INTERIM FINANCIAL REPORT FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2003 (CONSOLIDATED) DIRECTORS REPORT

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1 CARRARO S.p.A. Registered office in Campodarsego, Padua Via Olmo 37 Share capital Euro 21,840,000 fully paid in. Fiscal Code, VAT registration and registration with the Companies Register in Padua No R.E.A. No INTERIM FINANCIAL REPORT FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2003 (CONSOLIDATED) DIRECTORS REPORT The year to date cumulated sales as of 30 September show a 2% growth with regards to previous year, thanks to the increase of the construction equipment segment, the stationery segment and the stability of the agricultural segment, despite the 3Q 2003 registered a slight downturn (decrease) as to the previous year, for less working days and for episodic (incidental) delay in material supplying consistent to the resourcing businesses. The sales decrease is furthermore due to the uncertain economic climatic, that filled the first part of the year, leading the customers to comprise the orders in the period July-September. Nowadays the situation changed, so that the order backlog as at 30 September 2003 confirms an increasing 4Q if compared to the previous year. The profitability of the 3Q has been affected by the above mentioned reasons and by the consequent incurred expenses for the start-up of new supplies, mainly in the Italian companies, whereas was confirmed the nine months to 30 September profitability increase. With regards to the foreign companies, positive contributions from the Argentine subsidiary have to be mentioned, even though being lower than the same period of the previous year, due to the lower effect of devaluation of the Peso, and from the Indian, Polish and German subsidiaries that, thanks to higher sales and to the industrial rationalization are going on to increase their profitability. The Korean subsidiary regained its profitability, compared to the first months of the business year, conditioned by the crisis of its main customer. The net indebtedness increased if compared with June 30, 2003 for a temporary expansion of the net working capital. 1

2 GENERAL INFORMATION Net consolidated sales for the quarter 1st July - 30th September totalled to Euro million, a 1.6% decrease on the corresponding period of the previous year (Euro million). Sales for the nine months to 30 September 2003 totalled to Euro million, a 2% increase on the nine months to 30 September Developments in sales by segment are summarised as follows: Amounts in EUR/000 % change % change Segment 2003 on Q Q Q on Q Off-Highway: , ,41 Agriculture segment , ,42 Construction equipment segment , ,54 On-Highway: , ,87 Material handling , ,41 Auto & truck , ,98 Gears , ,25 Stationary (escalators) , ,52 Spare parts , ,78 Other , ,68 TOTAL , ,63 2

3 A breakdown of sales by segment and by geographical area is provided below: % Breakdown of sales by segment Segment Q Q Off-Highway: 74,29 72,47 74,49 73,57 Agriculture segment 35,18 36,72 35,94 36,23 Construction equipment segment 39,11 35,75 38,55 37,34 On-Highway: 15,00 16,87 14,08 16,87 Material handling 6,14 6,75 6,55 7,04 Auto & truck 2,97 3,67 2,70 3,64 Gears 5,89 6,45 4,83 6,19 Stationary (escalators) 2,44 1,66 3,70 1,79 Spare parts 6,31 5,92 6,05 5,33 Other 1,96 3,08 1,68 2,44 Sales by geographical area 9 months 9 months Geographical Area to 30 Sept. % to 30 Sept. % Q % Q % North America , , , ,54 Germany , , , ,01 UK , , , ,48 France , , , ,89 Korea , , , ,93 Poland , , , ,61 South America , , , ,35 Other non-eu , , , ,35 Other EU , , , ,96 Total abroad , , , ,12 Italy , , , ,88 Total

4 EBIT for 3Q 2003 was equal to Euro 4,007 million, a 4.42% of sales, a decrease on Euro million for the 3Q 2002, a 4.90% on sales. For the nine months to 30 September 2003 the amount was Euro (a 5.05% of sales); Euro million (a 5.07% of sales) for the nine months to 30 September Depreciation and amortisation for the nine months to 30 September 2003 amounted to Euro million down on the Euro million for the nine months to September Capital expenditure in 3Q 2003 was equal to Euro million a decrease on Euro million for the 3Q 2002, whereas for the nine months period to 30 September 2003 expenditure was equal to Euro million, an increase on Euro million for the nine months period to 30 September 2002 and it related to the purchase of assets for technology upgrades and the to the launch of new products (consignments). Net financial position, debt of Euro million improved on 30 June 2003 debt of Euro million. Gearing, the debt to equity ratio, was equal to % versus % as at 30 June FORESEEABLE DEVELOPMENT OF BUSINESS IN THE CURRENT YEAR Based on the order backlog, sales are expected to increase further, exceeding, at the end of the year 2003, the previous year amount, with a positive trend of the profitability, that will remain in line with the first nine months of the year. Will continue furthermore the rationalization actions, mainly focused on the foreign companies of the Group, from which we ll expect a general further improvement of the results. 4

5 FINANCIAL INFORMATION PROFIT AND LOSS ACCOUNT In thousands of Euro Line item % % Q % Q % Value of production Sales , , , ,00 Change in stocks of finished products , , , ,33 Other income , , , ,05 Cost of production , , , ,48 Raw materials and consumables , , , ,80 Services , , , ,50 Utilisation of third parties assets , , , ,38 Personnel , , , ,68 Depreciation and amortisation , , , ,11 Write-downs , , , ,20 Change in stocks , , , ,48 Accruals , , , ,18 Other operating charges , , , ,48 EBIT , , , ,90 5

6 NET FINANCIAL POSITION In thousands of Euro Description Bank loans and overdrafts: - within 1 year after 1 year Other financing payables: - within 1 year after 1 year leasing payments within 1 year leasing payments after 1 year Bonds and debenture loans: - within 1 year after 1 year Secured payables: - within 1 year after 1 year Accrued interest expense / deferred interest income, net LESS: Cash Securities Loans given Consolidated net financial debt

7 COMMENTS TO THE FINANCIAL INFORMATION Accounting policies The accounting policies adopted for the quarterly interim financial report, are the same as those adopted for the consolidated annual financial statements and for the six-month interim financial report: for a description we make reference to the relevant notes. Financial statements expressed in foreign currencies have been translated into Euro at the year-end exchange rate, as for assets and liabilities, at historical exchange rates for equity components and at the average exchange rate of the period for income statement amounts. The financial schedules include the financial statements of Carraro S.p.A. and of those subsidiaries in which it holds, either directly or indirectly, a majority of voting rights exercisable at ordinary general shareholders meetings. The consolidation area includes, besides the holding company Carraro S.p.A., the following entities, consolidated on a line-by-line basis: Legal name Registered office Currency Nominal value of share capital % held SIAP S.p.A. Maniago (PN - Italy) Euro 10,122, % Carraro Deutschland Gmbh Hattingen (Germany) Euro 10,507, % Carraro Argentina S.A. Carraro India Ltd. Haedo, Buenos Aires (Argentina) Rajangaon Pune (India) Pesos 25,809, % Rupee 400,000,000 36% F.O.N. S.A. Radomsko (Poland) Zloty 7,058, % Carraro International S.A. Luxembourg Euro 9,850, % Carraro North America Inc. Calhoun-Georgia (USA) US$ % Carraro Korea Co. Ltd Ulsan (Korea) Kor. Won 3,000,000, % O&K Antriebstechnik & Co. Hattingen (Germany) Euro 2,045, % Profit and loss account The Profit and loss account shows amounts for the first quarter of 2003 and, for comparative purposes, amounts for the first quarter of Comments are provided in the quarterly interim directors report. The Chairman Mario Carraro 7