Pirelli Spends Over US$ 50 Million on New Brazilian Unit

Italy-based tire company Pirelli inaugurated Wednesday, March 22, the expansion of the company industrial unit in the city of Gravataí­, in the southernmost Brazilian state of Rio Grande do Sul.

The new plant, which is near the company’s conventional tire factory, is going to produce radial tires for buses and trucks.

The investment of over US$ 50 million should generate 222 jobs. There are currently 1,600 people working at the factory.

Pirelli has been installed in the city of Gravataí­ for 30 years and houses the Italian company’s main world center for development and production of tires for scooters, motorcycles and bicycles.

The new unit will add 12,000 tons a year to the 64,000 tons that the company already produces at the site. It will represent 8% of Pirelli’s revenues in Brazil.

Of Gravataí­’s production, 80% will be for the local market and 20% for export, chiefly within Latin America .

The opening of the production unit in Gravataí­ further strengthens Pirelli’s presence in the radial Truck segment and follows the launch in China in the second half of 2005.

The investment in Gravataí­ is part of the Pirelli’s strategy of worldwide growth, which foresees expansion in emerging markets in the industrial segment, together with a focus on the Premium Auto and Motorcycle segments.

This strategy saw the Company close 2005 with a significant increase in key economic indicators and achieve its profitability target (ROS at 9%), forecast in the 3-year plan for 2006, one year ahead of schedule.

In particular, revenues amounted to 3,633 million euros ( +11.7% ), the operating profit was 329 million euros (+ 19.6% ) and the net profit was 198 million euros ( +18.6% ).

During the inauguration ceremony, in the presence of the Governor of the State of Rio Grande do Sul , Germano Rigotto , and local authorities, the Chairman of Pirelli Brazil, Giorgio Della Seta , said: "the opening of this new production unit in Brazil is proof of the Pirelli Group’s confidence in a country which has hosted us for 77 years.

"Rio Grande do Sul is a strategic area for us with its qualified labor force, excellent infrastructure and the entrepreneurial spirit of its state and municipal governments, all of which allow Pirelli to achieve its goals in Brazil and at the same time contribute to the region’s economic development".

Carlos Redondo, Pirelli Tire’s director for Latin America added: "the region’s industrial culture, the presence of already installed infrastructure, favorable market conditions and proximity to the countries of the Mercosur constitute an ideal scenario to guarantee new opportunities for the development of both Pirelli and the territory" .

The new production unit will flank Pirelli’s other radial Truck facilities in Italy, Turkey, Egypt and China, as well as the Brazilian plant in Santo André, in the Greater São Paulo.

Pirelli – www.pirelli.com

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