Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2015 Earnings Presentation
33 slides from Pirelli & C's earnings presentation, May 13, 2015
Slide 1: Pirelli 1Q 2015 Results
PIRELLI 1Q 2015 RESULTS MILANO – MAY 13, 2015
Slide 2: Agenda
AGENDA KEY MESSAGES 1Q 2015 RESULTS 2015 OUTLOOK & TARGETS 1Q 2015 TYRE OVERVIEW APPENDIX 1Q 2015 RESULTS 1
Slide 3: Key Messages
KEY MESSAGES > A solid 1Q 2015 with Premium outperformance despite market trends - Slow start of the year in European and North American markets - Truck and Non-Premium tyre markets show no signs of recovery in South America and Russia > Best price/mix in the industry : +3.7% in 1Q 2015 vs. negative
Slide 4: Agenda
AGENDA KEY MESSAGES 1Q 2015 RESULTS 2015 OUTLOOK & TARGETS 1Q 15 TYRE OVERVIEW APPENDIX 1Q 2015 RESULTS 3
Slide 5: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 1Q ‘14 1Q 15 Δ YOY Revenues 1,473.2 1,568.4 +6.5% • Premium outperformance (+10% Pirelli volume vs. +6% of the Premium market) delivers sound revenue Organic Growth* +2.4% growth and price/mix improvement • Non-premium and Industrial business impacted by the EBITDA befo
Slide 6: 1Q 2015 Performance by Region
1Q 2015 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin €/Mln Δ YoY Organic Δ YoY Organic Δ YoY Organic growth* growth* growth* Total 1,565.3 +6.5% +2.4% 1,237.4 +9.6% +5.1% 327.9 -3.8% -6.8% 13.6% (-0.3 pp) Europe 35% 35% +2.2% +0.9% 41% +3.1% Europe Low-teens (sta
Slide 7: Premium Performance by Region
PREMIUM PERFORMANCE BY REGION €/Mln Δ YOY Organic growth* Total 639.9 726.9 +14% +6% • 1Q performance reflects a strong comparison base (+16.2% Premium revenues organic growth in 1Q ‘14); • Market positioning confirmed with a more selective approach to distribution channels; Europe 54% 49% +2% • Pri
Slide 8: Pirelli Net Income 1Q 2015 vs 1Q 2014
PIRELLI NET INCOME 1Q 2015 VS 1Q 2014 One-off impact of FX losses related to the Turkish Steelcord 11.3 activities sold in Feb. ‘15 9.1 101.4 91.5 90.4 (8.8) (0.6) 84.6 (1.1) (16.8) +12% yoy Net Disc. Net Income Δ EBIT Δ Results Δ Financial Δ Taxes Net Income Disc. Net Income Operations before Disc.
Slide 9: Pirelli Debt Structure as of March 31, 2015
PIRELLI DEBT STRUCTURE AS OF MARCH 31, 2015 Net Financial Position Gross Debt Maturity €/Mln 2,676 943 415.2 Committed Line 317 0.9 97.6 Drawdown Cash & Cash 655.4 807 Equivalent 17.5 316.7 136 1,733 637.9 Debt Capital 1,394 41.0 174.2 Market Fin. 831.4 44.9 Receivables 129.3 614.0 Other 558.5 217.4
Slide 10: Pirelli 1Q 2015 Net Financial Position
PIRELLI 1Q 2015 NET FINANCIAL POSITION €/Mln EBIT before restr. costs 213.4 Depreciation / amortization: 78.5 Investments*: (85.6) NWC & other: (895.2) 106.2 6.4 1,732.9 688.9 (23.8) (24.4) Main ∆ NWC dynamics • Higher receivables in line with 979.6 top line trend • Temporary inventories increase
Slide 11: Agenda
AGENDA KEY MESSAGES 1Q 2015 RESULTS 2015 OUTLOOK & TARGETS 1Q 2015 TYRE OVERVIEW APPENDIX 1Q 2015 RESULTS 10
Slide 12: 2015 Regional Targets
2015 REGIONAL TARGETS Tyre Market ( yoy) 2015 Pirelli Tyre Business Target What has changed vs. the previous guidance Revenues EBIT Margin** Car ≥+4% = Mid-teen organic Twenties • Faster growth in Super Premium APac growth (>20% in €) increasing YOY o/w Premium > +10% = Truck* > +1% = Car ~ -2% (lo
Slide 13: FY 2015 Guidance
FY 2015 GUIDANCE 2015 targets 2015 targets February 2015 May 2015 Revenues ~ 6.4 € bln confirmed 2015 FX Guidance (yearly avg) • Volumes ≥ +3% ~+2% Old New - o/w Premium ≥+10% confirmed EUR/USD 1.22 1.10 • Price/mix ≥ +4% ~+4% EUR/RUB 65.0 confirmed USD/BRL 2.65 3.0 • Foreign Exchange ~ -1% ~+1% USD
Slide 14: 2015 Consumer & Industrial Guidance
2015 CONSUMER & INDUSTRIAL GUIDANCE Consumer Business Industrial Business 2015 targets 2015 Targets 2015 targets 2015 Targets February 2015 May 2015 February 2015 May 2015 Revenues ~ 4.9 € bln ~ 5.0 € bln Revenues ~1.5 € bln ~1.4 € bln • Volumes ~+3% >+2% • Volumes +4.5%/5% ~+1% - o/w Premium ≥+10%
Slide 15: Agenda
AGENDA KEY MESSAGES 1Q 2015 RESULTS 2015 OUTLOOK & TARGETS 1Q 2015 TYRE OVERVIEW APPENDIX 1Q 2015 RESULTS 14
Slide 16: Key Tyre Results
KEY TYRE RESULTS €/Mln 1Q‘14 ∆% 1Q‘15 ∆% Revenues 1,469.5 -2.4% 1,565.3 +6.5% o/w Premium 639.9 +12.9% 726.9 +13.6% EBITDA before restr. costs 280.3 +8.7% 293.5 +4.7% Margin 19.1% +2.0 p.p. 18.8% -0.3 p.p. EBIT before restr. costs 210.3 +12.2% 215.3 +2.4% Margin 14.3% +1.8 p.p. 13.8% -0.5 p.p. EBIT
Slide 17: Pirelli Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE €/Mln 21.1 9.4 31.0 (7.6) 16.4 (18.5) 3.3 213.3 204.9 (12.1) (34.6) Depreciation (8) SteelCord sourcing (7) Latam lower plant saturation (3.5) EBIT Price/ Efficien- Volume Depre- Marketing Raw FX Other Restr. EBIT 1Q ‘ 14 Mix cies ciation expenses & Materials Input
Slide 18: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘14 ∆% 1Q‘15 ∆% Revenues 1,128.7 +1.1% 1,237.4 +9.6% o/w Premium 639.9 +12.9% 726.9 +13.6% % revenues 56.7% +5.9 p.p. 58.7% +2.0 p.p. EBITDA before restr. costs 219.4 +12.6% 246.3 +12.3% Margin 19.4% +2.0 p.p. 19.9% +0.5 p.p. EBIT before restr. costs 16
Slide 19: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘14 ∆% 1Q‘15 ∆% Revenues 340.8 -12.2% 327.9 -3.8% EBITDA before restr. costs 60.9 -3.3% 47.2 -22.5% Margin 17.9% +1.7 p.p. 14.4% -3.5 p.p. EBIT before restr. costs 47.6 -3.8% 33.3 -30.0% Margin 14.0% +1.3 p.p. 10.2% -3.8 p.p. EBIT 46.1 -4.6% 32.9 -28.
Slide 20: 2015 Profitability Guidance
2015 PROFITABILITY GUIDANCE Driver 2015 targets 2015 targets February 2015 May 2015 Impact Impact Volumes ≥3% of sales +2% of sales Price/Mix ≥+4% of sales ~+4% of sales Forex -1% of sales +1% of sales Δ YoY on EBIT Δ YoY on EBIT Efficiencies ~+90 €/mln confirmed Raw Materials +6 €/mln +30 €/mln Oth
Slide 21: 2015 Raw Material Guidance
2015 RAW MATERIAL GUIDANCE Raw material breakdown 1Q 2015 Textile Natural Rubber 2015 Old Guidance 2015 New Guidance 13% 18% Average cost of Steel goods sold 13% (€/Mln) 2014A 2015E Δ YOY 2015E Δ YOY Synthetic Rubber Natural Rubber ~1.950 ~1.700 +55 ~1.550 +105 26% TSR20 ($/ton) Chemicals 20% Brent
Slide 22: Agenda
AGENDA KEY MESSAGES 1Q 2015 RESULTS 2015 OUTLOOK & TARGETS 1Q 2015 TYRE OVERVIEW APPENDIX 1Q 2015 RESULTS 21
Slide 23: Pirelli Group – 1Q 2015 Results
PIRELLI GROUP – 1Q 2015 RESULTS Profit & Loss Statement and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. 1Q’14 1Q’15 1Q’14 1Q’15 1Q’14 1Q’15 SALES 1,469.5 1,565.3 3.7 3.1 1,473.2 1,568.4 EBITDA before Restr. Costs 280.3 293.5 (3.0) (1.6) 277.3 291.9 % of sales 19.1%
Slide 24: Pirelli Group – 2014 Quarterly Results
PIRELLI GROUP – 2014 QUARTERLY RESULTS Q1’14 Q2’14 Q3’14 Q4’14 FY’14 Tyre Group Tyre Group Tyre Group Tyre Group Tyre Group SALES 1,469.5 1,473.2 1,511.3 1,513.7 1,539.2 1,541.8 1,487.5 1,489.4 6,007.5 6,018.1 EBITDA before Restr. Costs 280.3 277.3 308.7 305.5 287.2 284.9 300.7 300.3 1,176.9 1,168.0
Slide 25: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 1Q’14 2Q’14 3Q’14 4Q’14 FY ‘14 1Q’15 EBIT before restructuring costs 206.7 232.2 208.9 221.4 869.2 213.4 Depreciation / Amortization 70.6 73.3 76.0 78.9 298.8 78.5 Net investments (65.3) (78.3) (101.1) (133.4) (378.1) (85.6) Working capital / other variations (686.6) 77
Slide 26: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’14 1Q’15 FIXED ASSETS 3,874.0 4,055.3 Inventories 1,055.0 1,142.5 Trade receivables 673.8 1,063.7 Trade payables (1,394.4) (1,072.4) NET OPERATING WORKING CAPITAL 334.4 1,133.8 Other payables/receivables 33.9 111.5 Net Working Capital 368.3 1,245.3 Net Invested Capital
Slide 27: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 1Q’14 2Q’14 3Q’14 4Q’14 FY'14 1Q’15 % YOY 9 3 2 2 4 3 OE Europe* 9 6 1 2 2 REPLACEMENT -8 5 8 5 5 4 2 OE NAFTA 7 5 4 3 5 REPLACEMENT** -6 South America OE -11 -9 -15 -19 -17 -25 4 3 4 7 5 2 REPLACEMENT*** China 10 12 9 9 10 6 OE * Turkey included, Ru
Slide 28: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 1Q’14 2Q’14 3Q’14 4Q’14 FY'14 1Q’15 % YOY 7 4 OE Europe * -4 -5 -12 -4 14 2 2 REPLACEMENT -3 -1 -1 South America OE -1 -28 -29 -23 -33 -39 3 REPLACEMENT** -4 -3 -3 -8 -10 China 13 OE -7 -11 -5 -16 -29 * Turkey included and Russia excluded ** Non-po
Slide 29: 1Q 2015 Pirelli Tyre Mix
1Q 2015 PIRELLI TYRE MIX Sales by Business Sales by Segment Consumer Car 79% 71% Agro 2% Truck Motorbike Industrial 8% 21% 19% Sales by Channel Sales by Region Replacement South America NAFTA 77% 31% 13% Asia Pacific 10% MEAI 8% Russia OE Europe 3% 23% 35% 1Q 2015 RESULTS 28
Slide 30: March 2015 Pirelli People
MARCH 2015 PIRELLI PEOPLE Headcount People by Region NAFTA South America 4% 37.527 38% Asia Pacific 36.319 * 10% MEAI 9% Russia Europe 9% Mar '14 Mar '15 30% * Without Steelcord headcount People by Contract People by Cluster Management Temps & Agency 1% 7% Employees Workers 93% Staff 80% 19% 1Q 2015
Slide 31: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD U.S.A. U.K. ITALIA GERMANY RUSSIA Rome Car Burton Car Bollate Car Breuberg Car/Moto Kirov Car Carlisle Car Settimo Torinese Car Voronezh Car MEXICO ROMANIA Guanajuato Car Slatina Car VENEZUELA CHINA Guacara Car Yanzhou Car / Moto / Truck BRAZIL ARGENTINA EGYPT TURKEY INDO
Slide 32: Raw Materials
RAW MATERIALS Raw Material Price Trend Brent Oil (in USD/bbl) Natural Rubber: Sicom Natural Rubber (in USD/tons) Brent: www.oilnergy.com Yearly Average 4,519 3,380 3,156 108.9 111.0 99.5 111.7 2,517 80.2 62.7 1,711 1,801 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Slide 33: Disclaimer
DISCLAIMER This presentation contains statements that constitute forward-looking statements based on Pirelli & C SpA’s current expectations and projections about future events and does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies