Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2021 Earnings Presentation
30 slides from Pirelli & C's earnings presentation, May 12, 2021
Slide 1: 1Q 2021 Financial Results
1Q 2021 FINANCIAL RESULTS Milan, May 12th, 2021 1Q 2021 RESULTS Milan, May 12th, 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 > Positive 2021 scenario confirmed by 1Q strong rebound • Yearly global GDP projections at +5.3% • Robust tyre demand with ≥18” already above 1Q’19 levels • Healthy pricing environment, key to offset raw materials headwind > First evidence of Industrial Plan Key Programs implementation
Slide 4: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1Q 2021 MARKET AND PIRELLI PERFORMANCE 3 1Q 2021 FINANCIALS IN DETAIL 4 APPENDIX 1Q 2021 RESULTS 3 Milan, May 12th, 2021
Slide 5: Positive 2021 Scenario Confirmed
POSITIVE 2021 SCENARIO CONFIRMED MACRO-ECON TYRE DEMAND PRICING RAW MATERIALS Solid GDP rebound Healthy demand in Positive pricing Inflationary confirmed High Value environment scenario +4.7% GDP ‘21-’22 avg. 1Q ≥18” back to 2019 Healthy inventories at Positive balance between growth (plan +4.6%) le
Slide 6: Strategy Implementation Plan: 1Q 2021 Achievements
STRATEGY IMPLEMENTATION PLAN: 1Q 2021 ACHIEVEMENTS PLAN TARGETS 1Q MAIN ACHIEVEMENTS • Capture H.V. rebound and gaining share • Volume growth +13pp vs. WW market in . ≥18”, even stronger performance in China • Growing exposure towards higher rims • 66% weight of ≥19” (+2pp YoY), Commercial and techn
Slide 7: 2021 Targets Confirmed
2021 TARGETS CONFIRMED @ 31-Mar @ 12-May € billion 2020 A 2021 E 2021 E Net Sales 4.3 ~4.7 ÷ ~4.8 confirmed Adjusted EBIT margin 11.6% >14% ÷ ~15% confirmed CapEx 0.14 ~0.33 (3.3%) confirmed (% on sales) (~7%) Net Cash Flow 0.21 ~0.30 ÷ ~0.34 confirmed bef. Dividends & conv. Bond impact Net Financia
Slide 8: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1Q 2021 MARKET AND PIRELLI PERFORMANCE 3 1Q 2021 FINANCIALS IN DETAIL 4 APPENDIX 1Q 2021 RESULTS 7 Milan, May 12th, 2021
Slide 9: In 1Q 2021 Pirelli Over-Performing Market in All Segments
IN 1Q 2021 PIRELLI OVER-PERFORMING MARKET IN ALL SEGMENTS TOTAL ≥18” ≤17” 2020 2021 2020 2021 2020 2021 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 12% 20% ≥19" 10% 2% 5% +26% TOTAL MARKET -6% -1% -8% vs -12% +9% vs -7% -2% -12% vs -21% 1Q19 1Q19 -22% 1Q19 -35% -35% -35% -18% -43% -4% +2% +22% -14%
Slide 10: Commercial 1Q 2021: Strong Progress Driven by ≥19" and Specialties
COMMERCIAL 1Q 2021: STRONG PROGRESS IN THE QUARTER DRIVEN BY ≥19” AND SPECIALTIES 1Q 2021A Volume variance (Car) Key Programs Highlights Performance vs. market 1Q ’20 A 50% 50% Market H.V. Repl. ~50% of the increase driven by China PULL growth (O.E. driven Replacement) H.V. Repl. ≥18” YoY increase ~
Slide 11: Innovation 1Q 2021: New Push Products Launched (i/ii)
INNOVATION 1Q 2021: 2 NEW PUSH PRODUCTS LAUNCHED (i/ii) 1Q 2021 RESULTS 10 Milan, May 12th, 2021
Slide 12: Innovation 1Q 2021: New Push Products Launched (ii/ii)
INNOVATION 1Q 2021: 2 NEW PUSH PRODUCTS LAUNCHED (ii/ii) 1Q 2021 RESULTS 11 Milan, May 12th, 2021
Slide 13: Competitiveness Program on Track
COMPETITIVENESS PROGRAM ON TRACK Wave 1 - ‘20 Wave 2 - ’21-22 FY’20 focusing on: ’21-’22 FY’21 o/w 1Q’21 Modularity Product Cost Design speed and ~50% in 1H virtualization Footprint optimization mostly in 2Q Manufacturing Industrial IOT and flexible (YoY recovery) factory Logistic network redesign S
Slide 14: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1Q 2021 MARKET AND PIRELLI PERFORMANCE 3 1Q 2021 FINANCIALS IN DETAIL 4 APPENDIX 1Q 2021 RESULTS 13 Milan, May 12th, 2021
Slide 15: 1Q 2021 Net Sales Bridge
1Q 2021 NET SALES BRIDGE € million 25 (65) 1,245 1,052 234 Standard ▬ USD vs. EUR -8% ▬ BRL vs. EUR -26% ▬ RUB vs. EUR -18% 73% High Value 70% 1Q’20 Δ Volumes Δ Price/mix Δ Forex 1Q’21 Organic High Value Standard growth 1Q‘21 +29.3% +22.2% +15.4% +2.3% -6.1% +18.4% +24.5% o/w Car ≥18” O.E. +36.2% Re
Slide 16: 1Q 2021 Adjusted EBIT Bridge
1Q 2021 ADJUSTED EBIT BRIDGE € million ▬ Commodities +13 Net impact +15 Net impact -15 ▬ Exch. rate -24 26 (11) ~-30 on FY 21 16 (25) 10 (11) (11) (4) 96 (58) 169 141 ▬ R&D/Mkt expenses -27 ▬ Mgmt. Incentives (STI/LTI) -11 ▬ Other -20 margin 13.4% 13.6% 1Q’20 Volume Price/ Effic. Inflation Covid Slo
Slide 17: 1Q 2021 Net Income Bridge
1Q 2021 NET INCOME BRIDGE € million (19) 28 5 (8) 42 39 (3) Net Income Δ adj. EBIT Δ non rec. / Δ Net income Δ Financial Δ Taxes Net Income reported restr. costs / loss from income / reported 1Q’20 equity charges 1Q’21 participations % on Sales 3.7% 3.4% 1Q’20 1Q’21 Net Income reported 39 42 PPA amo
Slide 18: 1Q 2021 Cash Flow and Net Financial Position
1Q 2021 CASH FLOW AND NET FINANCIAL POSITION € million 3,912 Operating Cash Flow: -567 (-697 in 1Q’20) 40 9 37 ▬ Non-rec. / restr. -29 ▬ FX / other +20 717 3,258 (267) 27 90 Net Cash Flow: -654 (-754 in 1Q’20) NFP FY’20 EBITDA CapEx Increase in ∆ W.C. Taxes Interests Other NFP 1Q’21 adjusted rights
Slide 19: Total Gross Debt Structure
TOTAL GROSS DEBT STRUCTURE € million Net Financial Position Gross Debt maturity 5,076 (1,164) Liquidity position 1,311 Loan 912 can be 1,240 (756) extended to 2024 1,152 (408) 3,912 Bond 125 2,629 IFRS 16 795 Fin. receivables & other 1,112 644 Other 543 1,445 77 971 597 472 466 474 186 530 66 186 62
Slide 20: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1Q 2021 MARKET AND PIRELLI PERFORMANCE 3 1Q 2021 FINANCIALS IN DETAIL 4 APPENDIX 1Q 2021 RESULTS 19 Milan, May 12th, 2021
Slide 21: 1Q 2021 Results Highlights
1Q 2021 RESULTS HIGHLIGHTS € million 1Q’20 1Q’21 Δ YoY Revenues 1,052 1,245 +18.4% Organic Growth1 +24.5% High Value Revenues (% on total) 69.6% 72.6% +3.0 pp adj. EBITDA2 244 267 +9.1% Margin 23.2% 21.4% -1.8 pp adj. EBIT3 141 169 +19.6% Margin 13.4% 13.6% +0.2 pp PPA amortization (29) (28) Non rec
Slide 22: 1Q 2021 Pirelli Balance Sheet
1Q 2021 PIRELLI BALANCE SHEET € million 31-March-2020 31-Dec-2020 31-March-2021 Fixed assets related to continuing operations (before IFRS 16) 8,724 8,423 8,432 Right of use IFRS 16 451 434 439 Fixed assets related to continuing operations (incl. IFRS 16) 9,175 8,857 8,871 Inventories 1,137 836 875
Slide 23: 1Q 2021 Pirelli Group Cash Flow
1Q 2021 PIRELLI GROUP CASH FLOW € million 1Q’20 1Q ‘21 Adjusted EBIT1 141 169 Depreciation & Amortization (excl. PPA amortization) 103 98 Capital expenditures (57) (90) Rights of use (IFRS 16) (23) (27) Change in working capital / other (861) (717) Operating Cash Flow (697) (567) Financial income /
Slide 24: Key Car Market Trends: Europe
KEY CAR MARKET TRENDS: EUROPE Market trend FY’19 1Q’20 2Q’20 3Q’20 4Q’20 FY‘20 1Q’21 ∆% YoY O.E. -5 -10 -1 -4 -16 -24 Total Car market -63 9 Replacement -1 -3 -5 -13 -13 -34 6 Total (O.E.+Repl.) -2 -5 -4 -14 -16 -41 ≤17" 3 1 3 ≥18” -7 -8 -15 -1 -7 O.E. -15 -17 -23 -25 -62 -65 ≥18” & ≤17” 12 14 21 2
Slide 25: Key Car Market Trends: North America
KEY CAR MARKET TRENDS: NORTH AMERICA Market trend FY’19 1Q’20 2Q’20 3Q’20 4Q’20 FY‘20 1Q’21 ∆% YoY 0 2 O.E. -4 -11 -6 -20 Total Car market -68 11 2 Replacement -4 -2 -9 -11 -32 7 1 Total (O.E.+Repl.) -10 -3 -1 -13 -40 ≤17" 4 8 2 2 ≥18” O.E. -4 -4 -10 -17 -4 -24 -16 -15 ≥18” & ≤17” 14 -68 -68 9 15 1
Slide 26: Key Car Market Trends: Asia Pacific
KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend FY’19 1Q’20 2Q’20 3Q’20 4Q’20 FY‘20 1Q’21 ∆% YoY 31 O.E. -1 0 Total Car market -6 -15 -12 -32 32 3 7 Replacement -2 -13 -16 -43 32 4 Total (O.E.+Repl.) -1 -1 -16 -12 -38 ≤17" 53 25 ≥18” 4 5 14 O.E. -9 -16 -12 -3 -4 -14 -4 -33 -28 ≥18” & ≤17” 64 29 3 1
Slide 27: Key Market Trends: Russia & Nordics / South America
KEY MARKET TRENDS: RUSSIA & NORDICS / SOUTH AMERICA Market trend FY’19 1Q’20 2Q’20 3Q’20 4Q’20 FY‘20 1Q’21 ∆% YoY 0 O.E. -1 -7 -10 Russia & Nordics -11 -18 -44 5 Replacement -5 -7 -7 -19 -19 -39 4 Total (O.E.+Repl.) -4 -7 -8 -18 -19 -40 1 7 O.E. -3 -17 -21 -31 South America -82 10 Replacement1 -3 -8
Slide 28: 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 29: Manufacturing Footprint as of March 31st, 2021
MANUFACTURING FOOTPRINT AS OF MARCH 31ST, 2021 U.K. Germany Romania Russia U.S. ▬ Burton – Car ▬ Breuberg – ▬ Slatina – Car ▬ Kirov – Car ▬ Carlisle – Car Car / Moto ▬ Rome – Car ▬ Voronezh – Car Mexico ▬ Silao – Car Italy ▬ Bollate – China Cycling ▬ Settimo – Car ▬ Yanzhou – Car / Moto ▬ Jiaozuo –
Slide 30: 1Q 2021 Results
1Q 2021 RESULTS Milan, May 12th, 2021