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GROUP FINANCIAL OVERVIEW

              Claudio De Conto
  General Manager Operations – Pirelli & C. S.p.A.
Agenda



  Pirelli Group 2008 Key Financial Results


   Pirelli Group ‘09 –‘11: Net Financial Position Targets




     ...
Pirelli Group – 2008 Key Financial Results
Pre closing – Unaudited figures

Euro / Mln



                                ...
Pirelli Group – 2008 Net Financial Position
Pre closing – Unaudited figures

Euro / Mln

                                 ...
Pirelli Group – 2008 Net Financial Position by
Business
Pre closing – Unaudited figures




 Euro / Mln                  T...
Pirelli Group – Debt Structure
Pre closing – Unaudited figures


                   Net Financial Position                ...
Agenda



  Pirelli Group 2008 Key Financial Results



   Pirelli Group ‘09 –‘11: Net Financial Position Targets




    ...
Pirelli Group: ’09 –’11 : Net Financial Position Target

            Guidelines - Actions                                 ...
PIRELLI RE FINANCIAL TURNAROUND

            Claudio De Conto
        CEO Finance – Pirelli Real Estate
Agenda



         Pirelli RE straightforward financials


         Pirelli RE financial turnaround




                  ...
Pirelli Real Estate – Preliminary 2008 Results
Unaudited figures

      €/mln                                             ...
Details on 2008 Operating results
Unaudited figures

€/mln

              Change in Operating income including income from...
Net Debt excluding Shareholders' loans (2007-2008)
Unaudited figures

€/mln


                                            ...
Financial Situation of Funds/SPVs participated by Pirelli RE as of ’08 FY
Unaudited figures


                            ...
Pirelli Real Estate: Net Asset Value as of Dec 2008
Unaudited figures



Real Estate NAV at 100% (€/bn)*                  ...
Agenda



         Pirelli RE straightforward financials



         Pirelli RE financial turnaround




                 ...
The SGR role: 2008-2011 evolution



   NPLs




                      Italy                                            Ge...
Net Debt excluding Shareholders' loans 2009-2011


                 1000
                  900               862
         ...
Targets 2009-2011




                                          2008        2009          ACTIONS            2011


    As...
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Pirelli Industrial Plan Financials

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Claudio De Conto, General Manager Operations at Pirelli & C. S.p.A. illustrates both a) Pirelli Group 2008 Key Financial Results and b) Pirelli Group ‘09 –‘11: Net Financial Position Targets.

More on: http://industrial-plan.pirelli.com/idayPost/jsp/downloadArea.jsp

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Pirelli Industrial Plan Financials

  1. 1. GROUP FINANCIAL OVERVIEW Claudio De Conto General Manager Operations – Pirelli & C. S.p.A.
  2. 2. Agenda Pirelli Group 2008 Key Financial Results Pirelli Group ‘09 –‘11: Net Financial Position Targets | 1
  3. 3. Pirelli Group – 2008 Key Financial Results Pre closing – Unaudited figures Euro / Mln FY- '08 YoY % Q4 - '08 YoY % 4Q08 Results Drivers (*) (*) deterioration of market Revenues 4,648 -0.5% 980 -10% conditions for both tyre & real estate business EBITDA beforere structuring 397 -31% 6 -95% -% 8.5% Raw material cost impact as high as in Q3 combined EBIT before restructuring 188 -48% (44) n.m. with volume slowdown -% 4.1% Restructuring (144) (95) acceleration of restructuring initiatives on both Tyre and EBIT after restructuring 44 -88% (139) n.m. PRE Net Financial Position 1,028 stable vs. 9M08 figure (*) Homogeneous terms variation, not including exchange rate effects and, in 2007, DGAG assets deconsolidation. | 2
  4. 4. Pirelli Group – 2008 Net Financial Position Pre closing – Unaudited figures Euro / Mln 108.3 (81.3) 1,028.1 168.0 835.5 (302.1) 173.3 126.4 FY07 Operating Financial Income Speed Fin. Invest. Change in FY08 Dividends NFP Cash Flow & Fiscal Charg. Acquisition & Other Cons. Area NFP | 3
  5. 5. Pirelli Group – 2008 Net Financial Position by Business Pre closing – Unaudited figures Euro / Mln TYRE PRE Other Corporate P&C Business Group Cons Gross Debt 1,609 911 29 511 2,110 to Corporate 432 492 27 Financial receivables (121) (573) (17) (938) (699) Cash and cash equivalents (222) (49) (3) (109) (383) Net Financial Position 1,266 289 9 (536) 1,028 | 4
  6. 6. Pirelli Group – Debt Structure Pre closing – Unaudited figures Net Financial Position Gross Debt Maturity 909 Euro / Mln 2,110 1,082 681 Committed Line 1,070 Drawdown 1,028 161 228 69 306 92 170 Other Borrowing 890 734 136 150 Corporate bond 150 434 Gross Fin. Net Fin. Debt Assets * Position 150 2008 2009 2010 2011 2012 639 Total Committed Total 136 Lines not drawn 785 10 0 *Financial receivables,cash and cash equivalents | 5
  7. 7. Agenda Pirelli Group 2008 Key Financial Results Pirelli Group ‘09 –‘11: Net Financial Position Targets | 6
  8. 8. Pirelli Group: ’09 –’11 : Net Financial Position Target Guidelines - Actions Target PRE : Gross Debt reduction €/Mln Disposal of “Non Core” Assets NFP Stable NFP 08 1,028 Pre Clos. TYRE : Investments Continuous selection On going control Ratio Inv/Deprec. ~1/1 NFP 2009 ~ 1,000 NWC Management Stocks reduction Efficiency on Receivables Cash Flow 09-11 Before Dividends ~ 250 Sales/Average NWC from 9 to 11 Other Business : NFP 2011 < 800 Cash Neutral Before Dividends Opportunity sales of financial assets | 7
  9. 9. PIRELLI RE FINANCIAL TURNAROUND Claudio De Conto CEO Finance – Pirelli Real Estate
  10. 10. Agenda Pirelli RE straightforward financials Pirelli RE financial turnaround | 1
  11. 11. Pirelli Real Estate – Preliminary 2008 Results Unaudited figures €/mln 2007 Net of 2008 DGAG temporary 2007 Consolidation Pro quota aggregate revenues 775.6 949 1,043.7 Consolidated revenues (*) 365.1 334.1 428.8 Operating Income before layoffs & (17.7) 12 33.4 Real estate revaluation/ devaluation Income from equity particip. before layoff & Real estate revaluation/ devaluation (42) 71.6 71.6 Operating Income incl. Income from equity particip. before layoffs & (59.7) 83.6 105.1 Real estate revaluation/ devaluation(**) Real estate revaluation/ devaluation (135.8) 67.5 67.5 Lay Offs (44.2) Operating Income incl. Income from equity participations (**) (239.7) 151.1 172.6 (*) 2007 values do not include sales at cost of DGAG real estate assets amounting to 1.295,6 €/mln (**) Excluding Facility management result for 74.6 €/mln, which is included in "discontinued operations“ (in 2007 discontinued operations worth 49.5 €/mln) and financial interests on participations (23.0 €/mln vs. 24.1 €/mln in 2007) | 2
  12. 12. Details on 2008 Operating results Unaudited figures €/mln Change in Operating income including income from equity participations (excluding real estate devaluation/ revaluation and layoffs) (113.6) 83.6 Income from equity participations (29.7) (21.6) (74.0) (18.0) (59.7)* 2007 Success SPVs Derivatives 2008 EBIT Fees results actual on SPVs Pre-closing SPVs= special purpose vehicles (*) Excluding Facility management result for 74.6 €/mln, which is included in "discontinued operations“ (in 2007 discontinued operations worth 49.5 €/mln) and financial interests on participations (23.0 €/mln vs. 24.1 €/mln in 2007) | 3
  13. 13. Net Debt excluding Shareholders' loans (2007-2008) Unaudited figures €/mln Highstreet acquisition Disposal 935 Facility Mgmt 862 816 808 810 290 300 324 271 289 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Estimate Net Debt Net Debt excluding Shareholders’loans | 4
  14. 14. Financial Situation of Funds/SPVs participated by Pirelli RE as of ’08 FY Unaudited figures 100% 13.0 3.6 Euro / bn 0.6 * 0.4 2.6 SPVs DEBT Pro-Quota Shareholders’ NPL RE Assets PRE Loans Ero B o 2,577 154 M?? 176 778 MATURITY Euro / mln High Street 1,469 425 RE Assets 2009 2010 2011 Beyond * Of which NPls 0,2 €/mln. | 5
  15. 15. Pirelli Real Estate: Net Asset Value as of Dec 2008 Unaudited figures Real Estate NAV at 100% (€/bn)* Real Estate NAV Pro quota (€/bn)* AUM RE participated 14.1 15.0 11.3 3.5 3.8 3.0 10.1 2.6 1.2 0.4 SHL** 0.8 SHL** 3.7 Book Value Mkt Value Net Debt NAV Book Value Mkt Value Net Debt NAV Despite devaluation in 2008, the real estate portfolio shows a pro quota implied capital gain (difference between Market value and Book value) of approx. 260 €/mln, with a total real estate NAV of 0.8 €/bn * excluding non participated RE AUM ** SHL=Shareholders’ Loan | 6
  16. 16. Agenda Pirelli RE straightforward financials Pirelli RE financial turnaround | 7
  17. 17. The SGR role: 2008-2011 evolution NPLs Italy Germany Poland SGR Residential Development Residential Commercial Asset Residential Asset Commercial Asset Develop Asset Asset Mgm & Asset Mgm & Mgm & Services Mgm & Services Mgm & Services Mgm & Services Services Services | 8
  18. 18. Net Debt excluding Shareholders' loans 2009-2011 1000 900 862 816 800 700 600 500 400 ~350 300 ~200 200 100 0 2007 2008 2009 E 2011 E Capital increase for 400€/mln Significant reduction in 2009 also thanks to: Sale of non core assets (NPLs portfolios) Value enhancing of Fund & Asset Management through a strategic partnership | 9
  19. 19. Targets 2009-2011 2008 2009 ACTIONS 2011 Asset Under Management (BV) 14.4 slight decrease no acquisitons stable 1 €/bn disposals €/bn RE assets Operating Income (60) 20/30 50 €/mln costs ~100 Including Income from equity savings Fund Mgmt. participations valorization €/mln | 10

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