Pirelli & C. S.p.A. · MIL:PIRC
Pirelli & C — H1 2002 Earnings Presentation
20 slides from Pirelli & C's earnings presentation, Sep 9, 2002
Slide 1: H1 2002 Results
H1 2002 Results Milan, September 9th, 2002 0
Slide 2: Presentation Agenda
Presentation Agenda • Group Overview - Business Environment and Strategies - Pirelli H1 2002 Group Results • Sector Overview • Questions and Answers 1
Slide 3: Business Environment and Strategies
Business Environment and Strategies ➤ ➤ Recessive Recessive economy; economy; slow slow recovery recovery ➤ ➤ Cut Cut of of Telecom Telecom Carriers’ Carriers’ capex capex ➤ ➤ Investments Investments of of Energy Energy utilities utilities still still lagging lagging ➤ ➤ Tyre Tyre industry industry
Slide 4: Group Shareholder Structure
Pirelli Group Shareholder Structure Camfin Camfin 29.80% 29.80% Serfis Serfis 9.48% 9.48% Stakes are expressed as a percentage of voting Generali Group 6.21% Generali Group 6.21% rights, according to the latest information PIRELLI & C. HDP HDP 5.94% 5.94% available to the company SAI SAI 5.61% 5.61%
Slide 5: H1 2002 Group Results: Products and Geographical Breakdown
Pirelli H1 2002 Group Results Consolidated Sales at June 30th, 2002: Euro 3,352 ml (-15% YoY) Products Geographical Breakdown Telecom Cables 8% & Systems Rest of Europe 43% 18% Italy 44% Tyres Australia, 14% Africa, Asia Energy Cables 48% & Systems Latin 13% America North America 12% 4
Slide 6: H1 2002 Group Results
Pirelli H1 2002 Group Results Olimpia - H1 2002 H1 02 H1 01 var. P&L Costs for services (1) Sales 3,352 3,946 -15% Financial interest (87) EBIT 93 243 -62% Net loss (88) EBIT Margin 2.8% 6.2% Balance sheet Total assets 8,676 Net profit (w/o Olimpia) 2 200 Equity 5,169 Net profit (52) 200 Net result
Slide 7: Group Profit and Loss (Euro ml)
Pirelli Group Profit and Loss (Euro ml) H1 2002 H1 2001 Var. % Q2 2002 Q1 2002 Var. % Q2 2001 Var. % Net Sales 3,352 3,946 -15% 1,664 1,688 -1% 2,013 -17% EBITDA 278 432 -36% 141 137 -3% 204 -31% Ebitda Margin 8.3% 10.9% 8.5% 8.1% 10.1% EBIT 93 243 -62% 51 42 +21% 109 -53% Ebit Margin 2.8% 6.2% 3.1%
Slide 8: Group Profit and Loss - Ebit variations (Euro ml)
Pirelli Group Profit and Loss - Ebit variations (Euro ml) Labor Labor cost cost gross gross reduction reduction == 67 67 Material Material efficiencies/other efficiencies/other fixed fixed costs costs == 20 20 Total Total gross gross efficiencies efficiencies == 87 87 243 Volume Volume effect effect
Slide 9: Main Industrial Achievements - Focus on R&D
Main Industrial Achievements - Focus on R&D • Launch of CCM, the new fully automatic mixing room • First homologation for MIRS ™ motorcycle tyres on the Aprilia RSV 1000 • Operational opening of the new state-of-the-art MIRS plant in Georgia (USA) • Agreement for optical nanotech research with MIT •
Slide 10: Presentation Agenda
Presentation Agenda • Group Overview • Sector Overview - Energy Cables - Telecom Cables - Pirelli Tyres • Questions and Answers 9
Slide 11: Energy Sector
Pirelli Energy Sector BUSINESS ENVIRONMENT PIRELLI ACTIONS - Negative economic trend: delay in the - Significant progress in cost reduction (fixed costs recovery of utility investments until end-2002 reduced 5% vs. H1 ‘01); three plants closed in H1 ‘02; headcount reduced by 7%YoY - Restructuring ef
Slide 12: Energy cables and systems: business structure
Energy cables and systems:business structure Energy C&S % sales 1200 3.50% 3.00% 1000 2.50% Utilities 46% 800 2.00% Sales 600 ROS (%) 1.50% 400 1.00% General 33% 200 Market 0.50% 0 0.00% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 Industrial 21% 31/12/2001 30/06/2002 Employees 14,135 13,421 -5
Slide 13: Energy Cables: Profit And Loss (Euro ml)
Energy Cables: Profit And Loss (Euro ml) H1 2002 H1 2001 Var. % Q2 2002 Q1 2002 Var. % Q2 2001 Var. % Net Sales 1,614 1,691 -4.6% 818 796 +2.8% 876 -6.7% EBITDA 77 69 +11.6% 49 28 +75% 32 +53% Ebitda margin 4.8% 4.1% 6.2% 3.5% 3.7% EBIT (*) 26 20 +30% (*) 25 1 n.m. 8 +213% Ebit margin 1.6% 1.2% 3.1%
Slide 14: Telecom Sector
Pirelli Telecom Sector BUSINESS ENVIRONMENT PIRELLI ACTIONS ➤ Timely restructuring and cost cutting led to leaner ➤ Collapse of Terrestrial and Submarine Long and more flexible capacity installed; one plant Haul market suffering closed in H1 2002, headcount reduced by 35% YoY ➤ Very limited visibili
Slide 15: Telecom cables and systems: business structure
Telecom cables and systems: business structure Telecom C&S % sales 450 20.00% 400 15.00% Submarine 350 10.00% 5% Systems 300 5.00% 250 Sales 0.00% 200 ROS (%) -5.00% 150 Fibre to 2% -10.00% the “X” 100 50 -15.00% 0 -20.00% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 Tlc fibre & 93% cables 31/1
Slide 16: Telecom Cables and Systems: Profit And Loss (Euro ml)
Telecom Cables and Systems: Profit And Loss (Euro ml) H1 2002 H1 2001 Var. % Q2 2002 Q1 2002 Var. % Q2 2001 Var. % Net Sales 284 812 -65.0% 120 164 -27% 413 -71% EBITDA 11 112 -90% (3) 14 -121% 41 -107% Ebitda margin 3.9% 13.8% -2.5% 8.5% 9.9% EBIT (20) 82 -124% (18) (2) n.m. 27 -167% Ebit margin -7
Slide 17: Tyres Sector
Pirelli Tyres Sector ENVIRONMENT PIRELLI ACTIONS ➤ New car registrations down 4.5% in H1 2002 ➤ Mirs plants opened in UK (focused on SUVs) and in Europe, whilst down 1% in NAFTA. Latam USA; CCM (innovative mixing room) pilot plant in general downturn launched in Milan ➤ Market of replacement tyres i
Slide 18: Tyres: business structure
Tyres: business structure Tyres % sales 780 9.00% 760 8.00% 740 7.00% 720 6.00% 700 5.00% Sales Consumer 70% 680 4.00% ROS (%) 660 3.00% 640 2.00% 620 1.00% 600 0.00% Performance tyres 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 50% of total sector sales 31/12/2001 30/06/2002 Industrial 30% Em
Slide 19: Tyres: Profit And Loss (Euro ml)
Pirelli Tyres: Profit And Loss (Euro ml) H1 2002 1H 2001 Var. % Q2 2002 Q1 2002 Var. % Q2 2001 Var. % Net Sales 1,488 1,477 +0.7% 730 758 -3.7% 748 -2.4% EBITDA 202 201 +0.5% 101 101 - 100 +1% Ebitda margin 13.6% 13.6% 13.8% 13.3% 13.4% EBIT 111 111 - 57 54 +5.6% 54 +5.6% Ebit margin 7.5% 7.5% 7.8%
Slide 20: Presentation Agenda
Presentation Agenda • Group Overview • Sector Overview • Questions and Answers 19