Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2021 Earnings Presentation
35 slides from Pirelli & C's earnings presentation, Feb 23, 2022
Slide 1: FY 2021 preliminary unaudited results
FY 2021 preliminary unaudited results February 23rd, 2022 FY 2021 prel. unaudited 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 FY’21 KEY MESSAGES 2 PIRELLI FY’21 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 2 FY 2021 prel. unaudited results
Slide 4: Key Messages
Key Messages > FY 2021 Results supported by: • Strong commercial performance (market share gain on ≥18”, Top Industry price/mix) • Competitiveness plan delivery • Efficient working capital management > 2022 scenario impacted by high volatility • Sound GDP growth with some downside risks: • Inflation
Slide 5: FY'21 results above company targets
FY’21 results above company targets … 2021 E 2021 E 2021 A € billion (target Mar-21) (guidance Nov-21) Net Sales ~4.7 ÷ ~4.8 ~5.1 ÷ ~5.15 5.33 H.V. volumes ~+15% ÷ +17% ~+17% ÷ +18% +20.2% Price/mix ~+2.5% ÷ +3% ~+7% +9.1% adj. EBIT margin >14% ÷ ~15% ~15% ÷ ~15.5% 15.3% Δ YoY +3.7pp CapEx ~0.33 ~0.
Slide 6: … and our strong focus on Sustainability
… and our strong focus on Sustainability Area KPIs 2020A 2021A 2025E 2021 MAIN ACHIEVEMENTS SAFETY FIRST Accident • 100% of electricity sourced in Europe is Towards zero accidents frequency index 0.22 0.21 <0.10 at work renewable • FIA’s 3 star Environmental Accreditation obtained – first and only t
Slide 7: Agenda
Agenda 1 FY’21 KEY MESSAGES 2 PIRELLI & C. – FY’21 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 6 FY 2021 prel. unaudited results
Slide 8: FY / 4Q 2021 Car tyre market and Pirelli performance
FY / 4Q 2021 Car tyre market and Pirelli performance Pirelli outperforming H.V. market in FY’21 & 4Q, while rebalancing Standard exposure in 4Q Pirelli TOTAL ≥18” ≤17” Market FY’21 4Q’21 FY’21 4Q’21 FY’21 4Q’21 16% +14% +19% +7% nov. +12% 23% +6% nov. +6% nov. 8% nov. guid 15% nov. guid 6% 9% guid n
Slide 9: Industrial Plan delivery well on track in 2021 with strong commercial performance
Industrial Plan delivery well on track in 2021 with strong commercial performance Δ vs. Industrial Plan Targets 2021 FY MAIN ACHIEVEMENTS Ind. Plan Capture H.V. rebound & gain share: • Pirelli Car ≥18” +18% YoY, +4pp vs. market • Car ≥18” Vol. +23% (+8 pp vs. market) Growing exposure to higher rims
Slide 10: Overperformance vs. market, driven by ≥19” and Specialties
2021 Commercial program delivery Overperformance vs. market, driven by ≥19” and Specialties FM 2021A Volume variance (Car) Key Programs Highlights Volume trend FY’20 A 49% 51% Market H.V. Repl. Stable weight of H.V. Regions (>90%) PULL H.V. Repl. ≥18” YoY increase >85% of the increase in EU and USA
Slide 11: Strengthening our High Value positioning …
2021 Innovation program delivery (1/2) Strengthening our High Value positioning … 310 New Homologations 6 Product launches Focus on different Customers needs Higher rim sizes ~85% (≥19”) 3 All Season 1 Winter 2 Summer Specialties 1/3 • Cinturato AS SF2 • Cinturato Winter 2 • Scorpion HT • Powergy In
Slide 12: …while enhancing our product sustainability
2021 Innovation program delivery (2/2) …while enhancing our product sustainability Focusing on Eco & Safety Performance Eco is also : Strengthening materials innovation Concept tyres (supplied for the Volvo Recharging Concept) > New labelled products are strongly focused on top maximizing the use of
Slide 13: Competitiveness program progress
Competitiveness program progress FY’21 gross efficiencies fully on track with Industrial Plan; higher inflation vs. Mar-21 forecasts Wave 1 Wave 2 FY’20 A focusing on: FY’21 Ind. Plan FY’21 A Modularity Product Cost Design speed and virtualization Footprint optimization Manufacturing Industr
Slide 14: 2021 Operations program delivery
2021 Operations program delivery Completion of footprint rationalization and volumes ramp-up to full saturation Manufacturing footprints highlights Car capacity & saturation trend (million pcs) > Rationalization completed in 2021: • Bollate (IT) converted into Cycling plant • Burton (UK) reorganized
Slide 15: FY'21 Sales supported by strong commercial performance
FY’21 Sales supported by strong commercial performance Record 4Q price/mix, driven by price increases and solid mix improvement € million o/w Organic +15.7% +9.1% -0.9% +23.9% +24.8% 5,331 390 (36) 4,302 +20.2% 675 +11.2% Standard o/w Car ≥18” +23.2% 70% 71% High Value O.E. +21% Repl. +25% FY’20 Δ V
Slide 16: Profitability: Internal levers more than offsetting increasing external headwinds
Profitability: Internal levers more than offsetting increasing external headwinds FY / 4Q 2021 adjusted EBIT bridge € million Net impact +59 Net impact +70 Net impact -31 283 (212) 155 (85) 816 (12) (80) 49 (11) (39) 501 267 FY ▬ Commodities -179 ▬ R&D / mktg. exp. -32 ▬ FX -33 ▬ Mgmt inc. (short /
Slide 17: FY 2021 Net Income bridge
FY 2021 Net Income bridge Earnings driven mainly by improving operating performance € million 9 12 43 (101) 322 315 43 Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial Δ Taxes Net Income FY’20 restr. costs loss from equity income / charges FY’21 participations % on Sales 1.0% 6.0% FY’2
Slide 18: FY'21 Net Financial Position
FY’21 Net Financial Position Cash flow trend supported by a sound operating performance and Working Capital Management € million Net Cash Flow (before dividends): +431 (+344 in FY’19) 00 Operating Cash Flow: +794 (+808 in FY’19) 3,258 00 00 2,907 80 00 93 (1,211) 126 00 (51) 144 00 122 00 346 00 00
Slide 19: Total Gross Debt structure as of December 31st 2021
Total Gross Debt structure as of December 31st 2021 Cost of debt trend in line with Plan assumption and discounting COVID outbreak. On 21-Feb-22, signed a new €1.6B 5Y ESG bank loan to refinance June 2022 maturities and replace expiring Committed Lines not drawn € million Net Financial Position Gros
Slide 20: Agenda
Agenda 1 FY’21 KEY MESSAGES 2 PIRELLI & C. – FY’21 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 19 FY 2021 prel. unaudited results
Slide 21: Macro Outlook 2022 assumption
Macro Outlook 2022 assumption Sound GDP growth with some downside risks: Inflation, supply shortages and geopolitical tension 2022 GDP Growth Area 2022 Highlights Pirelli countermeasures World China USA Europe >• Oil price above pre-COVID >• Sound pricing on both levels due to strong demand, channel
Slide 22: 2022 Global Car Tyre market outlook
2022 Global Car Tyre market outlook High Value market well above Industrial Plan assumptions and growing ~4X the Standard market Car tyre market (million pcs) Δ YoY CAGR ’19-’22 Ind. Plan Ind. Plan ’21-’22 (Feb-22) (Mar-21) (Mar-21) 1,540 1,498 1,474 ~+3% ~-1.5% 1,451 1,424 ≥18" 265 289 270 279 302
Slide 23: 2022 Global Car High Value Tyre market outlook
2022 Global Car High Value Tyre market outlook ≥19” and EV growing above Ind. Plan expectations, reflecting a better Car production / parc mix ≥18” O.E. market (million pcs) ≥18” Repl. market (million pcs) Ind. Plan Ind. Plan Ind. Plan Ind. Plan (Mar-21) (Mar-21) Δ YoY (Mar-21) (Mar-21) Δ YoY ’21-’2
Slide 24: Pirelli Strategy implementation in 2022
Pirelli Strategy implementation in 2022 In line with Industrial Plan, but quickly reacting to the external scenario: seizing opportunities and offsetting headwinds main programs on-going in line with Mar-21 Ind. Plan new / strengthened initiatives > Focus on the growing and more resilient H.V. marke
Slide 25: Pirelli FY 2022 targets
Pirelli FY 2022 targets 2021 A 2022 E € billion • Volumes ~+1.5% ÷ ~+2.5% Net Sales 5.33 ~5.6 ÷ ~5.7 High Value ~+6%÷~+7% Standard ~-4%÷~-3% • Price/mix ~+5.5% ÷ ~+6.5% adj. EBIT margin 15.3% ~16% ÷ ~16.5% • Forex ~-2% ÷ ~-1.5% CapEx 0.35 ~0.39 (% of Sales) (6.5%) (~7%) Net Cash Flow 0.43 ~0.45
Slide 26: Agenda
Agenda 1 FY’21 KEY MESSAGES 2 PIRELLI & C. – FY’21 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 25 FY 2021 prel. unaudited results
Slide 27: Pirelli leading position in Sustainability rankings & initiatives
Pirelli leading position in Sustainability rankings & initiatives Major ratings (Feb-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 28: Key Car Market Trends: Europe
Key Car Market Trends: Europe Market trend (∆% YoY) 4Q’20 FY’20 1Q’21 2Q’21 3Q’21 4Q‘21 FY21 Total 88 O.E. -1 -7 -8 -23 -32 -29 42 8 6 10 Replacement -4 -3 -12 48 Total (O.E.+Repl.) 5 7 -3 -7 -2 -15 ≥18” & ≤17” 79 106 O.E. 7 3 ≤17" -4 -12 -1 ≥18” -27 -16 -12 -35 -26 -31 -25 52 40 21 23 24 Replacemen
Slide 29: Key Car Market Trends: North America
Key Car Market Trends: North America Market trend (∆% YoY) 4Q’20 FY’20 1Q’21 2Q’21 3Q’21 4Q‘21 FY21 Total 132 O.E. 2 0 -20 -4 -25 -16 64 Replacement1 11 13 0 -2 -11 -5 72 Total (O.E.+Repl.) 7 10 -1 -13 -5 -7 ≥18” & ≤17” 118 146 O.E. ≤17" 5 2 7 ≥18” -2 -25 -16 -11 -18 -22 -11 -8 -34 65 62 Replacement
Slide 30: Key Car Market Trends: Asia Pacific
Key Car Market Trends: Asia Pacific Market trend (∆% YoY) 4Q’20 FY’20 1Q’21 2Q’21 3Q’21 4Q‘21 FY21 Total 36 12 O.E. 3 0 -7 -12 -17 27 6 4 3 Replacement -1 -9 -7 31 3 7 3 Total (O.E.+Repl.) -4 -10 -10 ≥18” & ≤17” 53 31 22 O.E. 9 9 0 11 ≤17" ≥18” -3 -3 -9 -9 -3 -14 -19 68 24 Replacement 6 9 4 8 5 3 12
Slide 31: Key Car Market Trends: Russia, Nordics, MEAI / South America
Key Car Market Trends: Russia, Nordics, MEAI / South America Market trend (∆% YoY) 4Q’20 FY’20 1Q’21 2Q’21 3Q’21 4Q‘21 FY21 Russia, Nordics, MEAI 144 O.E. 10 16 17 -19 0 -11 51 15 12 Replacement -4 -1 -14 -25 66 Total (O.E.+Repl.) 0 11 13 -8 -4 -23 South America 290 O.E. 1 7 15 -31 -13 -8 118 Replac
Slide 32: Pirelli results highlights by quarter
Pirelli results highlights by quarter € million 1Q’20 1Q’21 Δ YoY 2Q’20 2Q’21 Δ YoY 3Q’20 3Q’21 Δ YoY 4Q’20 4Q’21 Δ YoY FY’20 FY’21 Δ YoY Revenues 1,052 1,245 +18.4% 765 1,320 +72.6% 1,277 1,414 +10.7% 1,208 1,352 +11.9% 4,302 5,331 +23.9% Organic Growth1 +24.5% +73.9% +10.5% +9.0% +24.8% % High Val
Slide 33: Pirelli Group Cash Flow by quarter
Pirelli Group Cash Flow by quarter € million 1Q’20 1Q’21 2Q’20 2Q’21 3Q’20 3Q’21 4Q’20 4Q’21 FY’20 FY‘21 Adjusted EBIT1 141 169 (74) 209 214 221 221 217 501 816 Depreciation & Amortization (excl. PPA amortization) 103 98 98 99 96 99 95 100 391 395 Capital expenditures (57) (90) (25) (63) (25) (61) (
Slide 34: Raw Material costs trend and mix
Raw Material costs trend and mix main raw materials price trend 54.8 ; +22% YoY 71.5 ; +31% YoY 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 1.651 ; +20% 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.;
Slide 35: 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