Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2008 Earnings Presentation
35 slides from Pirelli & C's earnings presentation, May 2008
Slide 1: 1Q 2008 Group Results
Reco 1Q 2008 Group Results
Slide 2: Statement
STATEMENT The Manager mandated to draft corporate accounting documents of Pirelli & C. S.p.A., Claudio De Conto, attests – as per art.154-bis, comma 2 of the Testo Unico della Finanza (D.Lgs. 58/1998) – that all the accounting information contained in this presentation correspond to the documented r
Slide 3: Disclaimer
DISCLAIMER This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current ex
Slide 4: Key Events during 1Q 2008
KEY EVENTS DURING 1Q 2008 •16thJanuary – JV A.P.I.C.E. (Pirelli & ACEA) •17thJanuary - Launch of Pirelli Cinturato •1stFebruary– (Notice of the) constitution of a new Company in the Photonic Sector •22thFebruary – Start up of the agreement among Pirelli, Piedmont, Turin, Settimo Torinese and Turin’s
Slide 5: Market Challenging Drivers: Issues and Actions
MARKET CHALLENGING DRIVERS ISSUES ACTIONS • Raw material price increase • P.Tyre Price increase 4-6% US & EU • Accelerating business in • Competitiveness Romania & China •Adapting PRE business model • Real Estate Market to the changed market conditions
Slide 6: Investing to Grow, Accelerating Business
INVESTING TO GROW Romania: scheduled 3.5 mln tyre in 2008 and 5.5 mln in 2009 ACCELERATING BUSINESS China: scheduled 2 mln tyre in 2008 and 4 mln in 2009 (CAR)
Slide 7: Pirelli RE Key Strategic Guidelines
PIRELLI RE KEY STRATEGIC GUIDELINES In light of the current financial markets, PRE’s strategy is focused on the following: 1) Increase Total Assets Under Management through fund raising and merging existing third parties portfolios 2) Focus on existing core/core plus funds adopting a long term manag
Slide 8: 1Q 2008 Pirelli Group Financials
1Q 2008 Pirelli Group Financials
Slide 9: 1Q 08 Pirelli Group Results
1Q 08 PIRELLI GROUP RESULTS €/mn 1Q 08 1Q 07 ∆ 08/07 IAS/IFRS IAS/IFRS Net Sales (as reported) 1,314.1 1,811.3 -27.4% Net Sales (2007 excluding DGAG effect) (*) 1,314.1 1,286.9 +2.1% EBITDA 168.0 181.6 -7.5% EBITDA margin (2007 excluding DGAG effect) 12.8% 13.9% EBIT 114.6 129.5 -11.5% EBIT margin (
Slide 10: 1Q 2007 – 1Q 2008: Group EBIT Variation
1Q 2007 – 1Q 2008: GROUP EBIT VARIATION €/mn 129.5 0.3 114.6 0.5 (3.4) (10.0) (2.3) Group Broadband Other Group EBIT at Tyre EBIT Pirelli RE Access & business Others EBIT at 31.03.07 EBIT Photonics EBIT 31.03.08 EBIT 9
Slide 11: Group Net Financial Position Variation
GROUP NET FINANCIAL POSITION VARIATION €/mn 851.0 35.2 16.4 15.4 835.5 16.2 234.4 (302.1) NFP Net Cash Purchase Buy Back Dividends Exchange NFP at flow of P&C of 38.9% P.Tyre rate Other at 31.12.2007 Ordinary RE P.Tyre 31.03.2008 activity shares 10
Slide 12: 1Q 2008 Pirelli Tyre Results
IiRecu 1Q 2008 Pirelli Tyre Results
Slide 13: 1Q 08 Pirelli Tyre Results
1Q 08 PIRELLI TYRE RESULTS €/mn 1Q 08 1Q 07 Variation IAS/IFRS IAS/IFRS Net ∆Price/mix: +3.9% 1076.9 1060.0 +1.6% Sales ∆Volumes: -0.7% ∆Actual Variation: +3.2% EBITDA 148.5 150.9 ∆Exch. Rates: -1.6% ∆Total: +1.6% EBITDA margin 13.8% 14.2% EBIT 100.3 103.7 -3.3% ∆Commercial Variations: +24.2 9.3% 9.
Slide 14: 1Q Pirelli Tyre Results by Business Segment
1Q 08 PIRELLI TYRE RESULTS BY BUSINESS SEGMENT €/mn 1Q 08 1Q 07 Variation IAS/IFRS IAS/IFRS CONSUMER Sales 748.3 740.3 +1.1% EBIT 70.3 77.6 ROS 9.4% 10.5% INDUSTRIAL Sales 328.6 319.7 + 2.8% EBIT 30.0 26.1 ROS 9.1% 8.2% • Consumer sales organic growth up 3,2% driven by two-wheel tyres and Latin Amer
Slide 15: 1Q 08 Market Trends
1Q 08 MARKET TRENDS EUROPE NORTH AMERICA Consumer, OE - 1% Consumer, OE -10% REPL - 4% REPL - 3% Industrial, OE +12% REPL - 8% CHINA Consumer, OE +10% REPL +20.% Industrial, (OE+ REPL) +20% MERCOSUR Consumer, OE +20% REPL + 3% Industrial, OE +24% REPL +16% 14
Slide 16: Pirelli Tyre: Raw Materials and Energy Cost Trends
PIRELLI TYRE: RAW MATERIALS AND ENERGY COST TRENDS CAGR 04 - 07 Index 2004 = 100 26,6% 257,2 BRENT 250 TSR20 25,5% 248,1 207,1 200 192,8 194,0 146,3 176,4 150 133,7 8,3% 100 14,4% 114 12,9% 129 2,6% 133 3,7% 137 ∆ Raw Material 100 Cost Index 50 2004 2005 2006 2007 1st Quarter 2008 15
Slide 17: Pirelli Tyre Price Announcements within 2Q '08
PIRELLI TYRE PRICE ANNOUNCEMENTS WITHIN 2Q ‘08 EUROPE NORTH AMERICA 2Q ‘08 2Q ‘08 CONSUMER AND CONSUMER TYRES, INDUSTRIAL TYRES, +5% +4% TO 6% EXPORT MARKETS (Dollar area) 2Q ‘08 CONSUMER AND INDUSTRIAL TYRES, +5% to 7% 16
Slide 18: 1Q 08 Pirelli Tyre Highlights: Cinturato
1Q 08 PIRELLI TYRE HIGHLIGHTS: CINTURATO Cinturato: Product Features - reduces up to 98 Kgs CO2 emissions in one year (average 15.000 Kms) - reduces fuel expenses by 54€ per year - is aromatic oil free - has 30% higher mileage (tyres last 1 year longer) - improves aquaplaning up to 25% Energy™ Clean
Slide 19: 1Q 2008 Pirelli Real Estate Results
1Q 2008 Pirelli Real Estate Results
Slide 20: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT (Values in €/ml) 2007 MARCH net of DGAG 2008 2007 temporary % Change consolid. 1. Pro Quota Aggregate Revenues (*) 301,0 405,8 374,4 2. Consolidated Revenues (*) 189,5 201,0 169,6 3. EBIT before Restructuring Costs 26,8 34,5 22,5 4. Income from Equity Participations 0,5
Slide 21: Income Statement - Breakdown by Area of Business
INCOME STATEMENT- BREAKDOWN BY AREA OF BUSINESS (Values in €/ml) ACTUAL MARCH 2008 INVESTMENT & ASSET MGMT SPECIALISED SERVICES OTHER & TOTAL interelimin. I&AM SERV. I&AM SERV. INVESTMENT ORDINARY EXTRAORDINARY ORDINARY EXTRAORD. 1. Pro-quota Aggregated Revenues 301,0 112,5 37,0 0,0 167,9 0,0 (16,4)
Slide 22: Net Debt
NET DEBT (Values in €/ml) MARCH 2007 AFTER MARCH DECEMBER MARCH DGAG 2008 2007 2007 DECONSOLID. Total Net Debt 300,3 289,7 966,9 76 Total Shareholders' Loans 507,6 526,4 332,8 379 Net Debt not incl. shareholders' Loans 807,8 816,1 1.299,7 455 Net Equity 717,6 720,1 725,1 725 Gearing 1,13 1,13 1,79 0
Slide 23: Pirelli RE Strategy
PIRELLI RE STRATEGY In light of the current financial markets, PRE’s strategy is focused on the following: 1) Increase Assets Under Management from €13 bn (BV) to €17-18 bn (BV) through: – Opportunistic / Value added fund raising and merger with existing portfolios for a total of approx. €6.0-7.0 bn
Slide 24: Pirelli RE Strategy: Financial Structure
PIRELLI RE STRATEGY FINANCIAL STRUCTURE: – Corporate Debt Equity target of 1:1 for year end – Leverage of AUM not higher than the current 70% – Financial situation of the current portfolio: – pro rata net debt Euro 3.1 bn (non recourse) – financing falling due (pro quota): €100 mln on average in the
Slide 25: 1Q 2008 Group Outlook
Reco 1Q 2008 Group Outlook
Slide 26: Pirelli Group Outlook 2008
PIRELLI GROUP OUTLOOK 2008 • For 2008 the Pirelli & C. SpA Group confirms its forecasts for a result of its businesses in line with last year, net of restructuring costs for real estate activities and assuming no external elements of an extraordinary nature unpredictable as of today. • Pirelli Tyre
Slide 27: 1Q 2008 Back Up Slides
IiRecu 1Q 2008 Back Up Slides
Slide 28: Pirelli Group Structure at 31.12.2007
PIRELLI GROUP STRUCTURE AT 31.12.2007 Main Shareholders* Camfin 20.3% Mediobanca 4.6% €/ Mln Edizione Holding 4.6% Group Sales: 5,209 Fondiaria SAI 4.4% Pirelli & C. SpA Group Net Invested Capital: 4,113 Allianz 4.4% Assicurazioni Generali 4.4% Pirelli Tech Sales: 189 Venture NIC: 2% (sul totale) Pi
Slide 29: Group Mission
GROUP MISSION Skilled management with an international culture Technology, Focus on core innovation and IPR business “Creating value for shareholders & stakeholders” Effective Corporate Governance 28
Slide 30: Pirelli Worldwide: A Global Company at 31.12.2007
PIRELLI WORLDWIDE: A GLOBAL COMPANY AT 31.12.2007 24 Plants 12 Countries 30,813 Employees 160 commercial presence Approx. 100 Scientists Enhanced production and presence in Brazil, Romania, China = Manufacturing Plant = Local Subsidiary Sales by Area* * excluding DGAG sales Employees distribution As
Slide 31: 1Q 2008 Pirelli Tech Ventures
1Q 2008 Pirelli Tech Ventures •Ambiente •Broadband Access & Photonics
Slide 32: 1Q 08 Broadband Access & Photonics Results
1Q 08 BROADBAND ACCESS & PHOTONICS RESULTS €/mn 1Q 08 1Q 07 IAS/IFRS Variation IAS/IFRS Net 29.7 25.1 +18.3% Sales (2.9) (3.4) +14.7% EBITDA EBITDA margin n.m. n.m. (3.5) (3.8) +7.9% EBIT EBIT margin n.m. n.m. (5.9) (4.2) Net Income 31
Slide 33: Broadband Access & Photonics: Fields of Activity
BROADBAND ACCESS & PHOTONICS: FIELDS OF ACTIVITY BBA: ENLARGING CLIENTS PORTFOLIO PHOTONICS: AND PRODUCTS BECOMING A REALITY • CWDM City 8TM enhancement to 10 Gbits • ADSL2/2+ deployment on track • DTL and ITLA market sales • SET-TOP-BOX sales and new tenders • Launch of Transponder MSA300 expected
Slide 34: Technological Ventures
TECHNOLOGICAL VENTURES PIRELLI PIRELLI & C. ECO TECHNOLOGY SpA AMBIENTE SpA - GECAM TM - ENERGY RECOVERY FROM SOLID WASTE - ANTIPARTICULATE FILTERS - PHOTO VOLTAIC ENERGY - ENVIRONMENTAL RECLAMATION AND DUE DILIGENCE - Sales consolidation of Gecam ™. - Sales consolidation of high quality fuel throug
Slide 35: Pirelli 1Q 2008 Group Results
PIRELLI 1Q 2008 GROUP RESULTS PIRELLI PIRELLI BROADBAND ALTRI ALTRO GRUPPO TYRE REAL ESTATE ACCESS & PHOT. BUSINESS PIRELLI & C. CONS. Euro/Mln 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 31.03.08 31.03.07 Sales 1,076.9 1,060.0 189.5 708.6 29.7 25.1 18.8