Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — 9M 2021 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Nov 11, 2021
Slide 1: 9M 2021 Financial Results
9M 2021 FINANCIAL RESULTS Milan, November 11th, 2021 9M 2021 RESULTS Milan, November 11th, 2021
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: Key Messages
KEY MESSAGES > Industry scenario: positive outlook confirmed, but volatility is increasing • Solid High Value Replacement demand and healthy pricing environment • Higher volatility due to supply shortages (e.g. semi-conductor and logistics) and inflation • Pirelli is fully seizing H.V. market recove
Slide 4: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 9M 2021 MARKET AND PIRELLI PERFORMANCE 3 9M 2021 FINANCIALS IN DETAIL 4 APPENDIX 9M 2021 RESULTS 3 Milan, November 11th, 2021
Slide 5: 2021 External Scenario Update
2021 EXTERNAL SCENARIO UPDATE MACRO-ECON. INFLATION TYRE DEMAND TYRE PRICING Growth momentum weakening Rising rate High Value demand Supportive pricing outlook confirmed environment >+5% Global GDP growth Global inflation +3.7% in in 2021E, -0.2pp vs. Aug 2021E (Ind. Plan +2.3%) FY’21E Car ≥18” dema
Slide 6: Industrial Plan Delivery, Well on Track on All Programs
INDUSTRIAL PLAN DELIVERY, WELL ON TRACK ON ALL PROGRAMS vs. Ind. Plan PLAN TARGETS 9M MAIN ACHIEVEMENTS • Capture H.V. rebound & gain share • Vol. +10 pp vs. Car ≥18” market • Growing exposure to higher rims and • 66% weight of ≥19” (+3pp YoY)1 technologies • Elect volumes ~10x vs. 9M’20 levels Comm
Slide 7: Pirelli 9M 2021 Results Highlights
PIRELLI 9M 2021 RESULTS HIGHLIGHTS € million Net Sales adjusted EBIT1 +29% +318 3,979 599 3,094 Standard 280 High Value 71.2% +0.2pp 71.4% 9M’20 9M’21 9M’20 9M’21 margin 9.1% 15.0% Net Income Net Financial Position 3Q Net Cash Flow +254 -560 +104 236 3,819 3,715 3,258 -18 FY’20 1H’21 9M’21 9M’20 9M’
Slide 8: FY 2021 Car Tyre Market Outlook Update
FY 2021 CAR TYRE MARKET OUTLOOK UPDATE Δ ’21 vs. ‘19 -15% ~+7% (Aug. gui +10%) -8% ≥18” -8% ~+12% +2% (Aug. gui +15%) ≤17” -15% ~+6% (Aug. gui +8%) -10% FY 2019A FY 2020A FY 2021E > Lower 2021 Car market growth, mainly due to weaker O.E. • O.E. impacted by chip shortage (O.E. total -1% YoY vs. +6% A
Slide 9: Pirelli FY 2021 Targets Update
PIRELLI FY 2021 TARGETS UPDATE @ 5-Aug @ 11-Nov € billion 2020 A 2021 E 2021 E • Volumes ~+14% ÷ ~+15% (Aug. guid. confirmed) Net Sales 4.3 ~5.0 ÷ ~5.1 ~5.1 ÷ ~5.15 • Price/mix ~+7% (Aug. guid. ~+4.5% ÷ ~+5%) ~15% ÷ ~15.5% • FX ~-2% adj. EBIT margin 11.6% confirmed (Aug. guid. ~-2.5% ÷ ~-2%) CapEx 0
Slide 10: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 9M 2021 MARKET AND PIRELLI PERFORMANCE 3 9M 2021 FINANCIALS IN DETAIL 4 APPENDIX 9M 2021 RESULTS 9 Milan, November 11th, 2021
Slide 11: Car Tyre Market and Pirelli Performance
CAR TYRE MARKET AND PIRELLI PERFORMANCE H.V. market > 2019 level, with solid Repl. demand; O.E. impacted by chip shortage Pirelli outperformance confirmed in 3Q, despite a tough comparison base Pirelli TOTAL ≥18” ≤17” Market 9M’21 3Q’21 9M’21 3Q’21 9M’21 3Q’21 24% 31% 13% 21% 17% 12% TOTAL 4% -5% -1
Slide 12: Commercial Program Progress
COMMERCIAL PROGRAM PROGRESS Strong over-performance mainly driven by ≥19” and Specialties 9M 2021A Volume variance (Car) Key Programs Highlights Volume trend 9M’20 A 49% 51% Market H.V. Repl. Stable weight of H.V. Regions PULL ≥18” YoY increase >80% of the increase in EU and USA H.V. Repl. • ~60% fr
Slide 13: Innovation Program Progress (1/2)
INNOVATION PROGRAM PROGRESS (1/2) World’s leading OEMs in Munich motor show chose Pirelli tyres for their EV cars Leader in EV at Munich Motor show Key partner of the most important Premieres BMW IX Coverage of EVs on display Porsche Taycan BMW i4 BMW the iX 29% ID.4 GTX EQE 350 ID.5 GTX Maybach S68
Slide 14: Innovation Program Progress (2/2)
INNOVATION PROGRAM PROGRESS (2/2) in 3Q, completed the Cinturato family renewal Winter tyre for medium-sized cars and CUVs More Safety and Comfort with extendable tyre sipes, a Pirelli pioneered technology More mileage thanks to an innovative compound Developed with virtual simulation Eco-friendly t
Slide 15: ESG: Pirelli, BirdLife & BMW for Deforestation Free Rubber in Indonesia
ESG: PIRELLI, BIRDLIFE & BMW FOR DEFORESTATION FREE RUBBER IN INDONESIA An additional milestone in our natural rubber sustainability journey, after producing the first ever FSC certified tyre in 2Q Objectives: 3-year partnership project in • conserving a deforestation-free area of 2,700 hectares Hut
Slide 16: Competitiveness Program Progress
COMPETITIVENESS PROGRAM PROGRESS 9M’21 efficiencies delivery in line with Industrial Plan targets Wave 1 - ‘20 Wave 2 - ’21-22 FY’20 focusing on: ’21-’22 FY’21 o/w 9M’21 Modularity Product Cost Design speed and ~50% in 1H virtualization Footprint optimization mostly in 2Q Manufacturing Industrial IO
Slide 17: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 9M 2021 MARKET AND PIRELLI PERFORMANCE 3 9M 2021 FINANCIALS IN DETAIL 4 APPENDIX 16 9M 2021 RESULTS 16 Milan, November 11th, 2021
Slide 18: 9M 2021 Net Sales Bridge
9M 2021 NET SALES BRIDGE Top line supported by strong commercial performance; record 3Q price/mix driven by price increases and mix improvement o/w Organic € million +24.7% +6.3% -2.4% +28.6% +31.0% 3,979 194 (71) 3,094 +27.8% 763 +21.8% Standard o/w Car ≥18” +31.3% 71% High Value 71% O.E. +34% Repl
Slide 19: 9M / 3Q 2021 Adjusted EBIT Bridge
9M / 3Q 2021 ADJUSTED EBIT BRIDGE Strong Internal levers contribution offsetting external headwinds, 3Q margin YoY trend impacted by the reversal of 2020 COVID actions € million Net impact +19 Net impact +59 Net impact -23 150 (114) 110 (51) (8) 599 (18) (71) 48 (38) 310 280 ▬ Commodities -83 ▬ R&D/
Slide 20: 9M 2021 Net Income Bridge
9M 2021 NET INCOME BRIDGE Earnings driven by improving operating performance € million 8 6 12 (91) 236 318 (18) Net Income Δ adj. EBIT Δ non rec. / Δ Net income Δ Financial Δ Taxes Net Income 9M’20 restr. costs / loss from income / 9M’21 equity charges participations % on Sales -0.6% 5.9% 9M’20 9M’2
Slide 21: 9M'21 Net Financial Position
9M’21 NET FINANCIAL POSITION Cash Flow better vs. 9M’19, due to Working Capital management € million Net Cash Flow (before dividends): -377 (-629 in 9M’19) 3,715 80 Operating Cash Flow: -85 (-252 in 9M’19) 87 99 3,258 107 ▬ Non-rec. / restr. -103 ▬ FX / other +16 706 (894) 60 213 Δ Net Fin. Position
Slide 22: Pirelli Capital Structure as of Sept. 30th 2021
PIRELLI CAPITAL STRUCTURE AS OF SEPT. 30TH 2021 Liquidity Margin covering maturities until 1H’23, considering the extension option Cost of debt trend in line with FY’21 assumptions € million Net Financial Position Gross Debt maturity 4,936 (1,221) Liquidity position 1,315 927 can be 1,284 Loan (840)
Slide 23: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1H 2021 MARKET AND PIRELLI PERFORMANCE 3 1H 2021 FINANCIALS IN DETAIL 4 APPENDIX 9M 2021 RESULTS 22 Milan, November 11th, 2021
Slide 24: Pirelli Leading Position in Sustainability Rankings & Initiatives
PIRELLI LEADING POSITION IN SUSTAINABILITY RANKINGS & INITIATIVES last positioning in the Major sustainability ratings (Nov-21) score update reference sector 2020 84 #1 ATX Auto Components 2021 Gold class #1 Max score 2020 A #1 Max score 2021 AA #2 Auto Components (PI #2 / 36) 2021 4.5 / 5 #1 Auto &
Slide 25: Pirelli 3Q / 9M Results Highlights
PIRELLI 3Q / 9M RESULTS HIGHLIGHTS € million 3Q’20 3Q’21 Δ YoY 9M’20 9M’21 Δ YoY Revenues 1,277 1,414 +10.7% 3,094 3,979 +28.6% Organic Growth1 +10.5% +31.0% High Value Revenues 918 997 +8.7% 2,203 2,842 +29.0% adj. EBITDA2 309 320 +3.5% 577 894 +54.9% Margin 24.2% 22.6% -1.6pp 18.7% 22.5% +3.8pp ad
Slide 26: Pirelli Balance Sheet
PIRELLI BALANCE SHEET € million 30-Sept-2020 31-Dec-2020 30-Sept-2021 Fixed assets (before IFRS 16) 8,465 8,423 8,396 Right of use IFRS 16 444 434 427 Fixed assets (incl. IFRS 16) 8,909 8,857 8,823 Inventories 825 836 974 Trade receivables 949 598 939 Trade payables (808) (1,268) (1,044) Operating n
Slide 27: Pirelli 3Q / 9M Group Cash Flow
PIRELLI 3Q / 9M GROUP CASH FLOW € million 3Q’20 3Q’21 9M’20 9M‘21 Adjusted EBIT1 214 221 280 599 Depreciation & Amortization (excl. PPA amortization) 96 99 297 295 Capital expenditures (25) (61) (106) (213) Rights of use (IFRS 16) (15) (10) (62) (60) Change in working capital / other (173) (62) (902
Slide 28: Key Car Market Trends: Europe
KEY CAR MARKET TRENDS: EUROPE Market trend 3Q’20 4Q’20 FY’20 1Q’21 2Q’21 3Q‘21 9M’21 ∆% YoY 88 O.E. 0 1 Total Car market -10 -23 -7 43 -32 10 14 Replacement 2 0 -6 -11 50 2 6 12 Total (O.E.+Repl.) -7 -5 -14 106 ≤17" 79 ≥18” 5 3 10 O.E. -9 -11 -2 -12 -3 -26 -17 -35 -26 ≥18” & ≤17” 52 42 15 21 24 Repl
Slide 29: Key Car Market Trends: North America
KEY CAR MARKET TRENDS: NORTH AMERICA Market trend 3Q’20 4Q’20 FY’20 1Q’21 2Q’21 3Q‘21 9M’21 ∆% YoY 133 O.E. 0 2 7 Total Car market -20 -4 64 -26 11 21 Replacement 0 -4 -2 -11 72 8 18 Total (O.E.+Repl.) -3 -1 -13 -5 ≤17" 118 146 ≥18” O.E. 6 5 3 15 -6 -2 -25 -16 -11 -2 -34 -18 ≥18” & ≤17” 65 62 Replac
Slide 30: Key Car Market Trends: Asia Pacific
KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend 3Q’20 4Q’20 FY’20 1Q’21 2Q’21 3Q‘21 9M’21 ∆% YoY 36 12 7 O.E. Total Car market -1 0 -12 27 -17 Replacement 6 4 5 -1 -9 31 -9 3 7 6 Total (O.E.+Repl.) -1 -10 -12 ≤17" 53 31 22 ≥18” 9 9 9 18 O.E. 4 -4 -3 -3 -14 -19 -9 ≥18” & ≤17” 62 25 Replacement 6 6 9
Slide 31: Key Market Trends: Russia, Nordics, MEAI / South America
KEY MARKET TRENDS: RUSSIA, NORDICS, MEAI / SOUTH AMERICA Market trend 3Q’20 4Q’20 FY’20 1Q’21 2Q’21 3Q‘21 9M’21 ∆% YoY 119 Russia, Nordics, MEAI O.E. 10 28 5 -3 -15 52 -3 21 19 Replacement -14 -2 -30 -25 67 14 21 Total (O.E.+Repl.) -8 -1 -24 -22 290 O.E. 7 28 1 South America -21 -31 124 -13 25 39 Re
Slide 32: 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 1.651 ; +20% YoY 1.365 ; -17% YoY 1.406 ; +3% YoY 1.317 ; -6% YoY $ / kg Brent Oil (in $ / barrel) Natural Rubber (in $ / kg) yearly avg. ; Δ YoY $ / barrel 2.25 85 2.00 75
Slide 33: Pirelli Manufacturing Footprint
PIRELLI MANUFACTURING FOOTPRINT U.K. Germany Romania Russia ▬ Burton – ▬ Breuberg – ▬ Slatina – Car ▬ Kirov – Car U.S. Semi-finished Car / Moto ▬ Voronezh – ▬ Carlisle – Car Car ▬ Rome – Car Italy China ▬ Bollate – ▬ Yanzhou – Cycling Car / Moto Mexico ▬ Settimo – Car ▬ Jiaozuo – Car ▬ Shenzhou – ▬
Slide 34: 9M 2021 Results
9M 2021 RESULTS Milan, November 11th, 2021