WITH AN INVESTMENT OF APPROXIMATELY €170 MILLION,
THE NEW PLANT AT SLATINA WILL MANUFACTURE CAR TIRES FOR EUROPE & FOR ALL MARKETS THAT ARE MORE RECEPTIVE TO TOP-END PRODUCTS ONCE FULLY OPERATIONAL, THE NEW FACILITY WILL PRODUCE OVER 4.5 MILLION TIRES A YEAR & EMPLOY ABOUT 1,000 PERSONNEL THE GROUP STRENGTHENS ITS PRESENCE IN EASTERN EUROPE WHERE IT TARGETS AN ANNUAL GROWTH OF OVER 10%

THANKS TO THE NEW CAR-TIRE FACILITY,
& TO THE STEEL-CORD PLANT COMMISSIONED IN 2005,
SLATINA IS SET TO BECOME AN INDUSTRIAL CENTRE OF WORLD IMPORTANCE FOR THE PIRELLI GROUP

INITIAL MOVES ARE UNDER WAY ON LOCAL SCHEMES TO PROMOTE THE WELFARE & TRAINING OF EMPLOYEES
& TO BENEFIT THE LOCAL COMMUNITY

Slatina, 26 October 2006 - Pirelli Tire has officially started tire manufacture in Romania at its new facility in Slatina (Olt Province). The plant will produce top-of-the-range tires for cars & SUVs (Sport Utility Vehicles) & is located close to the steel-cord facility opened last year.
 
The new Slatina plant, one of the world's most modern tire production facilities, applies leading-edge non-robotised production technologies & has been designed for producing high-performance tires - a sector where Pirelli Tire is a leader - including the Company's Winter, High-Performance, Ultra-High-Performance & SUV range.

The industrial complex, including the steel-cord facility, covers an area of 500,000 square meters & by the year end will employ approximately 770 personnel, of which about 450 in tire production. Output in 2006 will be 300,000 tires, rising to 2 million in 2007 .  The new facility, when fully operational, will have an annual output capacity of 4.5 million high-performance tires with a workforce of about 1,000 . The total investment is approximately EUR 170 million .

Slatina represents for the Pirelli Group a key industrial location . The new car-tire & the steel-cord facilities are global asset in Pirelli's industrial strategy. Slatina, which will in time become one of the world's biggest production centres for car tires , will enable Pirelli to step up its output capacity in response to market demang in the top-end segments, which are rapidly expanding both in Europe & in the rest of the world.

The Slatina complex is strategically located for serving markets in both Western & Eastern Europe, where the big car makers are increasingly adding production capacity.  Exports will exceed 90% of output .

In addition Pirelli strongly believes that in the next few years Central & Eastern European countries will become a major market for high-performance tires.  Local demand is set to exceed 10% per year. Consequently, Pirelli intends to develop the potential of the Slatina area by setting up, alongside its industrial operations, a platform of logistics, data-processing, & sales services to support expansion in these countries.

The new plant in Olt operates the best equipment on the market, further enhanced with modern process innovations patented by Pirelli. The plant features the very latest in Pirelli Tire non-robotised production technology & highly sophisticated control & management systems.

The entire workforce & almost all office staff at the Slatina facility have been recruited locally. As is the Company's custom, Pirelli has plans for a series of initiatives in Olt to promote the training & welfare of its personnel & their families &, more generally, to benefit the local community. In particular, a co-operation agreement has been signed with Craiova University for an intensive training project based on post-graduate courses & joint research projects. Further, a number of educational & assistance initiatives for young children & professional training for young people are under consideration.

Start-up of tire production in Romania strengthens the international presence of Pirelli, which was first established in Spain in 1902 & now counts 24 production facilities in 12 countries worldwide, in addition to an extensive sales & distribution network that stretches across 160 countries in all five continents.