Financial Overview

(in millions Euros)

	FY2009	FY2008	Rate of change (%)	Factors
Overall
Sales	4,528	5,447	(17)	-
Operating income	(40)	93	-	-
Sales by division
Lighting	1,228	1,524	(19)	1)
Engine Control	850	933	(9)	2)
Suspension System	525	893	(41)	3)
Shock Absorbers	281	315	(11)	4)
Electronic Systems	501	570	(12)	5)
Exhaust Systems	543	635	(15)	6)
Plastic Components and Modules	469	545	(14)	7)

Factors
1)
Lighting
-Revenues totalled 1,228 million Euros in 2009, a decrease of 19% over the previous year. The general drop in sales volumes attributable to the global financial crisis was most pronounced in the medium-to-high-end segment, where the business line is most active.

2)
Engine Control
-Revenues totalled 850 million Euros for 2009, a drop of 9% over 2008. Performance varied by region, with declines in Europe and the US contrasted by growth in India - driven by the production of diesel control units - and China, while performance in Brazil was in line with the previous year.

3)
Suspension Systems
-Revenues for the year totalled 525 million Euros. The largest decline was in Italy and was due to the contraction in the production of light commercial vehicles. For the business line’s other principal markets: Poland benefited from an increase in sales to Fiat and other manufacturers, and Brazil was in line with 2008.

4)
Shock Absorbers
-Revenues for the business line totalled 281 million Euros for 2009. The 11% decline over the previous year was attributable to the drop in both the European and American markets. Poland was the only market to record an
increase in revenues over 2008.

5)
Electronic Systems
-Total revenues were 501 million Euros in 2009, an overall decrease of 12% over the previous year, with sales performance in China and Brazil, however, going against the trend. There was an increase in revenues from instrument panels (+10%), primarily attributable to higher volumes for external customers. Revenues from telematics recorded a significant drop (-52%), however, due to the shift in demand toward less content-rich infotainment products. Sales of products for vehicle interiors were in line with 2008.

6)
Exhaust Systems
-Revenues totalled 543 million Euros for 2009, a 15% drop over the previous year. The decrease reflected a negative price effect linked to a fall in the market price of a core material that was partially offset by new product launches.

7)
Plastic Components and Modules
-The business line achieved revenues of 469 million Euros, a 14% decrease over the prior year on a like-for-like basis mainly as a result of reduced sales volumes attributable to the contraction in market demand.

Contracts

Lighting
-Major new orders included: headlamps for Mercedes, Audi and Skoda models, and headlamps and tail lights for Land Rover and Peugeot.

Engine Control
-Major orders received during the year included: for Fiat, CNG systems for the Grande Punto and the MultiAir control unit for the Punto Evo and MiTo; for Volkswagen, systems for 1.0 and 1.4 engines; for Fiasa, systems for 1.6/1.8 Tritec engines; and the Freechoice system for General Motors in Brazil.

Suspension Systems
-The principal production launch during the year was the suspension system for the Fiat 500C in Poland, while major new orders included the strut for future BMW platforms, which will be manufactured in Poland.

Electronic Systems
-Major new orders included instrument panels for Volkswagen, dashboard pin outs for Fiat models and infotainment products for external customers. For telematics, new orders were acquired for the aftermarket channel, including the tracking container and the TomTom kit for Fiat.

Exhaust Systems
-Major new orders included exhaust systems for new Euro 5 engines and a complete exhaust system for Seat.

Plastic Components and Modules
-All business lines began development of new products for Fiat 500 models to be sold in the US.

Acquisition

-In January 2009, the Company acquired a 51% interest in Magneti Marelli UM Electronic Systems Private Limited for the design, production and assembly of electronic automotive components in India.

-Magneti Marelli Suspensions USA, LLC announced that it has acquired the International Steel Solutions, LLC plant in Pulaski, Tennessee. The Company intends on using this facility to continue manufacturing shock absorbers and related suspension parts. The Company will be hiring a significant number of the current employees at the Pulaski facility, and has committed to increase those numbers in the next two years as it grows the business and expands the product line. (From a press release on January 18, 2010)

Joint Ventures

-The Company and China's Shanghai Automobile Gear Works (SAGW) have signed a joint venture agreement aimed at the production of hydraulic components for the AMT(Automated Manual Transmission) made by Magneti Marelli (FreechoiceTM). The agreement provides for equal shareholdings by the Company and SAGW. The joint venture will be located in the area of Shanghai and is set to be operational starting in the second half of 2009. At full speed, the new entity will be able to produce components for about 350,000 gearboxes a year. SAGW, a subsidiary of SAIC Motor Corporation Ltd.(SAIC), is a leading manufacturer of transmissions for the automotive sector. (From a press release on Jan. 27, 2009)

R&D Expenditures

(in millions Euros)

	FY2009	FY2008	FY2007
Overall	245	268	221

Product Developments

Lighting
-Innovations included the Bihalogen Projection Module, a new halogen standard that provides a brighter and wider beam of light.

Engine Control
-New products launched during the year included throttle bodies for Peugeot and Citroen and for the South African, Indian and Russian markets, as well as the GDI injector for the Volkswagen group. Innovation focused on development of components and battery packs for electric and hybrid vehicles, as well as projects to reduce nitrogen oxide emissions on diesel engines.

Shock Absorbers
-Production began on the electronic Synaptic Damping Control suspension system for the Lancia Delta and Alfa Romeo MiTo. The main innovation projects included: an inertial valve (a new valve for shock absorbers) and the selectronic project (a new concept in electronic shock absorber).

Electronic Systems
-In the area of innovation, a number of new products were developed for instrument panels and vehicle interiors for Fiat, Volkswagen/Audi and Ferrari. In the telematics area, development focused on the new radionavigation
platform for PSA, evolution of Blue&Me for Fiat and upgrades to Instant Nav for Fiat. For Ford, development continued, in collaboration with Microsoft, on the new Fordworks system which, based on the Windows platform, provides navigation and high-speed internet access.

Exhaust Systems
-In terms of innovation, activities were focused on existing projects in the area of noise reduction for diesel engines, sound quality (dual-mode muffler) and reductions in CO2 emissions and fuel consumption. During the year, production and distribution began of Abarth brand exhausts with “dual-mode muffler Etechnology.

Plastic Components and Modules
-Product innovation related to the application of multilayer blow-moulding technology to production of tanks for small/medium displacement vehicles and the use of slush technology (for enhanced aesthetics) for development of dashboards for commercial vehicles.

Technological Partnership

-Brembo, Pirelli and the Company announced the cooperation for the development of applications in particular in the field of safety systems for automobiles. The Cyber Tyre, the intelligent tyre developed by Pirelli, will be integrated with Magneti Marelli electronic control systems and with Brembo's braking systems. (From a press release on Jan. 27, 2009)

-FAAM of Italy and the Company have agreed to jointly develop, produce and market lithium batteries and battery management system (BMS). The marketing of the products under the agreement will start by the second half of 2010. The cooperation is intended for the transportation sector - with its primary strategic importance in the area of hybrid and electric engines. FAAM manufactures and sells lead and lithium batteries, fuel cells and electrical vehicles. Its production plants are located in Italy, Uruguay and China. (From a press release on August 31, 2009)

-STMicroelectronics and the Company announced that they have signed a memorandum of understanding on power electronics modules and components for inverters (energy conversion electronic systems) to be fitted on hybrid and electric vehicles. The two companies have already been cooperating in development of inverters for the KERS (the Kinetic Energy Recovery System) used in Formula 1 racing. They are aiming to apply the acquired technology from the collaboration to hybrid and electric vehicles with a high growth potential in order to establish an advantageous position in this field. (From an article in the Nikkan Jidosha Shimbun on Sep. 19, 2009)

-Samsung Mobile Display and the Company have signed a Cooperation Agreement for the development of new generations of display-based products, targeting the automotive market of Instrument Clusters, Infotainment and Car Navigation. The Company will provide its experience and expertise in the automotive field, specifically in the Instrument Clusters and built-in Car-Navigation systems sector, while Samsung Mobile Display will make available its know-how related to a broad range of technologies developed for display solutions, ranging from TFT (Thin Film Transistor display technology) to Active Matrix OLED. (From a press release on November 26, 2009)

-Telit Communications S.p.A. and the Company have signed a Memorandum of Understanding in the area of GSM (Global System for Mobile Communications) and GPRS (General Packet Radio Service) modules to be used on telematic devices in the automotive field. Under the agreement, Telit will supply the Company with cellular m2m (machine to machine) modules to be fitted in telematics boxes for automotive use world-wide and in particular for Europe and Brazil. Thanks to this connectivity, the telematics boxes allow a wide range of infomobility services to be accessed from the vehicle as well as in-vehicle multimedia entertainment services. (From a press release on December 15, 2009)

Capital Expenditure

(in millions Euros)

	FY2009	FY2008	FY2007
Overall	356	474	319

Investments Outside Italy

-The Company inaugurated a new plant in Wuhu Economic Development Area in Anhui Province, China. The facility will be dedicated to production activities in the Lighting and the Powertrain sectors. With regards to lighting products such as headlamps and rear lamps will be aimed at both the local market and at exporting towards other Asian countries including Japan and Korea. And the powertrain components including intake manifolds and throttle bodies will be manufactured for the Chinese carmakers. At full capacity, the location will have a production capacity of 4 million pieces a year for the lighting and 4.5 million for the powertrain. (From a press release on May 16, 2009)