Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — H1 2011 Earnings Presentation
35 slides from Pirelli & C's earnings presentation, Jul 27, 2011
Slide 1: Pirelli 1H 2011 Results
PIRELLI 1H 2011 RESULTS
Slide 2: 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
Slide 3: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE 2011 TARGETS UPDATE APPENDIX 2
Slide 4: Key Messages
KEY MESSAGES TYRE INDUSTRY Demand remains supportive Price discipline in all Regions Input costs show mixed trends with likely predictable headwinds in 2011 Reaches another profitability peak through an in-progress value strategy Well on track with its project to rebalance profitability by
Slide 5: Rebalancing Profitability Among Regions
REBALANCING PROFITABILITY AMONG REGIONS Sales by region Ebit % by Region Actions YoY 1H 011 growth 1H 2010 1H 2011 Focus on premium and Europe 42% +23% Mid single digit Double digit efficiency Factories back (Egypt) at full capacity MEA 9% +5% Mid double digit Small reduction in view of 2H marke
Slide 6: Russia: Ready to Go
RUSSIA: READY TO GO JV1: Pirelli & Russian Technologies 25.01% Russian Technologies MOSCOW KIROV 50% 24.99% Fleming Family & Partners JV1(NL) 100% Management Co + OTHER ASSETS 100% 100% Other assets Kirov being assessed 7 Mln tyres (today) 4 Mln tyres by ’14 Rationale Rapidly Expanding Competition &
Slide 7: Russian JV1: Early Facts & Figures
RUSSIAN JV1: EARLY FACTS & FIGURES Russian market ml pcs Vehicle car park ml pcs Tyre market segmentation 36 37 38 39 40 41 31 35 39 44 49 54 19% 29% 20% 23% 25% 42% 44% 31% 47% 49% 52% 54% 26% 27% 28% 32% 2% 35% 3% 4% 5% 35% 6% 7% 55% 53% 49% 46% 42% 55% 53% 49% 43% 39% 37% 33% 010A 011E 012E 013E
Slide 8: Keeping on Creating Brand Value: F1
KEEPING ON CREATING BRAND VALUE: F1 Results & Returns after the first 9 GPs Pirelli on television AUSTRALIA 04h 16mm 20ss Unrivalled global brand exposure MALAYSIA 02h 11mm 30ss = ~200 €/mln advertising & media CHINA 04h 37mm 30ss value equivalent* TURKEY 01h 41mm 30ss BARCELONA 01h 40mm 30ss Prem
Slide 9: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE 2011 TARGETS UPDATE APPENDIX 8
Slide 10: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 1H11 1H10* D YoY 2Q11 2Q10* D YoY 2Q results key drivers €/mln Revenues 2,789.3 2,369.0 +17.7% 1,388.4 1,234.0 +12.5% Value strategy in progress: Organic growth** +18.4% +16.2% price momentum and successful premium product EBITDA before Restr. Costs 410.9 305.2 +34.6%
Slide 11: Net Income 1H11 vs 1H10
PIRELLI NET INCOME 1H11 VS 1H10 4.9 98.2 (4.1) 158.8 (17.2) 77.0 Net Income Adjusted DEBIT D Results D Financial D Taxes Net Income (income before discontinued from particip. income/charges 1H11 operations) 1H10 10
Slide 12: 1H11 Net Financial Position
PIRELLI 1H11 NET FINANCIAL POSITION €/mln EBIT before restr. costs 146.5 EBIT before restr. costs 151.3 Dep/Am: 56.9 Dep/Am: 56.2 Investments*: (96.9) Investments*: (137.2) D NWC & others: (313.5) D NWC & others: 18.1 778.9 82.8 62.7 2.8 712.8 207.0 69.5 5.7 (15.3) (3.5) (88.4) Disposal of Cyoptics
Slide 13: Debt Structure as of June 30, 2011
PIRELLI DEBT STRUCTURE AS OF JUNE 30, 2011 Net Financial Position Gross Debt Maturity €/mln 1,400.5 90 621.6 130 Committed Line Drawdown Bond 500 500 202.8 778.9 117 112.8 New 5 year bond 85.9 Other Borrowings 810.5 145.8 219 15.6% 10.4% 6.1% 8.4% 14.5% 45.0% Gross Fin. Net Fin. Debt Assets* positio
Slide 14: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE 2011 TARGETS UPDATE APPENDIX 13
Slide 15: Tyre Key Results
PIRELLI TYRE KEY RESULTS €/mln 1Q11 YoY% 2Q11 YoY% 1H11 YoY% Revenues 1,384.5 +24.7% 1,376.4 +13.3% 2,760.9 +18.7% Double-digit top line growth driven by Pirelli’s strategic EBITDA (before 209.5 +43.1% 218.4 +23.0% 427.9 +32.1% priorities: Consumer Premium restruct. costs) margin 15.1% +1.9p.p. 15.
Slide 16: Tyre 1H11 Operating Performance
PIRELLI TYRE 1H11 OPERATING PERFORMANCE €/mln 8.8 154.3 22.1 3.3 164.6 (145.5) (5.5) 127.1 2Q 2011 Raw materials: (129.7) Labour / energy / other: (15.8) EBIT 2Q10 Price Volume Cost of Efficiencies Depreciation/ Exchange EBIT 2Q11 (before mix inputs other costs rate (before restr.costs) restr.co
Slide 17: Tyre 1H11 Net Financial Position
PIRELLI TYRE 1H11 NET FINANCIAL POSITION €/mln 121.7 1.8 7.1 1,359.0 5.7 176.6 63.6 85.4 (18.8) 1,109.9 (89. 1) 963.9 EBIT before restr. costs 155.6 EBIT before restr. costs 164.6 (500.0) Dep/Am: 53.9 Dep/Am: 53.8 Investments*: (94.5) Investments*: (133.8) D NWC & others: (291.6) D NWC & others: 4.5
Slide 18: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 2Q10 3Q10 4Q10 1Q11 2Q11 Europe +11% +5% +12% +3% OE* -2% +11% +6% +7% +8% +1% Replacement** +74% North America +26% +16% +6% +2% OE +8% +0% +1% +7% Replacement -5% +12% +11% +8% +7% +6% Mercosur OE +14% +10% +4% Replacement*** -2% -1% (*)Turkey and Russia
Slide 19: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE 1Q11 YoY% 2Q11 YoY% 1H11 YoY% €/mln Further increase on Premium: Revenues 983.3 +25.9% 958.9 +14.7% 1,942.2 +20.1% +30% yoy revenues growth in EBITDA (before 160.6 +51.5% 169.7 +38.6% 330.3 +44.6% 2Q with mkt share increase in restruct. costs) Europe margin 16
Slide 20: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 2Q10 3Q10 4Q10 1Q11 2Q11 +90% +84% +77% +67% +42% Europe* OE +19% +15% +16% +11% +9% Replacement +61% +49% +22% +4% Mercosur +1% OE +19% +23% +22% +12% +2% Replacement** (*)Turkey included and Russia excluded (**)Non-pool members’imports not included Sour
Slide 21: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE 1Q11 YoY% 2Q11 YoY% 1H11 YoY% €/mln Revenues 401.2 +21.9% 417.5 +10.0% 818.7 +15.5% Revenues growth sustained EBITDA (before 48.9 +21.0% 48.7 -11.6% 97.6 +2.2% by a firm price discipline restruct. costs) margin 12.2% -0.1p.p. +11.7% -2.8p.p. 11.9% -1.6 p.p.
Slide 22: Focus on Brazil
FOCUS ON BRAZIL Economic scenario* Tyre Market Outlook Real GDP (bn real) (mln/pieces) Export Import Growth at a more sustainable rate 58 52 7.5% 5.5% 42 41 19 4.4% 11 10 13 2010 2011 2012 Mega events will maintain momentum in the 2009 2010 2009 2010 2009 2010 Domestic Domestic medium term: Market
Slide 23: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE 2011 TARGETS UPDATE APPENDIX 22
Slide 24: 2011 Targets Update
PIRELLI 2011 TARGETS UPDATE €/bln 2011 Targets 2011 Targets (May 4, 2011) Update Revenues >5.85 Confirmed Tyre >5.80 Confirmed Volumes >+6% > +5% Price/mix ~+15% > +16% EBIT % 8.5% ÷ 9.5% 9.5% ÷ 10% Tyre 9% ÷ 10% 10% ÷ 11% Raw Material Headwind 580 540 Tax rate <37% Confirmed Capex >0.5 Confirmed NF
Slide 25: Raw Materials Impact
RAW MATERIALS IMPACT €/mln 580 540 30 Average Cost of Old New Goods Sold (70) Guidance Guidance Natural Rubber 4,900 4,600 TSR 20 ($/ton) Oil ($/barrell) 110 112 Brent 2011 Old Guidance Natural Synthetic 2011 New Guidance (March 8, 2011) Rubber Rubber (July 27, 2011) & Others 24
Slide 26: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE 2011 TARGETS UPDATE APPENDIX 25
Slide 27: Group – 1H11 Results
PIRELLI GROUP – 1H11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Pirelli & C. Cons. Other 1H11 1H10 1H11 1H10 1H11 1H10 Sales 2,760.9 2,325.3 28.4 43.7 2,789.3 2,369.0 ∆% 18.7% 17.7% EBITDA before Restruct Costs 427.9 323.9 (17.0) (18.7) 410.9 305.2 % on sale
Slide 28: Group – 2Q11 Results
PIRELLI GROUP – 2Q11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Pirelli & C. Cons. Other 2Q11 2Q10 2Q11 2Q10 2Q11 2Q10 Sales 1,376.4 1,215.3 12.0 18.7 1,388.4 1,234.0 ∆% 13.3% 12.5% EBITDA before Restruct Costs 218.4 177.5 (10.9) (14.2) 207.5 163.3 % on sale
Slide 29: Balance Sheet
PIRELLI BALANCE SHEET €/mln 1H11 FY10 Fixed Assets 3,203.0 3,164.1 Net Working Capital 402.8 116.7 Net Invested Capital 3,605.4 3,280.8 % Net Invested Capital Total Net Equity 2,047.2 2,028.0 1H11 FY10 Provisions 779.3 797.2 778.9 455.6 Pirelli Tyre 86.3% 84.7% Net Financial Position Other 13.7% 15.
Slide 30: Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 1Q11 2Q11 1H11 1Q10 2Q10 EBIT before restructuring costs 146.5 151.3 297.8 90.2 109.6 Depreciation 56.9 56.2 113.1 51.7 53.7 Net investments (96.9) (137.2) (234.1) (50.2) (85.2) Working capital/other variations (313.5) 18.1 (295.4) (143.2) 42.2 OPERATING CASH FLOW (207.
Slide 31: Group: 1H11 Net Financial Position by Business
PIRELLI GROUP: 1H11 NET FINANCIAL POSITION BY BUSINESS €/mln Tyre Other businesses Corporate Pirelli Group Jun. 11 Dec. 10 Jun. 11 Dec. 10 Jun. 11 Dec. 10 Jun. 11 Dec. 10 Gross Debt 1,391.3 1,613.6 91.9 83.3 708.4 123.0 1,400.5 1,147.0 to Corporate 696.1 589.6 83.2 83.3 Financial receivables (114.7)
Slide 32: 1H11 Pirelli Tyre Mix
1H11 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 61% 70% Motorbike 9% Steelcord Truck & others Industrial 30% 28% 2% SALES BY CHANNEL SALES BY REGION Nafta Replacement Latin 10% Asia Pacific 74% America 6% 33% MEA 9% OE Europe 26% 42% 31
Slide 33: 1H 2011 Pirelli People
1H 2011 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION 31,643 Nafta 29,573 1% Europe 37% Latin America 42% Asia Pacific MEA Dec 2010 June 2011 9% 12% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 89% 81% Employees 18% Temps & Agency 11% Management 1%
Slide 34: Tyre: Manufacturing Plants in 11 Countries
PIRELLI TYRE: 19 MANUFACTURING PLANTS IN 11 COUNTRIES (AS OF JUNE 2011) Italy Germany U.K. Bollate (MI) Car Breuberg Car/Moto Settimo Torinese Car/Truck Merzig Steelcord Burton Car Figline Valdamo Steelcord Carlisle Car Turkey Izmit Car/Truck Steelcord U.S.A Rome Car Romania Slatina Car/Steelcord Ve
Slide 35: Raw Materials
RAW MATERIALS RAW MATERIALS PRICE TREND 5,251 4.671 Brent Oil (in usd/bbl) 4,254 Natural Rubber (in usd/tons) 123 117 3,380 99 118 96 2,973 2,513 3,148 105 3,096 3,022 2,943 2,531 2,653 69 87 80 80 57 60 76 77 77 63 45 1,837 1,801 1,553 1,523 1,330 Natural Rubber: Sicom Brent: www.oilnergy.com In It