Pirelli & C.

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Chairman’s letter

Marco Tronchetti Provera - Pirelli Group Chairman

Dear Shareholders,

The strategy that guided Pirelli & C. in 2009 was based on a forceful and challenging slogan, “green performance”, a clear choice of environmental and social sustainability which has characterized both our products and our manufacturing processes, in full and open harmony with the most responsible decisions made by international companies attentive to the great economic transformations taking place at the global level.

In executing our 2009-2011 Three-Year Plan, we have worked consistently, aiming to increase the “green” proportion of our products from 20% to 40% over the three year period of reference.

We have been through a period of restructuring and relaunched the group, during 2008 and 2009, combining the reorganizational decisions, even though they were costly in economic and social terms, with the growth and development plans, both in Italy and at the international level. Our investment and expansion initiatives have been focused on the industrial “core business”, in the automotive segment, in the production of tyres and particulate filters. A commitment that our leading international investors have appreciated, as can be seen, in fact, from the performance of our shares on the stock exchange .

The year 2009 marks the return of dividends for the parent company thanks to decidedly improved overall results and net financial debt almost halved.

We have taken full advantage of the recovery of the markets – which is evident even among limits and contradictions above all on the main international markets of the Far East and of Latin America – (in particular in the "consumer" segment), in keeping with the demand for greater quality and innovation, confirming the validity both of our technological strategies and of our geographical positioning.

The return to profitability will now enable us to invest in new or increased production capacity in Russia, China, Romania, Brazil and Italy (thanks above all to the new Industrial Hub of Settimo Torinese, which will be completed in 2010 and be fully operational at the beginning of 2011).

The process of turning Pirelli Real Estate around continued with a review of the business model and with a strengthening of the asset and management structures.

It is precisely thanks to the actions taken in 2009 and continued in 2010 and to the positive results achieved up to now that, while conscious of the difficulties still present, we can look to the current year positively and with confidence, with the aim of reinforcing our position as an increasingly innovative, responsible and sustainable Italian industrial multinational.

Signature of Marco Tronchetti Provera