Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2013 Earnings Presentation
38 slides from Pirelli & C's earnings presentation, Mar 27, 2014
Slide 1: Pirelli FY 2013 Results
PIRELLI FY 2013 RESULTS MILANO – MARCH 27, 2014
Slide 2: Agenda
AGENDA KEY MESSAGES FY 2013 RESULTS 2014 OUTLOOK & TARGETS 2013 TYRE OVERVIEW APPENDIX FY13 RESULTS 1
Slide 3: Key Messages
KEY MESSAGES > Sound 2013 and progress along our 2014-2017 plan: 20% ROI and FCF above 200 million euro > Our route to value: focus resources on highest return projects across businesses and regions to maximize ROI > Positive start of 2014 through our grip on pillars of Premium value creation FY13 R
Slide 4: FY 2013 Results
AGENDA KEY MESSAGES FY 2013 RESULTS 2014 OUTLOOK & TARGETS 2013 TYRE OVERVIEW APPENDIX FY13 RESULTS 3
Slide 5: 2013 FY Results vs Guidance
PIRELLI 2013 FY RESULTS VS GUIDANCE Targets Actual Industrial Plan Total Revenues ~6.2 €/Bln 6.15 €/Bln • +8.4% organic growth YoY YoY • Premium in Europe Growth rate >2% +1.2% above expectations • Slower OE volumes in o/w volumes ~+6%/6.5% +5.7% South America; o/w Premium >13% 15.3% • FX deteriorat
Slide 6: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS FY13 FY12* Δ yoy 4Q13 4Q12* Δ yoy 4Q Highlights Revenues 6,146.2 6,071.5 +1.2% 1,496.3 1,497.4 -0.1% • Industry-leading Organic growth** +8.4% +9.0% organic growth performance, rising FX EBITDA before Restr. Costs 1,105.4 1,102.9 +0.2% 292.0 285.0 +2.5% impact (-9.1%) M
Slide 7: FY 2013 Performance by Region
FY 2013 PERFORMANCE BY REGION Tyre Sales Consumer Sales O/W Premium Industrial Sales Tyre Ebit Margin €/Mln 6,115.8 +1.4% yoy 4,478.9 +1.3% yoy 2,210.0 +6.5% yoy 1,636.9 +1.6% yoy 13.4% (-0.2 pp) Europe Double-digit Europe 33% -2% 39% -3% (Improving in Q4 51% +2% yoy and QoQ) 17% +1% Mature Markets
Slide 8: Net Income FY 2013 vs FY 2012
PIRELLI NET INCOME FY 2013 VS FY 2012 Financial charges (18) Prelios fin. income (13) Fx devaluation & others (14) 391.5 (1.5) (26.1) 306.5 (45.3) (12.1) Of which: Prelios (12.8) Prelios “Convertendo” (44.3) Net Income Δ EBIT Δ Results Financial ΔTaxes Net Income FY 12 from particip. Income / Charge
Slide 9: Dividend Proposal
DIVIDEND PROPOSAL Dividend Proposal to be filed with Pirelli & C. AGM (June 12, 2014) DPS (€) N° of Shares* Dividends (€/mln) 2013 2012 Δ % yoy mln 2013 Δ % yoy Ordinary shares 0.320 0.320 - 475 152.1 - Savings shares 0.390 0.390 - 12 4.6 - 156.7 - 43% of Group Net Income adjusted (net of equity par
Slide 10: Debt Structure as of December 31, 2013
PIRELLI DEBT STRUCTURE AS OF DECEMBER 31, 2013 Net Financial Position Gross Debt Maturity €/Mln 2,334.2 (1,011.8) 134 Cash & Cash Committed Equivalent 236 108 Line 44 26 Drawdown 575.0 831 194 42 (928.0) 614 Debt Capital 763.8 1,322.4 Market (83.8) 777 217 Fin. Receivables 575 Other 995.4 Borrowings
Slide 11: FY 2013 Net Financial Position
PIRELLI FY 2013 NET FINANCIAL POSITION €/Mln EBIT before restr. costs 219.6 Depreciation / amortization: 72.4 Investments*: (174.8) NWC & other: 686.1 EBIT before restr. costs 596.9 Depreciation / amortization: 216.5 Investments*: (238.3) NWC & other: (658.3) 214.2 1,970.9 159.8 300.7 16.9 (9.1)
Slide 12: 2014 Outlook & Targets
AGENDA KEY MESSAGES FY 2013 RESULTS 2014 OUTLOOK & TARGETS 2013 TYRE OVERVIEW APPENDIX FY13 RESULTS 11
Slide 13: 2014 Sector Outlook
2014 SECTOR OUTLOOK > Global Car+LT volume growth confirmed at low single digit (~3% yoy). Mature Markets’ outlook better than previously assumed. Solid Replacement market in South America, with improving mix; OE volumes discount lower car production. > Premium growth is confirmed at 3x Non-Premium;
Slide 14: 2014 Pirelli Outlook by Region
2014 PIRELLI OUTLOOK BY REGION Car Tyre Market 2014 Target Tyre Business Highlights Highlights Revenues EBIT% +3% yoy Low single- Positive development of Premium, Europe o/w Premium Mid-teens digit growth efficiency and use of low-cost sources up double-digit Premium growth above market, thanks +3%
Slide 15: FY 2014 Targets Update
FY 2014 TARGETS UPDATE at constant consolidation perimeter* 2014 Targets 2014 Targets November ‘13 Update €/Mln Discounting a more cautious Revenues ~6.6 ~6.2 scenario on Forex Volumes > +5% Confirmed > +14% Stronger Premium growth in o/w Premium ~ +12% Europe Price/mix ~ +3% / ~ +4% ~ +4% / ~ +5% F
Slide 16: 2014 Consumer & Industrial Targets
2014 CONSUMER & INDUSTRIAL TARGETS at constant consolidation perimeter* Consumer Business Industrial Business 2014 Targets 2014 Targets 2014 Targets 2014 Targets November ‘13 update November ‘13 update Revenues ~ 4.9 ~ 4.6 Revenues >1.7 ~ 1.6 Volumes > +6% Confirmed Volumes ~ +4% / ~ +4.5% Confirmed
Slide 17: 2013 Tyre Overview
AGENDA KEY MESSAGES FY 2013 RESULTS 2014 OUTLOOK & TARGETS 2013 TYRE OVERVIEW APPENDIX FY13 RESULTS 16
Slide 18: Key Tyre Results
KEY TYRE RESULTS 1Q‘13 ∆% 2Q‘13 ∆% 3Q‘13 ∆% 4Q‘13 ∆% FY‘13 ∆% Revenues 1,526.7 -1.0% 1,587.3 8.9% 1,511.8 -2.0% 1,490.0 0.1% 6,115.8 1.4% o/w premium 548.1 -2.8% 556.6 6.4% 570.6 8.6% 534.7 15.5% 2,210.0 6.5% EBITDA before Restr. Costs 260.1 -8.3% 282.7 2.0% 284.7 4.3% 302.8 3.4% 1,130.3 0.3% Margin
Slide 19: Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE Depreciation -5.8 Others -6.6 25.8 18.5 31.6 11.6 26.1 222.2 200.5 (37.8) (9.9) (3.4) (3.3) (12.4) (25.1) EBIT Volume Price / Raw Other Input Efficiences Slowdown Other Marketing Depreciation Restr. FX EBIT 4Q ‘12* Mix Materials Costs Industrial Commercial & other
Slide 20: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE 1Q‘13 ∆% 2Q‘13 ∆% 3Q‘13 ∆% 4Q‘13 ∆% FY‘13 ∆% Revenues 1,116.7 -3.0% 1,138.7 5.6% 1,123.2 0.6% 1,100.3 2.6% 4,478.9 1.3% o/w premium 548.1 -2.8% 556.6 6.4% 570.6 8.6% 534.7 15.5% 2,210.0 6.5% % revenues 49.1% +0.2p.p. 48.9% +0.4p.p. 50.8 +3.8p.p. 48.6% +5.4p.p.
Slide 21: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE 1Q‘13 ∆% 2Q‘13 ∆% 3Q‘13 ∆% 4Q‘13 ∆% FY‘13 ∆% Revenues 410.0 4.9% 448.6 18.2% 388.6 -8.7% 389.7 -6.2% 1,636.9 1.6% EBITDA before Restr. Costs 65.3 35.5% 79.2 26.7% 72.8 15.9% 73.4 -10.5% 290.7 13.8% Margin 15.9% +3.6p.p. 17.7% +1.2p.p. 18.7% +4.0p.p. 18.8% -0.
Slide 22: 2014 Raw Material Guidance
2014 RAW MATERIAL GUIDANCE Breakdown FY 2013 Guidance November 2013 Update March 2014 (based on purchase cost) Average Cost of Goods Sold Synthetic Rubber €/Mln 2013A 2014E Δ yoy 2014E Δ yoy 29% Natural Rubber Natural Rubber ~2,700 ~ 2,600 +20 ~ 2,250 +80 24% TSR20 ($/ton) Brent Oil 109 111 (-15) 11
Slide 23: FY 2014 Main Profitability Drivers
FY 2014 MAIN PROFITABILITY DRIVERS Driver Impact and Changes vs Previous Guidance ( yoy) VOLUMES >+5% on sales Confirmed. Stronger Europe offsets softer OE in South America PRICE/MIX +4%/+5% on sales Stronger Consumer mix (Premium volumes >14%) (previously +3%/+4%) Price slightly up in both busines
Slide 24: Appendix
AGENDA FY 2013 RESULTS TYRE BUSINESS FY 2013 OVERVIEW 2014 OUTLOOK & TARGETS APPENDIX FY13 RESULTS 23
Slide 25: Group – FY Results
PIRELLI GROUP – FY 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. FY’13 FY’12 FY’13 FY’12 FY’13 FY’12 SALES 6,115.8 6,031.3 30.4 40.2 6,146.2 6,071.5 EBITDA before Restr. Costs 1,130.3 1,126.5 (24.9) (23.6) 1,105.4 1,102.9 % on sales 18.5%
Slide 26: Group – Q4 Results
PIRELLI GROUP – Q4 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. Q4’13 Q4’12 Q4’13 Q4’12 Q4’13 Q4’12 SALES 1,490.0 1,488.4 6.3 9.0 1,496.3 1,497.4 EBITDA before Restr. Costs 302.8 292.8 (10.8) (7.8) 292.0 285.0 % on sales 20.3% 19.7% 19.5%
Slide 27: Group – Q3 Results
PIRELLI GROUP – Q3 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. Q3’13 Q3’12 Q3’13 Q3’12 Q3’13 Q3’12 SALES 1,511.8 1,542.6 7.0 9.7 1,518.8 1,552.3 EBITDA before Restr. Costs 284.7 272.9 (4.8) (5.3) 279.9 267.6 % on sales 18.8% 17.7% 18.4%
Slide 28: Group – Q2 Results
PIRELLI GROUP – Q2 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. Q2’13 Q2’12 Q2’13 Q2’12 Q2’13 Q2’12 SALES 1,587.3 1,457.7 7.5 7.6 1,594.8 1,465.3 EBITDA before Restr. Costs 282.7 277.2 (4.5) (6.0) 278.2 271.2 % on sales 17.8% 19.0% 17.4%
Slide 29: Group – Q1 Results
PIRELLI GROUP – Q1 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. Q1’13 Q1’12 Q1’13 Q1’12 Q1’13 Q1’12 SALES 1,526.7 1,542.6 9.6 13.9 1,536.3 1,556.5 EBITDA before Restr. Costs 260.1 283.6 (4.8) (4.5) 255.3 279.1 % on sales 17.0% 18.4% 16.6%
Slide 30: Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 1Q’13 2Q’13 3Q’13 4Q’13 FY’13 EBIT before restructuring costs 183.0 205.1 208.8 219.6 816.5 Depreciation / Amortization 72.3 73.1 71.1 72.4 288.9 Net investments (79.7) (84.3) (74.3) (174.8) (413.1) Working capital / other variations (492.4) (5.6) (160.3) 686.1 27.8 OPE
Slide 31: Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’12 FY’13 FIXED ASSETS 3,877.2 4,043.0 Inventories 1,102.6 987.3 Trade receivables 704.6 666.4 Trade payables (1,268.7) (1,244.5) NET OPERATING WORKING CAPITAL 538.5 409.2 Other payables/receivables 11.0 3.0 Net Working Capital 549.5 412.2 NET INVESTED CAPITAL 4,426.7 4
Slide 32: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS 4Q’12 1Q’13 2Q’13 3Q’13 4Q’13 FY’13 % yoy 3 5 6 2 OE -9 Europe* -11 5 7 3 2 REPLACEMENT -13 -11 10 6 5 5 5 1 America OE North 0 3 REPLACEMENT -3 -7 -3 -1 22 14 8 4 6 Mercosur OE -10 17 11 5 6 4 9 REPLACEMENT** 24 16 17 China 14 14 5 OE * Turkey included Russia ex
Slide 33: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS 4Q’12 1Q’13 2Q’13 3Q’13 4Q’13 FY’13 % yoy 24 2 7 6 OE Europe * -10 -6 12 9 6 7 1 REPLACEMENT -1 44 51 33 34 11 OE Mercosur -31 12 16 8 10 3 6 REPLACEMENT** 40 China 24 18 17 OE -7 -6 * Turkey includes and Russia excluded ** Non-pool members’ imports not include
Slide 34: FY 2013 Pirelli Tyre Mix
FY 2013 PIRELLI TYRE MIX Sales by Business Sales by Segment Consumer Car 73% 67% Motorbike 6% Industrial Truck Steelcord & other 27% 25% 2% Sales by Channel Sales by Region Replacement South America NAFTA 75% 36% 11% Asia Pacific 8% MEA 8% Russia OE Europe 4% 25% 33% FY13 RESULTS 33
Slide 35: December 2013 Pirelli People
DECEMBER 2013 PIRELLI PEOPLE Headcount People by Region NAFTA South America 37,979 3% 37,338 38% Asia Pacific 9% MEAI 9% Russia Europe Dec. 2012 Dec. 2013 9% 32% People by Contract People by Cluster Management Temps & Agency 1% 7% Employees Workers 93% Staff 80% 19% FY13 RESULTS 34
Slide 36: 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 Figline Valdarno Steelcord MEXICO ROMANIA Guanajuato Car Slatina Car / Steelcord VENEZUELA CHINA Guacara Car Yanzhou Car / Moto / T
Slide 37: 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 3,156 111.0 108.9 98.5 111.7 2,517 2,531 80.2 75.2 1,801 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q
Slide 38: 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