Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — H1 2016 Earnings Presentation
28 slides from Pirelli & C's earnings presentation, Jul 28, 2016
Slide 1: 1H 2016 Financial Results
1H 2016 Financial Results July 28, 2016
Slide 2: Key Messages
KEY MESSAGES 1 Solid organic growth backed by: › Premium outstanding performance › Top price/mix improvement in the industry › Strong growth in mature markets, offsetting weakness in Russia and South America Profitability confirmed at high level thanks to internal levers (Price/mix and Efficiencies)
Slide 3: Refinancing
REFINANCING > July 28, 2016: successful conclusion of a €6.4 billion debt refinancing with a pool of major International banks, composed by: 4.8 €/bln 1 € bln credit line in US$, 3Y maturity Subscribed by 19 major long term facility International banks with an 2.8 € bln credit line in € and US$,
Slide 4: Agenda
AGENDA 1 1H 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 1H 2016 RESULTS 3
Slide 5: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS*** 1H 15 1H 15 Δ YoY vs 1H15 € million 1H 16 1H highlights reported excl. Venezuela excl. Venezuela Revenues 3,178.5 3,057.5 2,968.6 -2.9% Improvement in organic growth driven by Organic Growth* +5.9% Premium outperformance, and strong price/mix on both Consumer and E
Slide 6: 1H 2016 Performance by Region
1H 2016 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin*** € million Organic Organic Organic Δ YoY Δ YoY Δ YoY growth** growth** growth** Total 2,966.9 -2.8% +6.0% 2,469.6 +2.1% +7.4% 497.3 -21.5% +0.4% 14.5% (+0.1 pp YoY) Europe 35% 39% +5.6% +6.4% 44% +7.5% Europe
Slide 7: 1H 2016 Premium Performance by Region
1H 2016 PREMIUM PERFORMANCE BY REGION Organic Δ YoY growth* € million Total 1,487.2 1,607.2 +8.1% +11.3% Strong performance backed by: • Volume outperformance in the SuperPremium • Mix improvement, especially in technological niches, such as marked Europe 47% 49% +13.5% +14.7% items, RunFlat and S
Slide 8: Pirelli Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million (0,9) (26,8) 51,3 (10,2) (44,1) 73,8 434,8 (51,3) 429,1 2,5 EBIT 1H’15 Price / Mix Efficiencies Volume D&A & other Raw FX Other input Other EBIT 1H’16 Before restr. and costs Materials costs Business Before restr. and non rec. items (labour / non rec. it
Slide 9: Pirelli Net Income 1H 2016 vs 1H 2015
PIRELLI NET INCOME 1H 2016 VS 1H 2015 € million Increase in financial charges related to (122.2) (41.0) Marco Polo Industrial Debt consolidation USD Private Placement early repayment (25.4) Other (19.8) (44.8) 196.5 Value adjustments (mainly in 1Q): Fenice (19.9) Prelios (12.8) Venezuela (7.9)
Slide 10: 1H 2016 Net Financial Position
1H 2016 NET FINANCIAL POSITION € million 5.999,4 97,0 30,9 348,7 Financial changes incl. in the 122.2 Debt acquisition 191,8 Variation of Bidco NFP (134.3) 5.331,0 Exchange rate differentials / (84.9) other EBIT before restr. costs 429.1 Depreciation / Amortization 149.6 Investments* (156.0) NWC &
Slide 11: Pirelli Gross Debt as of 30 June 2016
PIRELLI GROSS DEBT AS OF 30 JUNE 2016 > On June 1st, 2016, the Merger between Pirelli & C. S.p.A. and Marco Polo Industrial Holding S.p.A. became effective; acquisition facilities turned into Pirelli’s debt 4,258.1 6,731.7 € million 2,473.6 Committed Line 1,028.7 Drawdown Other borrowings 839.9 Debt
Slide 12: Agenda
AGENDA 1 1H 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 1H 2016 RESULTS 11
Slide 13: Key Tyre Results
KEY TYRE RESULTS € million 1Q‘16 ∆ YoY* 2Q‘16 ∆ YoY* 1H‘16 ∆ YoY* Revenues 1,435.1 -4.0% 1,531.8 -1.6% 2,966.9 -2.8% o/w Premium 781.9 +8.4% 825.3 +7.7% 1,607.2 +8.1% EBITDA before restr. costs 290.2 +2.0% 289.1 -5.7% 579.3 -2.0% Margin 20.2% +1.2 p.p. 18.9% -0.8 p.p. 19.5% +0.1 p.p. EBIT before res
Slide 14: Consumer Business: Pirelli Performance
CONSUMER BUSINESS*: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY* 2Q‘16 ∆ YoY** 1H‘16 ∆ YoY** Revenues 1,165.7 -1.0% 1,303.9 +5.0% 2,469.6 +2.1% o/w Premium 781.9 +8.4% 825.3 +7.7% 1,607.2 +8.1% % revenues 67.1% +5.9 p.p. 63.3% +1.6 p.p. 65.1% +3.6 p.p. EBITDA before restr. costs 263.3 +9.9% 270.2 +1.4
Slide 15: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 2Q’15 3Q’15 4Q’15 FY’15 1Q’16 2Q’16 1H’16 % YoY 7 10 7 8 6 4 6 O.E. Europe* 11 3 4 3 2 REPLACEMENT 1 -1 3 4 2 2 4 2 3 O.E. NAFTA 5 1 4 2 6 2 REPLACEMENT** -3 South America O.E. -16 -21 -20 -15 -22 -29 -29 2 5 2 3 REPLACEMENT*** -7 -2 -5 16 China 7 9
Slide 16: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS*: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY* 2Q‘16 ∆ YoY** 1H‘16 ∆ YoY** Revenues 269.4 -15.3% 227.9 -27.8% 497.3 -21.5% EBITDA before restr. costs 26.9 -40.2% 18.9 -52.6% 45.8 -46.1% Margin 10.0% -4.2 p.p. 8.3% -4.3 p.p. 9.2% -4.2 p.p. EBIT before restr. costs 16.4 -47.8% 8.1 -7
Slide 17: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 2Q’15 3Q’15 4Q’15 FY’15 1Q’16 2Q’16 1H’16 % YoY 13 10 17 11 7 5 6 O.E. Europe* 6 9 4 5 6 2 4 REPLACEMENT South America O.E. -20 -42 -43 -33 -53 -58 -48 REPLACEMENT** -7 -8 -2 -3 -12 -14 -10 China 28 14 2 O.E. -6 -23 -23 -31 * Russia excluded, Turke
Slide 18: Agenda
AGENDA 1 1H 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 1H 2016 RESULTS 17
Slide 19: Pirelli 2Q Key Financial Results
PIRELLI 2Q KEY FINANCIAL RESULTS 2Q 15 2Q 15 Δ YoY vs 1Q15 € million 2Q 16 reported excl. Venezuela excl. Venezuela Revenues 1,610.1 1,558.9 1,532.6 -1.7% Organic Growth* +6.6% EBITDA before Restr. Costs 317.7 305.1 288.7 -5.4% Margin 19.7% 19.6% 18.8% -0.8 p.p. EBIT before Restr. Costs 238.0 227.9
Slide 20: Pirelli Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million 0.7 20.8 (21.2) (3.8) 38.0 (22.1) 227.9 (27.8) 213.6 1.1 EBIT 2Q’15 Price / Mix Efficiencies Volume D&A & other Raw FX Other input Other EBIT 2Q’16 Before restr. and costs Materials costs Business Before restr. and non rec. items (labour / non rec. items
Slide 21: Pirelli Balance Sheet
PIRELLI BALANCE SHEET € million FY’15 (reported) 1H’16 FIXED ASSETS 3,780.5 8,791.8 Inventories 1,053.9 1,075.4 Trade receivables 676.2 964.4 Trade payables (1,313.1) (1,118.0) NET OPERATING WORKING CAPITAL 417.0 921.8 Other payables/receivables (107.6) 17.3 Net Working Capital 309.4 939.1 NET INVES
Slide 22: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW € million 1Q’15 2Q’15 1H’15 1Q’16 2Q’16 1H’16 EBIT before non rec. items and restr. costs 213.4 238.0 451.4 215.5 213.6 429.1 Depreciation / Amortization 78.5 79.7 158.2 74.5 75.1 149.6 Capex (85.6) (103.2) (188.8) (74.0) (82.0) (156.0) Working capital / other variations (895
Slide 23: Operating Net Working Capital and Capex Seasonality Trend
OPERATING NET WORKING CAPITAL AND CAPEX SEASONALITY TREND Operating Net Working Capital CapEx € million € million €391 million Δ = €640 million 6.2% on FY sales 1.134 1.129 130 1.057 970 922 103 86 82 73 74 417 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2015 2016 2015 2016 CapEx / Sales 5.5% 6.4% 4.8% 8.1%
Slide 24: 1H 2016 Pirelli Tyre Mix
1H 2016 PIRELLI TYRE MIX Sales by Business Sales by Segment Industrial Car 17% 76% Consumer 83% Agro 2% Motorbike Truck 15% 7% Sales by Channel Sales by Region NAFTA South America OE 15% 22% Asia Pacific 23% 12% MEAI Replacement 9% 77% Russia Europe 3% 39% 1H 2016 RESULTS 23
Slide 25: June 2016 Pirelli People
JUNE 2016 PIRELLI PEOPLE Headcount People by Region NAFTA 36,753 36,598* South America* 6% 32% Asia Pacific 11% MEAI 10% Russia Europe 9% 32% Dec ’15 Jun ’16 People by Contract People by Cluster Temps & Agency Management 7% 1% Employees Workers 93% Staff 80% 19% * Without Venezuela headcount (897 FT
Slide 26: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD* ITALY GERMANY Low cost countries U.K. Bollate – Car U.S. Breuberg – Car / Settimo Torinese Burton – Car Moto – Car Rome – Car Carlisle – Car RUSSIA Kirov – Car Voronezh – Car MEXICO ROMANIA Silao – Car TURKEY Slatina – Car Izmit – Car / Truck BRAZIL
Slide 27: Raw Materials
RAW MATERIALS Raw Material Price Trend Brent Oil (in $ / barrel) Natural Rubber (in $ / tons) Natural Rubber: Sicom Yearly Average Brent: www.oilnergy.com 4,519 3,380 3,156 108.9 111.0 111.7 2,517 99.5 80.2 1,711 56.6 1,370 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4
Slide 28: Disclaimer
DISCLAIMER This presentation is not and does not constitute an offer to sell or the solicitation, invitation or recommendation to purchase any securities in the United States or any other jurisdiction. The information included in this presentation is not intended to constitute or form part of, and s