Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Pirelli & C Spa Azioni — 1H 2024 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Aug 1, 2024
Slide 1: 1H 2024 Financial Results
1H 2024 Milan Financial Results August 1st, 2024 FY 2023 Financial Results PIRELLI 1H 2024 RESULTS Thursday, 1 August, 2024 March 6th, 2024
Slide 2: Agenda
Agenda 1 1H 2024 KEY MESSAGES 2 PIRELLI & C. – 1H 2024 RESULTS 3 FY 2024 OUTLOOK AND TARGETS 4 APPENDIX PIRELLI 1H 2024 RESULTS 1 Thursday, 1 August, 2024
Slide 3: Key Messages
KEY MESSAGES 1H’24 Results in line with FY targets and confirming the effectiveness of our strategy ▪ Market share gain in ≥18’’ both in OE and Replacement ▪ Strong price/mix (+2.8% yoy in 1H, +3.3% in 2Q) due to product and region mix enhancement ▪ Profitability improvement driven by internal lever
Slide 4: 1H 2024 results highlights: strategy is paying off with solid performance
1H 2024 results highlights: Pirelli's strategy is paying off with solid performance Net Sales Adjusted EBIT1 € million € million +0.3% +4.2% 3,438 3,448 517 539 +4.6% STD organic growth H.V. 74% 77% 1H’23 1H’24 1H’23 1H’24 margin 15.1% 15.6% Net Income Net Financial Position € million € million -110
Slide 5: Sustainability Plan: update on key initiatives development
Sustainability Plan: update on key initiatives development Area Focus KPIs 2023A 2025E 2030E 1H’24 PROGRESS 1.69(5) • Accident Frequency Index reduction: -35% vs 1H’23 Towards zero Accident Frequency ~1(5) <1(5) accidents at work Index • Skills development core of Pirelli Manufacturing If calculated
Slide 6: Agenda
Agenda 1 1H 2024 KEY MESSAGES 2 PIRELLI & C. – 1H 2024 RESULTS 3 FY 2024 OUTLOOK AND TARGETS 4 APPENDIX PIRELLI 1H 2024 RESULTS 5 Thursday, 1 August, 2024
Slide 7: 1H 2024 Strategic programs: delivery in line with targets
1H 2024 Strategic programs: delivery in line with targets Car ≥18’’ Total +7% vs +6% Mkt, Repl. +10% vs +9% Mkt COMMERCIAL Seizing regional HV growth opportunities Car ≥19” Total +9% vs +8% Mkt Repl. +12% vs +11% Mkt Widening our OE portfolio ~150 new car homologations (~90% ≥19’’, ~60% EV) with EV
Slide 8: Commercial Program: Keep gaining market share in ≥18”
Commercial Program: Keep gaining market share in ≥18”, while further reducing exposure to ≤17’’ TOTAL CAR ≥18” 2Q HIGHLIGHTS Market Pirelli 1Q24 2Q24 1Q24 2Q24 3% 7% 7% 6% 7% MARKET TOTAL 2% 1% 1% ▪ Softer trend vs 1Q’24 due to a weaker Std. (substantially flat in 2Q’24 vs +1% in 1Q’24), especially
Slide 9: Innovation Program: Eco-Safety Design Products and Sustainable Materials
Innovation Program: Advancing on Eco-Safety Design Products and Sustainable Materials New P Zero Winter 2 Pirelli’s unique FSC strategy FSC® certification confirms that forest-based products Launched with a Flagship Project in are managed preserving biological diversity, while partnership with BMW,
Slide 10: Innovation Program: Cyber Tyre
Innovation Program: Cyber Tyre, getting into a new level SENSORS EQUIPPED 2021 2024 2025 McLAREN ARTURA AUDI RS4 25YRS EDITION PAGANI UTOPIA VIRTUAL TRACK VEHICLE DYNAMICS TYRE ID & TPMS ENGINEER OPTIMIZATIONS The sensors, connected via Bluetooth to the ECU1, supply useful data so that the car can s
Slide 11: Efficiency program: offsetting inflation
Efficiency program: offsetting inflation and in line with the expectations and seasonality Focusing on: FY 2024 GUI 1H 2024 ACT Modularity Product Cost ~65% of FY Design speed and virtualization Energy consumption & electrification ~20% of FY, in line with Manufacturing Automation, industrial IoT &
Slide 12: 1H 2024 Sales: solid organic growth
1H 2024 Sales: solid organic growth supported by the strong commercial performance € million +1.8% +2.8% +4.6% -4.3% +0.3% 3,438 3,595 3,448 61 96 (147) STD H.V. 74% 77% 1H’23 Δ Volumes Δ Price/mix Organic Growth Δ Forex 1H’24 2Q’24 +1.2% +3.3% +4.5% -3.7% +0.8% 1Q’24 +2.3% +2.3% +4.6% -4.8% -0.2% P
Slide 13: 1H 2024 Adjusted EBIT: profitability improvement
1H 2024 Adjusted EBIT: profitability improvement driven by commercial performance & efficiencies € million Net impact +37 Net impact +34 Net impact +3 36 (62) 71 (68) 539 517 60 (14) (25) 24 Commodities +55 1H R&D / mktg. Exp. -16 FX -19 Stock & Others -9 margin 15.1% 15.6% 1H’23 Volume Price/mix Ra
Slide 14: 1H 2024 Net Income
1H 2024 Net Income: earnings discounting non-cash impact in 1Q, already normalizing in 2Q € million 243 5 10 22 (69) 231 22 1H’23 Δ adj. EBIT Δ non recurr. / Δ Net Income / Δ Financial Δ Taxes 1H’24 restr. costs loss from equity income / % of sales 7.1% partecipations expenses 6.7% 1H’24 Financial I
Slide 15: 1H'24 Net Financial Position
1H’24 Net Financial Position: Better Net Cash Flow before div. thanks to sound operating performance € million Net Cash Flow (before dividends): -519 (-535 in 1H’23), -497 excl. Hevea Tec 2,978 Operating Cash Flow: -279 (-302 in 1H’23) 60 197 109 70 2,262 863 (768) Main delta: 144 41 Hevea Tec conso
Slide 16: Gross Debt structure as of June 30th 2024
Gross Debt structure as of June 30th 2024 Pirelli upgraded to BBB (stable outlook) by Fitch; S&P confirmed rating at BBB-, improving outlook to positive. Liquidity margin covers debt maturities until 1Q’27 (1Q’28 considering July bond issuance). € million Net Financial Position Gross Debt maturity 4
Slide 17: Agenda
Agenda 1 1H 2024 KEY MESSAGES 2 PIRELLI & C. – 1H 2024 RESULTS 3 FY 2024 OUTLOOK AND TARGETS 4 APPENDIX PIRELLI 1H 2024 RESULTS 16 Thursday, 1 August, 2024
Slide 18: Car Tyre demand outlook update
Car Tyre demand outlook update Mid-single digit growth confirmed for ≥18'', while demand for ≤17'' weakening in key Standard regions Global car tyre market flat ~+1% ~flat Mln tyres mid-single mid-single ~+6% ~+5% digit digit ≥18" +6pp +6pp +7pp ≤17" ~-1% -1%÷~flat -1% 2023 A 2024 E 2024 E (May Guid
Slide 19: Targets update: upper end of profitability guidance range
Targets update: a better mix will lead to the upper end of the profitability guidance range 2023 A 2024 E € billion (March 2024 Guidance) (August 2024 Guidance) Volumes: +1.5% ÷ +2.5% (confirmed) Net Sales 6.65 6.6 ÷ 6.8 confirmed P / Mix: +2.0% ÷ +2.5% (old ~+2.0%) FX: -4.0% ÷ -3.0% adj. EBIT margi
Slide 20: Agenda
Agenda 1 1H 2024 KEY MESSAGES 2 PIRELLI & C. – 1H 2024 RESULTS 3 FY 2024 OUTLOOK AND TARGETS 4 APPENDIX PIRELLI 1H 2024 RESULTS 19 Thursday, 1 August, 2024
Slide 21: Key Car Market Trends: Europe
Key Car Market Trends: Europe Market trend (∆% YoY) FY22 1Q’23 2Q’23 3Q’23 4Q‘23 FY23 1Q’24 2Q’24 Total 19 13 10 4 7 2 O.E. -3 -9 2 1 5 Replacement 0 -2 -2 -3 -8 2 3 0 2 Total (O.E.+Repl.) -2 0 -1 -4 28 26 ≥18” & ≤17” 12 16 12 10 6 5 2 1 4 ≤17" O.E. -2 -4 -2 -8 ≥18” -10 13 13 15 8 5 1 2 4 2 Replacem
Slide 22: Key Car Market Trends: North America
Key Car Market Trends: North America Market trend (∆% YoY) FY22 1Q’23 2Q’23 3Q’23 4Q‘23 FY23 1Q’24 2Q’24 Total 16 9 10 8 10 O.E. 5 2 1 11 6 6 0 1 Replacement -5 -7 -8 7 10 2 5 1 Total (O.E.+Repl.) -3 -4 -3 20 ≥18” & ≤17” 11 13 11 12 13 5 9 4 3 5 3 5 O.E. 0 0 ≤17" ≥18” -4 15 11 12 6 10 2 2 4 4 Replac
Slide 23: Key Car Market Trends: Asia Pacific
Key Car Market Trends: Asia Pacific Market trend (∆% YoY) FY22 1Q’23 2Q’23 3Q’23 4Q‘23 FY23 1Q’24 2Q’24 Total 21 13 10 O.E. 4 2 4 1 3 12 3 2 1 0 Replacement 0 -4 -7 16 7 5 1 1 2 Total (O.E.+Repl.) -3 -1 24 ≥18” & ≤17” 20 12 13 13 10 6 8 8 8 2 1 2 0 2 2 ≤17" O.E. ≥18” 16 12 6 7 6 6 4 2 2 0 Replacemen
Slide 24: Key Car Market Trends: Russia, MEAI / South America
Key Car Market Trends: Russia, MEAI / South America Market trend (∆% YoY) FY22 1Q’23 2Q’23 3Q’23 4Q‘23 FY23 1Q’24 2Q’24 Russia, MEAI 12 11 7 10 6 5 O.E. 0 18 -4 5 0 1 Replacement -2 0 -4 -8 16 7 3 2 1 Total (O.E.+Repl.) -3 0 -7 South America 9 5 6 3 1 O.E. -2 -2 -9 6 Replacement -2 -4 -4 -2 -1 -6 -8
Slide 25: Economic results summary
Economic results summary 2Q 2024 2Q 2023 ∆ YoY 1H 2024 1H 2023 ∆ YoY € million Net Sales 1,752.0 1,737.8 +0.8% 3,447.5 3,437.5 +0.3% Organic variation +4.5% +4.6% adjusted EBITDA1 392.0 379.4 +3.3% 768.3 739.1 +4.0% % of net sales 22.4% 21.8% +0.6 p.p. 22.3% 21.5% +0.8 p.p. reported EBITDA 384.1 367
Slide 26: Consolidated Balance Sheet
Consolidated Balance Sheet 30/06/2024 31/12/2023 30/06/2023 € million Fixed assets 8,748.0 8,812.1 8,821.7 Inventories 1,417.7 1,371.4 1,418.7 Trade receivables 937.3 649.4 895.1 Trade payables (1,499.1) (1,999.4) (1,405.1) Operating net working capital 855.9 21.4 908.7 % of net sales* 12.9% 0.3% 13
Slide 27: Net Cash Flow
Net Cash Flow € million 2Q 2024 2Q 2023 1H 2024 1H 2023 Adjusted Operating income (EBIT) 276.5 269.3 539.1 517.4 Amortiz. & depreciations (excl. PPA 115.5 110.1 229.2 221.7 amortiz.) Investments in tangible and intangible (90.2) (70.3) (143.6) (123.5) assets (Capex) Increase in right of use (26.1) (
Slide 28: Net Financial Position Detail
Net Financial Position Detail € million 30/06/2024 31/12/2023 Current borrowings from banks and other financial institutions 1,185.6 789.5 - of which lease liabilities 102.7 99.1 Current derivative financial instruments 11.5 18.2 Non-current borrowings from banks and other financial institutions 2,9
Slide 29: Net Income Adjusted detail
Net Income Adjusted detail € million 2Q 2024 2Q 2023 1H 2024 1H 2023 Net income 130.9 127.6 231.3 242.6 Amortization from PPA 28.5 28.5 56.9 56.9 Non recurring items and restructuring costs 7.9 11.5 15.6 20.5 Taxes impact (10.5) (11.2) (20.8) (21.7) Net income adjusted 156.8 156.4 283.0 298.3 PIRELL
Slide 30: Total Gross Debt Structure
Total Gross Debt Structure Total gross debt structure at June 30, 2024 € million Within Between Between Between Between Beyond Total 1 year 1 & 2 years 2 & 3 years 3 & 4 years 4 & 5 years 5 years Bilateral borrowing EUR 400 mln. ESG 2021 3y 399.8 - - - - - 399.8 Club Deal EUR 800 mln. ESG 2020 5y 39
Slide 31: 2024-2025 targets
2024-2025 targets 2023 A 2024 E 2025 E Financial targets (August ’24 update) Billion € Revenues 6.65 6.6 ÷ 6.8 6.8 ÷ 7.0 Adj. EBIT margin ~15.1% ~15.5% % revenue ~16% (old target: >15.0% ÷ ~15.5%) Net Cash Flow 0.51 0.50 ÷ 0.52 0.55 ÷ 0.57 bef. Dividends Net Financial Position 2.26 ~1.95 ~1.6 NFP /
Slide 32: ESG Indices: a globally acknowledged sustainability leadership
ESG Indices: a globally acknowledged sustainability leadership Major rankings Last update Score Positioning in the reference sector Top score ATX - Auto Components 2024 82 and Automotive 2024 TOP 1% ESG The only tyre maker in Top1% 2023 A A LIST – Max score A LIST– Max score 2024 A Supplier Engageme
Slide 33: Raw material costs trend and mix
Raw material costs trend and mix Main raw materials price trend yearly avg.; Δ YoY 70.8 ; +64% YoY 98.9 ; +40% YoY 82.3 ; -17% YoY 1.678 ; +27% YoY 1.548 ; -8% YoY 1.378 ; -11% YoY $ / kg Brent Oil (in $ / barrel) $ / barrel 1.95 Natural Rubber (in $ / kg) 130 115 1.70 100 85 1.45 70 1.20 55 40 0.95
Slide 34: Disclaimer
Disclaimer In General. This disclaimer applies to this document and any oral comments of any person presenting it. This document, taken together with any such oral comments, is referred to herein as the “Presentation”. This document has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company
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