Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2022 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, May 10, 2022
Slide 1: 1Q 2022 Financial Results
1Q 2022 Financial Results May 10th, 2022 1Q 2022 Financial Results
Slide 2: 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
Slide 3: Agenda
Agenda 1 1Q’22 KEY MESSAGES 2 PIRELLI 1Q’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 2 1Q 2022 Financial Results
Slide 4: Key Messages
Key Messages > 1Q 2022 Results supported by: • strengthening in High Value (market share gain in Repl. ≥18”; increasing focus on O.E. ≥19” and EV) • top-of-industry price/mix, covering 1.2x raw mat. & inflation • operating cash flow in line with 1Q’21 > 2022 global scenario becoming more volatile: •
Slide 5: Measures to mitigate the impact of the Russia-Ukraine war
From March we put in place a set of measures to mitigate the impact of the Russia-Ukraine war Russia main KPIs - FY’21 Area Issue Actions taken, compliant with sanctions >Revenues : €162M (~3% of Group Sales) 1 Export ban of selected raw Alternative Suppliers mat. to Russia from EU Increased Sto
Slide 6: 1Q 2022 Results highlights
1Q 2022 Results highlights Solid quarterly delivery in a challenging environment € million Net Sales adjusted EBIT1 +22% +35% 1,521 229 1,245 169 Standard High Value 73% 74% 1Q’21 1Q’22 1Q’21 1Q’22 margin 13.6% 15.0% Net Income Net Financial Position Net Cash Flow 2.6x -673 110 3,580 2,907 -654 in 1
Slide 7: Agenda: Pirelli 1Q'22 Results
Agenda 1 1Q’22 KEY MESSAGES 2 PIRELLI 1Q’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 6 1Q 2022 Financial Results
Slide 8: 1Q 2022 – Pirelli vs. market – outperforming in Repl.
1Q 2022 – Pirelli vs. market – outperforming in Repl., both in High Value and Standard Outperf. in ≥18” Repl. continues, driven by EU and N.A.; O.E. demand impacted by supply shortages, especially on Std.; PI trend in O.E. Std. reflecting Russia-Ukraine crisis and a more selective approach Market Pi
Slide 9: 2022 Strategy implementation: 1Q 2022 delivery in line with targets
2022 Strategy implementation: 1Q 2022 delivery in line with targets main programs 2022 targets 1Q’22 main achievements • Focus on H.V. outperforming the market in ≥18” Replacement • Car ≥18”: +8% in line with market • Repl. +16%, +2pp vs. market • More selective approach to O.E. • O.E. -1% vs. a fla
Slide 10: Strong over-performance driven by ≥19” & Specialties
Commercial Program delivery in 1Q 2022 Strong over-performance driven by ≥19” & Specialties 1Q 2022A volume variance (Car) key programs highlights volume trend Market 1Q’21 A 46% 54% Car ≥18" +8% +8% Stable weight of H.V. Regions (>90%), H.V. Repl. PULL first Elect volumes sales (~4% of Repl. o/w Re
Slide 11: Innovation Program 1Q 2022 (1/2)
Innovation Program 1Q 2022 (1/2) New Scorpion tyres: a renewed range for SUVs with a strong focus on EV and hybrid vehicles safe and silent performance for sustainable mobility an adaptive tyre with stronger tread blocks 1 Tread Pattern optimized for higher efficiency and comfort 1 Zig Zag central G
Slide 12: Innovation Program 1Q 2022 (2/2): strong focus on EVs
Innovation Program 1Q 2022 (2/2): strong focus on EVs Pirelli current EV homologation portfolio Europe EV trade homologation portfolio vs. peers ~250 EV homologations worldwide, with the following main partners1: # of EV O.E. marked items2: ~2.5x the peers avg. 154 95 Tesla Rivian 67 48 48 34 Pirell
Slide 13: Competitiveness program progress
Competitiveness program progress 1Q achievements in line with expectations and consistent with programs quarterly targets 2021 2022 E FY ACT Focusing on: FY GUI 1Q’22 ACT Modularity Product Cost ~40% in 1H Design speed and virtualization Footprint optimization mostly in 2H Manufacturing Indu
Slide 14: 1Q 2022 Net Sales bridge
1Q 2022 Net Sales bridge Record price/mix and further enhancement in High Value € million o/w Organic -1.4% +20.4% +3.2% +22.2% +19.0% 1,521 40 1,245 253 +5.8% (17) -9.7% Standard o/w Car ≥18” +8% O.E. -1% Car -6% 74% High Value 73% Repl. +16% Moto -29% 1Q’21 Δ Volumes Δ Price/mix Δ Forex 1Q’22 Soli
Slide 15: 1Q 2022 adjusted EBIT bridge
1Q 2022 adjusted EBIT bridge Profitability improvement supported by internal levers offsetting the negative external scenario € million Net impact +68 Net impact +92 Net impact -25 (120) 206 6 29 (53) 229 (5) 4 adj. EBIT 169 (7) ▬ Commodities -110 ▬ FX -10 1Q’21 Volume Price/ Raw Mat. FX Effic. Infl
Slide 16: 1Q 2022 Net Income bridge
1Q 2022 Net Income bridge Earnings driven mainly by improving operating performance and lower non-rec. / rest. costs € million 1 (4) 36 (25) 110 60 42 Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial Δ Taxes Net Income 1Q’21 restr. costs loss from equity income / charges 1Q’22 particip
Slide 17: 1Q 2022 Cash Flow and Net Financial Position
1Q 2022 Cash Flow and Net Financial Position Cash Flow trend stable YoY and in line with business seasonality € million Net Cash Flow (before dividends): -673 (-654 in 1Q’21) Operating Cash Flow: -565 (-567 in 1Q’21) 3,580 00 31 0 44 33 00 00 ▬ Non-rec. / restr. 24 842 ▬ FX / other 8 00 2,907 00 (33
Slide 18: Total Gross Debt structure as of March 31st 2022
Total Gross Debt structure as of March 31st 2022 Sound liquidity position, smooth maturity profile and Investment Grade credit rating optimize cost of funding in volatile markets € million Net Financial Position Gross Debt maturity: liquidity margin covering maturities until February 2024 4,957 (1,3
Slide 19: Agenda: FY 2022 Outlook and Targets
Agenda 1 1Q’22 KEY MESSAGES 2 PIRELLI 1Q’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 18 1Q 2022 Financial Results
Slide 20: 2022 macro outlook deteriorates vs. Feb-22 assumptions
2022 macro outlook deteriorates vs. Feb-22 assumptions Geopolitical tension and COVID in China further impacting global supply chains, inflation and GDP 2022 GDP1 Growth Area 2022 Highlights Pirelli countermeasures > Oil price impacted by supply >• Sound pricing on both World China USA Europe shorta
Slide 21: 2022 Car Tyre market: a more cautious view
2022 Car Tyre market: a more cautious view on Car prod. (~flat vs. +6% in Feb) and on China High Value outperformance vs. Standard confirmed WORLD Car tyre market China Car tyre market (million pcs) (million pcs) 1,540 1,474 255 250 1,425 1,432 247 ≥18" 265 302 35 233 279 299 43 44 42 1,275 1,146 1,
Slide 22: Pirelli FY 2022 targets update
Pirelli FY 2022 targets update: price/mix & efficiencies more than offsetting raw mat. & inflation Ukraine conflict and China slowdown affecting profitability; solid NCF target confirmed € billion 2021 A 2022 E • Volumes ~+0.5%÷~+1.5% Target @ 23-Feb-22 Target @ 10-May-22 High Value ~+5.5%÷~+6%
Slide 23: Agenda: Appendix
Agenda 1 1Q’22 KEY MESSAGES 2 PIRELLI 1Q’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 22 1Q 2022 Financial Results
Slide 24: Sustainability strategy: key targets
Sustainability strategy: key targets Area KPIs 2020A 2021A 2025E 2021 MAIN ACHIEVEMENTS SAFETY FIRST Accident • 100% of electricity sourced in Europe and Towards zero accidents frequency index 0.22 0.21 <0.10 at work Turkey is renewable • FIA’s 3 star Environmental Accreditation obtained – first and
Slide 25: Pirelli leading position in Sustainability rankings & initiatives
Pirelli leading position in Sustainability rankings & initiatives Major ratings (May-22) last score positioning in the reference sector update = leading the ranking or initiative 2021 77 ATX Auto Components 2022 Gold class Max score 2021 A Max score 2021 AA 6% of the Auto comp. companies in AA 2021
Slide 26: Key Car tyre market trends: Europe
Key Car tyre market trends: Europe Market trend (∆% YoY) FY’20 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 Total 88 O.E. -23 -5 -8 -16 -32 -29 42 Replacement 8 6 10 8 -3 -12 48 Total (O.E.+Repl.) 5 7 3 -7 -2 -15 ≥18” & ≤17” 106 79 O.E. 5 ≥18” -16 -27 -10 -1 -11 -15 -17 ≤17” -26 -35 -25 -31 52 40 21 23 24 22
Slide 27: Key Car tyre market trends: North America
Key Car tyre market trends: North America Market trend (∆% YoY) FY’20 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 Total 132 O.E. 0 -20 -4 -16 -1 -25 64 Replacement1 11 13 6 0 -11 -5 72 Total (O.E.+Repl.) 7 10 4 -13 -5 -7 ≥18” & ≤17” 146 118 O.E. ≥18” 2 7 5 ≤17” -16 -25 -11 -18 -11 -22 -8 -9 -34 62 65 Replac
Slide 28: Key Car tyre market trends: Asia Pacific
Key Car tyre market trends: Asia Pacific Market trend (∆% YoY) FY’20 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 Total 36 12 O.E. 3 0 -12 -7 -17 27 Replacement 4 3 -7 -1 -6 -9 31 7 3 Total (O.E.+Repl.) -4 -4 -10 -10 ≥18” & ≤17” 53 31 22 O.E. 9 11 0 5 ≥18” ≤17” -3 -9 -3 -9 -2 -14 -19 68 24 Replacement 8 4 5
Slide 29: Key Car tyre market trends: Russia, Nordics, MEAI / South America
Key Car tyre market trends: Russia, Nordics, MEAI / South America Market trend (∆% YoY) FY’20 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 Russia, Nordics, MEAI 144 O.E. 16 17 -19 0 -11 -9 51 15 12 Replacement 2 -4 -1 -25 66 Total (O.E.+Repl.) 0 11 13 -4 -1 -23 South America 290 O.E. 7 15 -31 -13 -8 -14 118
Slide 30: Pirelli financial results highlights
Pirelli financial results highlights € million 1Q 2021 1Q 2022 Δ YoY Revenues 1,245 1,521 +22.2% Organic Growth1 +19.0% High Value Revenues (% on total) 72.6% 73.7% +1.1 pp adj. EBITDA2 267 333 +25.0% Margin 21.4% 21.9% +0.5 pp adj. EBIT3 169 229 +35.4% Margin 13.6% 15.0% +1.4 pp PPA amortization (2
Slide 31: Pirelli balance sheet
Pirelli balance sheet € million 31-Mar-2021 31-Dec-2021 31-Mar-2022 Fixed assets 8,871 8,912 8,911 Inventories 875 1,092 1,222 Trade receivables 814 659 908 Trade payables (914) (1,626) (1,197) Operating net working capital 775 125 933 % of Sales1 17.2% 2.3% 16.6% Other receivables / payables 54 1 1
Slide 32: Pirelli cash flow
Pirelli cash flow € million 1Q 2021 1Q 2022 Adjusted EBIT1 169 229 Depreciation & Amortization (excl. PPA amortization) 98 105 Capital expenditures (90) (49) Rights of use (IFRS 16) (27) (8) Change in working capital / other (717) (842) Operating Cash Flow (567) (565) Financial income / (expenses) (
Slide 33: Raw Material costs trend and mix
Raw Material costs trend and mix main raw materials price trend 71.5 ; +31% YoY 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 1.365 ; -17% YoY 1.406 ; +3% YoY 1.317 ; -6% YoY 1.678 ; +27% YoY $ / kg Brent Oil (in $ / barrel) Natural Rubber (in $ / kg) yearly avg.; Δ YoY $ / barrel 115 1.90 100 1.6
Slide 34: Pirelli manufacturing footprint
Pirelli manufacturing footprint U.K. Germany Romania ▬ Burton – ▬ Breuberg – ▬ Slatina – Car Semi-finished Car / Moto ▬ Carlisle – Car U.S. ▬ Rome – Car Russia ▬ Kirov – Car ▬ Voronezh – Car China Mexico ▬ Yanzhou – Italy ▬ Silao – Car Car / Moto ▬ Bollate – ▬ Jiaozuo – Car Cycling ▬ Shenzhou – ▬ Se