Slide 1: FY 2016 Financial Results
FY 2016 Financial Results March 31st, 2017
Slide 2: Key Messages
KEY MESSAGES > Solid FY 2016 results, with a strong 4Q, sustained by: › Premium outperformance across markets, now accounting for 64% of Consumer sales › Highest price/mix improvement in the industry › First signs of recovery in emerging markets (e.g. South America and Russia) in 4Q Sound profitabil
Slide 3: Industrial Reorganization: Steps Taken So Far
INDUSTRIAL REORGANIZATION: STEPS TAKEN SO FAR 2016 – Jan. 2017 Marco Polo1 › Swap of 10% of Pirelli Industrial with 80% of Aeolus’s Car tyre business completed on October 1, 2016; Pirelli Industrial valuation: 100% €700 million equity value (100%) › Pirelli-Aeolus know-how & technology license agree
Slide 4: Pirelli Color Edition: A Super-Specialty for Prestige & Premium Customers
PIRELLI COLOR EDITION: A “SUPER-SPECIALTY” FOR PRESTIGE & PREMIUM CUSTOMERS > On offer: 4 base colors available for the P Zero and Winter > A breakthrough high tech product extending Pirelli’s specialty Sottozero tyre lines, plus Bespoke on demand offer (Pirelli Noise Canceling System, Run-Flat & Se
Slide 5: Pirelli Connesso: The First Consumer Connected Tyre Solution in the Industry
PIRELLI CONNESSO: THE FIRST CONSUMER CONNECTED TYRE SOLUTION IN THE INDUSTRY how it works > A digital platform, using a sensor (embedded in the tyre P ZERO CONNESSO APP CLOUD connected to Pirelli Cloud) and a smartphone app to constantly TYRE DATA communicate with the driver Pressure > Pirelli Conne
Slide 6: 2016 Sustainability Performance (1/2)
2016 SUSTAINABILITY PERFORMANCE (1/2) EXPRESSED THROUGH THE «RETURN ON CAPITAL1» ADOPTED MODEL 62.9% Growth 54.2% 56.5% 46.2% 50.5% 42.7% Green performance revenues2 (weight on Tyre revenues) 2011 2012 2013 2014 2015 2016 Human Capital 2016A Target 2020 (Nov. 2013 ) Accident Frequency Index -15% yoy
Slide 7: 2016 Sustainability Performance (2/2)
2016 SUSTAINABILITY PERFORMANCE (2/2) EXPRESSED THROUGH THE «RETURN ON CAPITAL» ADOPTED MODEL Supply chain Focus on Natural Rubber Sustainability to increase transparency on non-tier 1. 64 new “third party” ESG audits on site: +7% of audited suppliers without non-conformities vs 2015. Carbon Disc
Slide 8: Agenda
AGENDA 1 FY 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX FY 2016 RESULTS 7
Slide 9: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS1 FY’15 FY’15 Δ YoY vs FY’15 € million FY’16 2016 FY highlights Reported adj. excl. Venezuela excl. Venezuela Revenues 6,309.6 5,962.5 6,058.4 +1.6% Solid organic growth, backed by Organic Growth2 +7.0% Premium outperformance and price/mix EBITDA before non-recurring i
Slide 10: FY 2016 Performance by Region
FY 2016 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin adjusted3 € million Organic Organic Organic Δ YoY Δ YoY Δ YoY growth1 growth2 growth2 Total 6,056.2 +1.7% +7.1% 5,068.5 +5.3% +8.2% 987.7 -13.4% +2.6% 14.8% (+0.2 pp YoY) Europe 35% 38% +3.5% +5.1% 42% +5.8% Eu
Slide 11: FY 2016 Premium Performance by Region
FY 2016 PREMIUM PERFORMANCE BY REGION Organic Δ YoY Growth1 € million Total 2,957.8 3,244.6 +9.7% +12.3% Sound performance in SuperPremium & Prestige, and solid Winter season Europe 47% 47% +10.0% +12.0% Progress in selected distribution channels (e.g. Car Dealers, independent dealers), with new
Slide 12: Pirelli Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million 91 (78) (17) (55) 140 897 861 (94) 43 6 EBIT FY’15 Volume Price / Mix Efficiencies D&A & other Raw FX Other input Other EBIT FY’16 adjusted1 costs Materials costs Business adjusted1 (labour / energy / other) Note: FY 2015 EBIT net of Venezuela; 1 before
Slide 13: FY 2016 Net Financial Position
FY 2016 NET FINANCIAL POSITION € million 5,331 Financial charges (440) Eurostazioni & Greentech 109 Taxes (116) Real estate disposal 91 57 (200) 4,913 (883) 86 (266) 232 556 Variation of Bidco NFP4 (134) Aeolus Car Debt5 (74) EBIT adjusted1 897 Exchange rate differentials / (24) D&A (excl. amort. of
Slide 14: Pirelli Debt Structure as of December 31, 2016
PIRELLI DEBT STRUCTURE1 AS OF DECEMBER 31, 2016 Net Financial Position Gross Debt Maturity € million 6,624 1,711 1,538 1,536 Cash & Cash 360 1,582 Equivalents 1,998 2 Committed Line 5,281 7 353 Drawdown 4,913 1,386 129 Receivables 2,057 600 12 Debt Capital & other assets 605 Market 1,830 Other 738 6
Slide 15: Agenda
AGENDA 1 FY 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX FY 2016 RESULTS 14
Slide 16: Key Tyre Results
KEY TYRE RESULTS € million 1Q‘16 ∆ YoY1 2Q‘16 ∆ YoY1 3Q‘16 ∆ YoY1 4Q‘16 ∆ YoY1 FY‘16 ∆ YoY1 Revenues 1,435.1 -4.0% 1,531.8 -1.6% 1,564.0 +5.7% 1,525.3 +7.3% 6,056.2 +1.7% o/w Premium 781.9 +8.4% 825.3 +7.7% 835.9 +10.3% 801.5 +12.4% 3,244.6 +9.7% EBITDA before non-recurring 290.2 +2.0% 289.1 -5.7% 2
Slide 17: Consumer Business: Pirelli Performance
CONSUMER BUSINESS1: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY2 2Q‘16 ∆ YoY2 3Q‘16 ∆ YoY2 4Q‘16 ∆ YoY2 FY‘16 ∆ YoY2 Revenues 1,165.7 -1.0% 1,303.9 +5.0% 1,314.4 +10.4% 1,284.5 +6.8% 5,068.5 +5.3% o/w Premium 781.9 +8.4% 825.3 +7.7% 835.9 +10.3% 801.5 +12.4% 3,244.6 +9.7% % revenues 67.1% +5.9 pp 63.3
Slide 18: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 4Q’15 FY’15 1Q’16 2Q’16 3Q’16 4Q’16 FY’16 % YoY 6 7 8 4 2 3 O.E. (2) Europe1 11 4 3 4 2 REPLACEMENT 1 (1) 2 2 4 2 2 1 1 O.E. NAFTA 3 2 7 4 2 REPLACEMENT2 0 (4) 17 South America O.E. (15) (13) (12) (20) (29) (29) 2 3 REPLACEMENT3 (7) (2) (4) (1) (3) 3
Slide 19: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS1: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY2 2Q‘16 ∆ YoY2 3Q‘16 ∆ YoY2 4Q‘16 ∆ YoY2 FY‘16 ∆ YoY2 Revenues 269.4 -15.3% 227.9 -27.8% 249.6 -13.5% 240.8 +9.9% 987.7 -13.4% EBITDA before non-recurring 26.9 -40.2% 18.9 -52.6% 20.5 -26.5% 24.7 -16.3% 91.0 -36.1% items & restr. costs M
Slide 20: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 4Q’15 FY’15 1Q’16 2Q’16 3Q’16 4Q’16 FY’16 % YoY 17 11 7 5 1 O.E. Europe1 (1) (7) 4 5 6 2 8 3 REPLACEMENT (3) South America O.E. (20) (17) (31) (29) (48) (43) (58) 2 4 REPLACEMENT2 (8) (4) (2) (14) (10) 54 China 28 30 29 2 O.E. (6) (23) 1 Russia exc
Slide 21: Agenda
AGENDA 1 FY 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX FY 2016 RESULTS 20
Slide 22: Pirelli / Marco Polo Merger: Purchase Price Allocation Impact
PIRELLI / MARCO POLO MERGER: PURCHASE PRICE ALLOCATION IMPACT Following the merger of Marco Polo into Pirelli, the acquisition price excess amounting to €6 billion (€7.3 billion acquisition price minus Pirelli net > equity adjusted at the acquisition date) has been allocated through the Purchase Pri
Slide 23: Pirelli Balance Sheet
PIRELLI BALANCE SHEET € million FY’15 (reported1) FY’15 (restated2) FY’16 FIXED ASSETS 3,780.5 10,361.4 10,299.2 Inventories 1,053.9 1,053.9 1,055.6 Trade receivables 676.2 676.2 679.3 Trade payables (1,313.1) (1,320.1) (1,498.5) NET OPERATING WORKING CAPITAL 417.0 410.0 236.4 Other payables / recei
Slide 24: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 4Q’15 4Q’15 Δ YoY vs 4Q’15 € million 4Q’16 Reported adj. excl. Venezuela excl. Venezuela Revenues 1,597.7 1,423.4 1,525.3 +7.2% Organic Growth1 +8.7% EBITDA before non-recurring items & Restr. Costs 349.3 293.8 311.1 +5.9% Margin 21.9% 20.6% 20.4% -0.2pp EBIT adjusted2
Slide 25: Pirelli Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million 22 (26) (6) (3) 34 (20) 242 222 2 15 EBIT 4Q’15 Volume Price / Mix Efficiencies D&A & other Raw FX Other input Other EBIT 4Q’16 adjusted1 costs Materials costs Business adjusted1 (labour / energy / other) Note: 4Q 2015 EBIT net of Venezuela; 1 before amo
Slide 26: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW € million 1Q’152 2Q’152 3Q’152 4Q’152 FY’152 1Q’16 2Q’16 3Q’16 4Q’16 FY’16 EBIT adjusted1 215.0 239.5 207.3 262.9 924.7 217.1 215.1 222.8 241.6 896.6 Amortization (excl. PPA amortization) 76.9 78.2 76.5 86.4 318.0 72.9 73.6 70.6 69.5 286.6 Capital Expenditure (85.6) (103.2) (
Slide 27: Operating Net Working Capital and Capex Seasonality Trend
OPERATING NET WORKING CAPITAL AND CAPEX SEASONALITY TREND Operating Net Working Capital1 CapEx € million € million 391 372 Δ = 640 6.6%2 on FY sales 6.1% on FY sales 130 134 1.134 Δ = 733 1.129 1.057 970 967 103 922 86 82 82 73 74 417 234 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2015 2016 201
Slide 28: FY 2016 Pirelli Tyre Mix
FY 2016 PIRELLI TYRE MIX Sales by Business Sales by Segment Industrial Car 16% 78% Consumer 84% Agro 2% Motorbike Truck 14% 6% Sales by Channel Sales by Region NAFTA 16% O.E. South America Asia Pacific 23% 22% 13% MEAI 8% Replacement 77% Russia Europe 3% 38% FY 2016 RESULTS 27
Slide 29: December 2016 Pirelli People
DECEMBER 2016 PIRELLI PEOPLE Headcount People by Region NAFTA 37,050 South America 6% 35,856 32% Asia Pacific 13% MEAI 9% Russia Europe 8% 32% Dec '151 Dec '16 1 People by Contract People by Cluster Temps & Agency Management 5% 1% Employees 95% Staff 20% Workers 79% 1 Without Venezuela headcount, in
Slide 30: Pirelli Plants in the World as of December 31st 2016
PIRELLI PLANTS IN THE WORLD1 AS OF DECEMBER 31ST 2016 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 I
Slide 31: 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 45.0 1,370 1,378 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Slide 32: 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