management of working capital driven by the

implementation of global credit insurance

programs covering insolvency risk

▬ Inventory terms gradually improved in recent

years following the implementation of several

cost-saving measures (e.g. efficiency

improvement and scrap reduction) while

accounts payable remained rather stable

SEASONALITY OF NET OPERATING WORKING CAP1 THROUGH QUARTERS

SEASONALITY OF CAPEX THROUGH QUARTERS

970.0

417.0

922.0 967.0

234.0

4Q

1,057

3Q 1Q

1,134

4Q 2Q

=640

1,129

1Q 2Q 3Q

= 733

86.0 103.0

73.0

130.0

74.0 82.0 82.0

134.0

1Q 3Q 2Q 3Q 4Q 1Q 2Q 4Q

2015A 2016A

2015A 2016A

€ million

108

Source: Pirelli tyre market estimates based on main data provider for the Region; 1 Russia & Turkey included

KEY CAR MARKET TRENDS: EUROPE1 _

O.E.

Replacement

Total (O.E.+Repl.)

O.E.

Total (O.E.+Repl.)

3Q’16 4Q’16 FY’16 2Q’17 3Q'17

Replacement

1Q’17 9M’17

To

tal C

ar

ma

rke

t N

ew

Pre

miu

m &

Sta

nd

ard

6.643 6.30 9.734 11.595

2.941

11.591 8.522

(4.627)

.425 1.246 1.193 .551

(2.746) 18.571

15.973 18.735

1.615

12.069 10.932

1.453 5.910 3.605 5.413

(3.837) (1.369)

.126

(1.857)

1.211 3.246 3.697 3.50 .057

2.465 6.792

4.486 6.551

.450 .989

1.603 5.377 4.196 5.884

.311 .776

12.502 11.959 12.840 15.435

2.268

11.838 9.778

.440 4.540 3.132 4.561

(1.066)

.432

Market trend

∆% YoY

≤17"

≥18”

109

Source: Pirelli tyre market estimates based on main data provider for the Region; 1 NAFTA Replacement includes imports

KEY CAR MARKET TRENDS: NAFTA _

O.E.

Replacement

Total (O.E.+Repl.)

O.E.

Total (O.E.+Repl.)

3Q’16 4Q’16 FY’16 2Q’17 3Q'17

Replacement1

1Q’17 9M’17

2.866 2.115 3.864 4.820 .321

(5.919)

.482 .061 (.561) .471 (.677)

(5.103) (5.088)

11.597 15.405 13.681 12.817

7.742 9.057 9.757

(2.147)

2.889 (.619) .472

(4.215) (3.283)

8.081 10.198 9.660 9.502 4.563 3.317 5.693

(1.756)

2.277

.417

(.513)

(4.388) (3.629)

1.213 .542 1.851 1.588

(3.137) (3.183)

.0 5.0

2.0 2.0

(1.0)

.550 4.187 1.962 2.014

(2.092) (1.264)

Market trend

∆% YoY

≤17"

≥18”

To

tal C

ar

ma

rke

t N

ew

Pre

miu

m &

Sta

nd

ard

110

Source: Pirelli tyre market estimates based on main data provider for the Region

KEY CAR MARKET TRENDS: APAC _

22.427 24.413 20.909 23.001 18.892 18.060 19.885

6.808 5.721 4.640 4.716 1.810 3.696 3.381

O.E.

Replacement

Total (O.E.+Repl.)

O.E.

Total (O.E.+Repl.)

3Q’16 4Q’16 FY’16 2Q’17 3Q'17

Replacement

1Q’17 9M’17

To

tal C

ar

ma

rke

t N

ew

Pre

miu

m &

Sta

nd

ard

29.104 30.915 26.184 27.511

21.397 19.783 22.815 12.026 7.673 4.926 1.849

(2.027)

.233 .056

11.855 11.173 11.356 13.392 14.188 14.910 14.219 3.709 4.308 4.439 7.032 4.306 5.918 5.689

14.191 10.443 7.418 5.138 1.194 3.036 3.157

4.130 4.624 4.779 7.368 4.823 6.417 6.146

8.075 7.181 5.918 6.325 3.311 5.016 4.855

Market trend

∆% YoY

≤17"

≥18”

111

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

KEY MARKET TRENDS: RUSSIA & CIS AND SOUTH AMERICA _

O.E.

Replacement

Total (O.E.+Repl.)

O.E.

Total (O.E.+Repl.)

Replacement1

Ru

ssia

& C

IS

So

uth

Am

eri

ca

1.808 6.010

(11.415)

23.963 22.818 18.218 21.615

(11.209) (.534)

(9.162)

19.925 24.438 11.972

18.643

(9.402)

.567

(9.532)

20.462 24.151 12.946 19.102

(6.671)

4.385

(11.048)

20.136 19.297 19.671 19.689

3.036 5.783

.262

15.382 7.503 12.285 11.687

1.321 5.567

(2.159)

16.139 9.445 13.488 12.986

3Q’16 4Q’16 FY’16 2Q’17 3Q'17 1Q’17 9M’17 Market trend

∆% YoY

112

RAW MATERIAL COSTS TREND AND MIX _ MAIN RAW MATERIALS PRICE TREND

Synth. Rubber

29% (+2ppYoY)

Textiles

16% (-2pp YoY)

Steel Reinf.

10% (-2pp YoY)

Natural Rubber

16% (+3pp YoY)

35% Raw mat. costs

on sales

Carbon Black

9% (+1ppYoY) Chemicals

20% (-2pp YoY)

9M 2017 MIX (BASED ON PURCHASING COST)

30

50

70

90

110

130

150

001

001

002

002

003

003

004

004

005

005

006

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

$ / kg $ / bbl

Natural Rubber: Sicom

Brent: www.oilnergy.com Yearly Average Natural Rubber (in $ / kg) Brent Oil (in $ / barrel)

45.0

2011 2012 2013 2014 2015 2016 2017

111.0

4.52

111.7

3.16

53.6

1.37 1.38 1.72

52.6

113

PILLAR 1: SHIFTING CAR CAPACITY TOWARDS HIGH VALUE _

Note: rounding might occur

33

26

38 (54%)

-7

+3

+11 -2 +2

53 (67%)

71

79

Standard to New

Premium

New Premium conversion to

≥21’’

Standard reduction

New Premium growth

2016A 2020E

High Value Car

(≥18” & Specialties)

Other Car

(≤17” Marked,

Homologated,

technological and

regional lines)

Capacity ≥18’’

CAR CAPACITY PRODUCTION SPLIT

2016A 2020E

~ 90% > 90%

Mln pieces Capacity ≤17’’

AVERAGE

SATURATION

PRODUCTION SPLIT

High Value Car

(≥18” & Specialties)

Other Car

(≤17” Marked, Homologated,


AGENDA_

114

1. PIRELLI TODAY

2. GOVERNANCE







9. TARGETS


11. APPENDIX

APPENDIX AGENDA_

115

a. PIRELLI EVOLUTION TO DATE

b. MARKET AND COMPETITION

<<<< c. HIGH VALUE PRODUCTS

d. HISTORICAL FINANCIALS

+18 Mln pcs

Premium capacity in 11-15

+9pp Mkt Share on

European Premium OEMs

1.3 € Bln, 72% of Consumer

Capex 11-15

Pirelli is the first mover in

embracing “Premiumisation”

of the Consumer tyre market

(since London Plan 2013)

PIRELLI STARTED ITS JOURNEY IN PREMIUM CONSUMER TYRES YEARS AGO:

Building strong relationships

with Premium car OEMs

Investing in the “Premium

geographies”

▬ Europe

▬ NAFTA

▬ APAC

Building new Premium Plants

in key regions (China, Mexico,

Romania) and conversion from

standard to Premium capacity

IPO Becoming a pure High Value

Consumer tyre player

ChemChina

Partnership and

Pirelli taken private

Pirelli Consumer “first

mover” in Premium

PIRELLI EVOLUTION TO DATE: PREMIUM FOCUS STARTED MANY YEARS AGO_

2010 - 2015 NOVEMBER 2015 2016 - 2017 Q4 2017

116

* Simplified shareholding structure: Camfin, LTI and SPV stake in Pirelli through Marco Polo; ** Investment vehicle participated by ChemChina (75%) and Silk Road Fund (25%), a

Chinese $40 Bln long-term Investment fund

Successful Mandatory Tender Offer led by ChemChina, Camfin and LTI

ChemChina-Pirelli partnership:

▬ Pivotal role of Pirelli Management

▬ Focus on Consumer as core business

▬ Acceleration in Premium

▬ Conversion of Aeolus capacity to support China growth

▬ Industrial business separation, leaving exposure to the resilient consumer

demand

PIRELLI SHAREHOLDERS STRUCTURE*

Camfin

SPV Lux**

22.4%

65%

12.6%

LTI

Camfin 26.2%

73.8%

Free float

BEFORE MTO

AFTER MTO



ChemChina

Partnership and



mover” in Premium

PIRELLI EVOLUTION TO DATE: CHEMCHINA PARTNERSHIP_

2010 - 2015 NOVEMBER 2015 2016 - 2017 Q4 2017

117

PIRELLI EVOLUTION TO DATE: REINFORCEMENT OF CONSUMER ORGANIZATION DURING DELISTING PERIOD_

SPIN – OFF OF THE INDUSTRIAL SEGMENT (B2B BUSINESS)

PRE – INDUSTRIAL

REORGANIZATION (2016)

WHAT HAS BEEN DONE IN 1H 2017

Consumer business

▬ Rationalization of the organization with a leaner structure and more integrated regions reporting to CEO

▬ New functions to fully capture new opportunities

▬ Consumer Marketing, Digital, Data Science, Cyber, Velo

▬ Integration of Aeolus Car plant, with immediate Jiaozuo plant upgrade, to be ready to capture growth

opportunities in China

MARCH 2017

Consumer Industrial

Spin-off

100% Consumer

118



ChemChina

Partnership and



mover” in Premium

2010 - 2015 NOVEMBER 2015 2016 - 2017 Q4 2017

APPENDIX AGENDA_

119





KEY DRIVERS OF GLOBAL HIGH VALUE TYRE MARKET GROWTH_

Increase in

number

of homologations

2

Rising

penetration

of SUVs

4

Growing demand

for specialties

3

Car evolution

5

New Car

technologies

6

Penetration of

Premium &

Prestige cars

1

120

2020E 2025E

3% 8% Share of

parc


30% 52% Share of

parc



1% 8% Share of

parc


More Tyres needed

(with faster replacement)

Higher Car Usage

(more Miles Driven)

Lower cost per mile

(Higher car

Accessibility)


24/7 availability

▬ Platform designed for fleets with Web

Portal and apps supported by Pirelli

cloud

▬ Leverage on intelligent tyre information

▬ Solution designed to support Total Cost

of Ownership reduction

MORE PREMIUM & PRESTIGE CAR MAKERS ENTERING

SHARED MOBILITY SPACE


DRIVER 6: SHARED PRESTIGE & PREMIUM CAR_


Electric

Autonomous1

Connected

Shared

121

2020E 2025E

3% 8% Share of

parc


30% 52% Share of

parc



1% 8% Share of

parc


1. Figures refers to autonomous driving levels 3, 4, 5 Note. “Connected” refers to cars with mobile data connection (e.g. 2G, 3G, LTE), which might be provided by either embedded car systems or car hardware paired with external devices (e.g. smartphone) All data refers to Prestige & Premium cars Source: company analysis on consulting and investment banks research reports


▬ Integrated real-time analysis of tyres

and car performance

▬ Highest reliability to guarantee safety

▬ Future evolution of the “Cyber Car”,

with advanced features and improved

performance

AUTONOMOUS DRIVING WILL NEED NEW RELIABLE

SYSTEMS NOT ONLY TO “SEE” BUT ALSO TO “FEEL” THE

ROAD…COMBINED WITH THE MAX LEVEL OF SAFETY

Electric

Autonomous1

Connected

Shared

DRIVER 6: AUTONOMOUS PRESTIGE & PREMIUM CAR_


122

APPENDIX AGENDA_

123





RUNFLAT ▬ Allows continuous driving in the event of a puncture

▬ Special reinforcements on the shoulder, maintaining stability and control

SEAL INSIDETM ▬ Prevents air pressure loss in the event of a puncture

▬ Layer of mastic on the inner upholstery

NOISE CANCELLING

SYSTEMTM

▬ Reduces noise generated by rolling of the tyre

▬ Terry cloth inside the inner upholstery

RACING TYRES

▬ PZEROTM TROFEO R: designed for "Track Days"

▬ PZEROTM Slick and Rain: designed for major championships

▬ PZEROTM, SCORPIONTM, SOTTOZEROTM: designed for rallies

COLLECTION

TYRES ▬ Built with modern materials while maintaining original appearance

COLOR EDITION ▬ Possibility of customizing tyres with colours chosen by the consumer

▬ Offered in 4 standard colours and additional Pantone colours

CONNESSOTM

▬ “Intelligent tyres” which connect with the consumer

▬ Technology platform consisting of sensors, control unit, cloud and app

▬ Available initially in the United States from Summer 2017

confidential

partners

confidential

partners

Sp

ecia

ltie

s

Su

per

Sp

ecia

ltie

s

HIGH VALUE PRODUCTS PORTFOLIO_

KEY PARTNERSHIPS KEY CHARACTERISTICS PRODUCTS

124

▬ On offer: 4 base colors available for the P Zero and Winter Sottozero tyre lines, plus Bespoke on demand

PIRELLI COLOR EDITION: A “SUPER-SPECIALTY” FOR PRESTIGE & PREMIUM CUSTOMERS_

125

▬ Pricing (for the full set of tyres): 4 base colors ~1% / 3% of Prestige Car price, in line with car customization options; on demand for the bespoke version (customized colors chosen from the pantone palette, and possibility of applying names and markings to the tyre)

▬ Available for pre-order now on color.pirelli.com for U.S., Europe and the Far East, on sale since 4Q 2017

▬ Now available in the Replacement channel for the Prestige segment only, whose car parc amounts to ~2.5 million cars globally

▬ A breakthrough high tech product extending Pirelli’s specialty offer (Pirelli Noise Canceling System, Run-Flat & Self-Sealing)

▬ The answer to increasing Prestige and Premium customer need for personalization, design and technological excellence

▬ A unique technology, deriving from F1, based on innovative materials that guarantee vivid and durable colors over time

Yellow Red Silver White Bespoke

https://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjPge6m8q7WAhWFZVAKHUbzAKsQjRwIBw&url=https://github.com/mateogianolio/hopfield-colors&psig=AFQjCNEk7Nsu1D6PUf901d-93HVoxDscDA&ust=1505829529269996

APPENDIX AGENDA_

126





5,069 4,976

(93)

Pirelli Consumer

2016 Annual Report

Pirelli IPO new

perimeter*

Perimeter

REVENUES

851 844

Pirelli IPO New

Perimeter*

Perimeter

and off-take

Pirelli Consumer

2016 Annual Report

FY 2016 results were restated to better reflect the final

result of the Industrial Business separation, progressively

effective during 2016 and 2017

▬ The difference in EBIT and EBITDA includes both:

▬ Delta perimeter, and

▬ Off-take costs related to moto production in

Brazil and car production in Turkey in

Prometeon’s plants

EBIT ADJUSTED**

▬ The change perimeter mostly refers to sales related

to industrial business from consumer entities not yet

fully separated in 2016

EBITDA margin

16.8% 17.0%

Pirelli Consumer

2016 Annual Report

1,094

Perimeter

and off-take

1,082

Pirelli IPO New

Perimeter*

EBITDA ADJUSTED**

€/Mln

* Carve-out; ** Before ammortization of PPA, non recurring items and restructuring costs

EBIT margin

21.6% 21.7%

(12)

(7)

FROM 2016 CONSUMER ANNUAL REPORT VIEW TO 2016 IPO NEW PERIMETER_

127

2014A 2015A 2016A CAGR 14-16

Revenues adjusted 4,480 4,785 4,976 5.4%

%yoy 7% 4%

EBITDA Adjusted 890 1,021 1,082 10.3%

Margin % 20% 21% 22%

EBIT Adjusted 654 769 844 13.6%

Margin % 15% 16% 17%

Net income Adjusted 281 388 297 *

Margin % 6% 8% 6%

Capex 297 349 340 7.0%

As % of revenues 7% 7% 7%

EBITDA Adjusted - Capex 592 672 742 11.9%

Cash conversion ratio % 67% 66% 69%

€ Mln

Note: carve-out historical financials adjusted, i.e. before amortization of PPA, non recurring items and restructuring costs; restated with Steelcord among discontinued operations

(2014) and net of Venezuela deconsolidation impact (both 2014 and 2015). Cash conversion ratio defined as (EBITDA Adjusted-Capex)/EBITDA Adjusted

* Higher interest expenses for Marco Polo merge in 2016A

▬ Sound top line growth driven

by High Value and industry

leading price/mix

▬ Margin expansion driven by

price mix and efficiency

programs

▬ Top quality operative

performance led to a high

cash flow conversion

KEY FINANCIAL HIGHLIGHTS_

€466 Mln pro-forma for

new capital structure

128

55% 48% 45%

45% 52% 55%

2014A 2015A 2016A

€ Mln %

(4.7%)

+16.4%

CAGR

14A-16A

Standard

High value

4,785

+5.4%

4,976 4,480

Standard

High Value

Note: carve-out historical financials adjusted, i.e. before amortization of PPA, non recurring items and restructuring costs; restated with Steelcord among discontinued

operations (2014) and net of Venezuela deconsolidation impact (both 2014 and 2015)

2015A

vs. 2014A

2016A

vs. 2015A

Δ Volumes 0.7% 3.5%

- o/w High Value volumes 17.1% 15.5%

Δ Price/Mix 4.1% 3.4%

Δ Exchange rate 2.0% (4.4%)

Δ Perimeter (Aeolus and others

carve-out) 0.0% 1.5%

Δ Revenues 6.8% 4.0%

ORGANIC REVENUES GROWTH REVENUES ADJUSTED

BEST IN CLASS TOP LINE GROWTH DRIVEN BY HIGH VALUE AND INDUSTRY LEADING PRICE/MIX_

129

Relentless Push Towards High Value Drives Growth Outperformance and Margin Expansion

Note: carve-out historical financials adjusted, i.e. before amortization of PPA, non recurring items and restructuring costs; restated with Steelcord among discontinued operations

(2014) and net of Venezuela deconsolidation impact (both 2014 and 2015)

32% 23% 19%

68% 77% 81%

2014A 2015A 2016AEBIT

margin (%)

(12.6%)

+23.9%

CAGR

‘14A-’16A

Standard

High value

Standard

14.6% 16.1% 17.0%

EBIT ADJUSTED BRIDGE EBIT ADJUSTED

€ Mln

654.0 60.0

288.0

194.0 14.0

844.0

2014A 2016A depr. &

others

(144)

exch.

Rate

(30)

Raw

mat.

Input

costs

(192)

Effic. Price/Mix Vol.

€ Mln

+13.6%

654 769 844

High Value

HIGH VALUE FOCUS WITH TANGIBLE IMPACT ON MARGIN_

130

% %

Europe 42%

NAFTA 19%

LATAM 17%

APAC 14%

MEAI 5%

Russia 3%

EU, NAFTA, APAC 93%

LATAM, MEAI, Russia

7%

Breakdown

High Value

2016

revenues

EU, NAFTA, APAC

LATAM, MEAI, Russia

Focus on Prestige and Premium geographies: Europe, NAFTA & APAC represent ~93% of the Global Prestige

and Premium car parc and ~95% of the Global Tyre Market ≥18’’

2016A

2016 EBIT ADJUSTED BY GEOGRAPHY 2016 REVENUES ADJUSTED BY GEOGRAPHY

DIVERSIFIED GEOGRAPHIC EXPOSURE WITH FOCUS ON PRESTIGE AND PREMIUM REGIONS_

131

OPERATING COSTS BREAKDOWN

€ Mln, % on Total

EFFICIENCIES ACHIEVED IN 2015A-2016A

€ Mln

62%

74%

38%

26%

2015A 2016A

96 98

Raw

materials

Allocation

mix & other

Note: data not adjusted

* off/take car Turkey and moto Brazil

10% 10% 12%

7% 7% 6%

7% 7% 11%

5% 4% 3% 5% 5% 6% 3% 3%

2% 1% 2% 1%

2% 1% 1%

1% 1% 1% 1% 1%

1%

23% 23% 21%

35% 35% 33%

2014A 2015A 2016A

Raw Materials

& Consumables

Personnel

Other costs

Purchases of goods for resale*

Fluids and energy

Advertising

Sales costs

4,244 4,515 4,624

Consultancies Maintenance

Rents

Warehousing Travels

COST STRUCTURE_

132

2014A 2015A 2016A

CAGR

14A-16A

NATURAL

RUBBER ~1,950 ~1,450 ~1,250 ~-20%

(US$/ton)

BUTADIENE ~950 ~700 ~610 ~-20%

(EUR/ton)

OIL ~110 ~68 ~45 ~-36% (US$/barrel)

STRONG TRACK RECORD ON OFFSETTING

RAW MAT. AND FOREX

Average Cost of Goods Sold

RAW MATERIAL COSTS BREAKDOWN & TREND

Natural Rubber

13%

Synthetic Rubber

28%

Carbon Black 8%

Chemicals 22%

Textiles 18%

Steel reinf. 11%

% on total raw mat. costs

2016A Raw Mat.

cost on

Revenues

31%

€ Mln

(13)

2

(8) (5) (1) (34)

(60)

3

(33)

(119)

63

(149)

(322)

(47)

100

(13)

19

(5)

197

69

202

432

274

12

120

188

100

2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A

Pirelli Managerial account

Change in translation impact

FOCUS ON RAW MATERIALS_

Raw material cost impact on operating income (including exch.rates effect)

Price/mix impact on operating income

Pirelli consumer reported data pre-carveout*

133

2015

1,021

(350)

(106)

(171)

(285)

87 198

EBITDAAdjusted

Capex ∆ WC Taxes Interests other NCF

€ Mln € Mln

€ 672 Mln -> 65.7% CONVERSION RATE

CASH FLOW BRIDGE (2015)

1,082

(340)

89 (75)

(427)

(49) 280

EBITDAAdjusted

Capex ∆ WC Taxes Interests other NCF

€ 742 Mln -> 68.6% CONVERSION RATE

CASH FLOW BRIDGE (2016)

2016

includes 6 €/mln related to cash & cash

equivalents relative to discontinued operations

HISTORICAL CASH FLOW STATEMENT_

1,038 (198)

278 (46)

168

1,241 1,241

(280) (266) 4,132

134

4,961

134

970.0

417.0

922.0 967.0

234.0

= 733 =640

4Q 3Q 2Q 1Q

1,129

4Q 3Q

1,057

2Q 1Q

1,134

86.0 103.0

73.0

130.0

74.0 82.0 82.0

134.0

2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q

NET INVESTED CAPITAL SEASONALITY: PIRELLI GROUP REPORTED DATA_

*Net operating working capital defined as Inventories + Trade receivables - Trade payables

€ Mln

SEASONALITY OF CAPEX THROUGH QUARTERS

€ Mln

COMMENTARY

Example based on former perimeter (Consumer + Industrial) only

for illustration purposes

▬ Q4 lowest level of working capital, consistent with the

wider industry: high volumes of collections linked

specially to Winter sales in high seasonal regions as

Europe and Russia.

▬ Net working capital decline in 2016 mainly due to

inflation effect (raw materials price increase in Q4 2016

inflating payables more than revenues - time lag - and stocks

- lower days outstanding):

▬ Management of working capital driven by the

implementation of global credit insurance programs

covering insolvency risk

▬ Inventory terms gradually improved in recent years

following the implementation of several cost-savings

measures (e.g. Efficiency improvement and scrap

reduction) while accounts payable remained rather

stable

SEASONALITY OF NET OPERATING WORKING CAPITAL1 THROUGH QUARTERS

2015A 2016A

2015A 2016A

135

CAPEX 2014-2016

120 163 164

88

85 93

79

90 76 11

12 8

2014A 2015A 2016A

Capacity & High Value conversion Mix & Quality Other Intangible

297

349 340

TANGIBLE CAPEX BREAKDOWN BY GEOGRAPHY

€ Mln, %

6.6% 7.3% 6.8% Capex /

Revenues

Adj.

71% 76% 74%

29% 24% 26%

2014A 2015A 2016A

Standard regions

(Russia + MEAI +

LATAM)

High Value regions

(EU + NAFTA +

APAC)

30% 29% 25%

Maintenance* % on total capex

* Baseload HSE and loss prevention, R&D, IT, Logistics and other

INVESTMENT FOCUSED ON HIGH VALUE TO DRIVE FUTURE GROWTH_

€ Mln

136

(1.243) (1.173) (1.280)

850 849 874

566 584 680

2014A 2015A 2016A

NET OPERATING WORKING CAPITAL DEVELOPMENT

3.7% 5.2% 5.5%

174 260 274

Operating

NWC /

Revenues

▬ Seasonal products campaign (mainly winter tyres) leads to a

lower level of 4Q working capital, consistently with the wider

industry

Note: Net operating working capital defined as Inventories + Trade receivables - Trade payables.

Days Receivables defined as Receivables/Revenues*360; Rotation of Receivables defined as Revenues/Receivables.

Days Inventories defined as Inventories/Revenues*360; Rotation of Inventories defined as Revenues/inventories..

* Payables / Revenues

2014A 2015A 2016A

Days Rotation Days Rotation Days Rotation

RECEIVABLES 44 8.2 42 8.6 49 7.3

INVENTORIES 66 5.5 61 5.9 63 5.7

PAYABLES 26.7%* 2.6 23.4%* 3.0 25.7%* 2.8

WORKING CAPITAL MANAGEMENT (CARVE OUT FIGURES)_

€ Mln

137

NET DEBT – NFP RECONCILIATIONS & TREND 2014 – 9M 2017

TREND 2014 – 9M 2017

Net Debt / EBITDA adjusted 1.2 x 1.3 x 4.7 x 3.7 x1

2014 2015 2016 9M 2017

Net Debt 1,093 1,284 5,045 4,397

Other non-current financial receivables (49) (44) (85) (109)

Net Debt adjusted 1,044 1,241 4,961 4,288

Cash & cash equivalents related to discontinued operations (6)

Net Financial Position 1,038 1,241 4,961 4,288

(933.0)

979.0 621.90 347 (1,000)

1,093

1,746 Non-current liabilities

Current financial liabilities

Cash & cash equivalents & other current fin. assets

1,284

1,238

5,045

5,886

670

(1,511)

4,397

4,219

(444)

€ million

138

NET DEBT EVOLUTION_

1 Net Debt on 12 month trailing EBITDA adjusted w/o start-up costs

COMMENTS INCOME STATEMENT (CARVE-OUT CONSUMER CONSOLIDATED FIGURES)

▬ Other revenues are mainly related to the sales of

Industrial products. As a consequence of the

separation between Industrial and Consumer

activities, the increase in 2016 is mainly due to the

sale of raw materials, semi-finished products and

services to the Industrial business

▬ The increase of other costs in 2016 is almost entirely

related to the purchase of finished products, following

the underwriting of supply agreements between

Industrial and Consumer activities.

▬ The deconsolidation of Pirelli de Venezuela C.A.

(“Pirelli Venezuela”, 96.2% controlled by Pirelli Group)

in 2015 implied the recognition of a loss from

deconsolidation of € 0.5 billion mainly related to the

devaluation of the net financial position recorded by

the Venezuelan company and write off of receivables;

▬ The increase of financial expenses is mainly due to:

▬ the higher financial debt included in the Carve-

Out 2016 financials

▬ the high level of inflation in Venezuela in 2015,

leading to a decrease in monetary assets

reflected as financial expenses in accordance

with the applicable accounting principles

▬ The increase in tax expenses in 2015 was also

affected by the effect of

▬ higher non-deductible expenses of the

Venezuelan subsidiary attributable to an effect

of the high levels of inflation recorded in the

country and the devaluation of the trade

payables/receivables

▬ Write-off of tax assets for 107.6 €M

*Before non rec. items & restr. costs, start-up: Aeolus Car, Velo, Cyber & digital transformation;

HISTORICAL INCOME STATEMENT_

2014A 2015A 2016A 1H 2016 1H 2017 Revenues 4,648.0 5,021.0 4,976.4 2,426.9 2,685.3

%yoy 8% (1%) 11%

Revenues (excl. Venezuela) 4,479.9 4,785.4 4,976.4 2,426.9 2,685.3

%yoy 7% 4% 11%

Other revenues 488.8 500.0 696.2 347.4 318.6

Δ inventories 61.6 44.2 (22.4) (11.8) 87.5

COGS (1,480.3) (1,583.6) (1,540.5) (732,6) (942.2)

Personnel (996.0) (1,055.4) (986.3) (495.9) (551.2)

Other costs (1,768.1) (1,875.8) (2,096.7) (1,024.7) (1,098.9)

Increase in fixed assets for internal work 2.4 2.8 2.4 1.1 1.6

EBITDA 956.4 1,053.1 1,029.0 510.5 500.7

Margin % 21% 21% 21% 21% 19%

EBITDA Adjusted 889.7 1,021.4 1,082.3 529.9 546.4

Margin % 20% 21% 22% 22% 20%

D&A (262.3) (281.1) (342.6) (169.0) (182.5)

EBITDA Adjusted without start-up cost 566.8

Margin % 21.1%

EBIT 694.2 772.1 686.5 341.5 318.2

Margin % 15% 15% 14% 14% 12%

EBIT Adjusted 654.2 769.2 844.3 413.2 416.2

Margin % 15% 16% 17% 17% 16%

EBIT Adjusted without start-up costs 443.0

Margin % 16.5%

Net income (loss) from equity investments (87.0) (41.4) (20.0) (48.8) (12.9)

Venezuela deconsolidation 0.0 (507.8) 0.0 0.0 0.0

Financial income/expenses (256.9) (308.5) (427.2) (252.4) (226.4)

Taxes (130.1) (278.2) (75.3) (46.7) (11.3)

Net income (loss) from discontinued operations 17.6 (14.7) 0.0 0.0 0.0

Net result 237.7 (378.4) 164.0 (6.4) 67.6

o/w minorities 10.8 5.3 9.2

139

€ Mln

Copyright © 2017 Pirelli & C. S.p.A.

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In General. - Amazon S3...In General. This document (the “Presentation”) has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company” and, together with its subsidiary