Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2019 Earnings Presentation
29 slides from Pirelli & C's earnings presentation, May 14, 2019
Slide 1: 1Q 2019 Results - Pirelli, Global High Value
1Q 2019 RESULTS PIRELLI, GLOBAL HIGH VALUE 14 May 2019
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: Agenda
AGENDA 1Q 2019 RESULTS HIGHLIGHTS AND FY 2019 GUIDANCE REVIEW OF 1Q 2019 RESULTS AND OPERATIONAL TARGETS APPENDIX 1Q 2019 RESULTS PIRELLI, GLOBAL HIGH VALUE 2 14 May 2019
Slide 4: Key Messages
KEY MESSAGES > In a challenging environment, our High Value Model confirms its resilience, even in a FY2019 market which we see with more caution with respect to the beginning of the year > In the competitive Tier 1 arena, focusing on price/mix discipline and efficiencies, we were the only player to
Slide 5: 1Q 2019 Results Highlights
1Q 2019 RESULTS HIGHLIGHTS € million NET SALES EBIT ADJUSTED.1 ∆ YoY organic +0.4% +0.3% 218 219 1,310 1,314 +1.2% Standard -6.0% High Value 63.6% +7.3% 68.1% +5.3% 1Q 2018 1Q 2019 1Q 2018 1Q 2019 Margin 16.7% 16.7% NET INCOME before discontinued operations NET FINANCIAL POSITION IFRS 162 impact +10
Slide 6: FY 2019 Outlook Update (May '19)
FY 2019 OUTLOOK UPDATE (MAY ’19) 2019 TARGETS 2019 OPERATIONAL DRIVERS 2018A 2019E 2019E 2019E 2019E (guid. Feb 2019) (guid. May 2019) (guid. Feb 2019) (guid. May 2019) Net Sales €5,195 mln +4% ÷ +6% +3% ÷ +4% Volumes 0% ÷ +1.0% ~ -1.0% High Value weight ~ 64% ~ 67% confirmed ▬ High Value volumes ~
Slide 7: Agenda
AGENDA 1Q 2019 RESULTS HIGHLIGHTS AND FY 2019 GUIDANCE REVIEW OF 1Q 2019 RESULTS AND OPERATIONAL TARGETS APPENDIX 1Q 2019 RESULTS PIRELLI, GLOBAL HIGH VALUE 6 14 May 2019
Slide 8: Net Sales Bridge
1Q 2019 NET SALES BRIDGE € million Group Volumes 1,310 37 1,314 -12 -123 101 -86 Net Sales H.V. Volumes Std. Volumes Price/Mix FX Net Sales 1Q’18 1Q’19 High Value Standard o/w Organic Car ≥18’’ +4.5% -0.9% 1Q ‘19 O.E. +0.4% -6.5% -16.6% +7.7% +0.3% +1.2% Repl. +12.1% +6.7% +7.2% 4Q ‘18 O.E. -1.2% -7
Slide 9: Operating Performance
1Q 2019 OPERATING PERFORMANCE € million Internal levers ∑ +45 External levers ∑ -44 (1) 4 16 (27) 218 (15) 219 ▬ Costs cutting +13 (2) 63 ▬ D&A / other2 -9 (38) EBIT adj. Volume Price/mix Efficiencies Start-up D&A / other2 Raw Mat. Other FX EBIT adj. 1Q’18 costs1 input costs 1Q’19 Margin 16.7% 16.7%
Slide 10: Performance by High Value Regions
1Q 2019 PERFORMANCE BY HIGH VALUE REGIONS € million SALES Δ org. adj. EBIT 1Q’18 1Q’19 YoY % growth margin1 613 599 -2.3% -1.6% -10.8% Mid-teens HIGH VALUE REGIONS EMEA SALES +2.0% (decreasing YoY) 2.5% 47% 46% 1,057 1,083 Standard2 243 270 +10.8% +2.8% NORTH Twenties -13.5% AMERICA High +6.4% (impr
Slide 11: Performance by Standard Regions
1Q 2019 PERFORMANCE BY STANDARD REGIONS € million SALES Δ org. adj. EBIT 1Q’18 1Q’19 YoY % growth margin1 STANDARD REGIONS -0.8% +5.0% 64 64 Double-digit SALES RUSSIA -5.3% & NORDICS +37.4% (improving YoY) -8.9% 5% 5% 254 231 Standard2 189 -11.7% +3.3% 167 High High-single Value SOUTH digit +33.2% -
Slide 12: Standard Capacity Rationalization in Brazil
STANDARD CAPACITY RATIONALIZATION IN BRAZIL: -3 MILLION PCS IN BOTH CAR AND MOTO BY 2021 Campinas becoming a production hub for Car & Moto: + High Value, + Efficiencies, + Competitiveness Pirelli total Moto capacity in Brazil million pcs Pirelli total Car capacity in Brazil million pcs (Gravatai in
Slide 13: 2019 ≥18" Market Outlook
2019 ≥18” MARKET OUTLOOK O.E. + REPL. ≥18” CAR TYRE MARKET 2019E million tyres ~+8 p.p. vs. ≤17” (2019E at ~-1%) ~+7% from +8% prev. ~256 Replacement 240 ▬ Maintains double digit growth, backed by recent years’ high rim additions to car parc ~+10% ▬ Homogenous growth in All High Value Regions, accou
Slide 14: FY 2019 Outlook Update (May '19)
FY 2019 OUTLOOK UPDATE (MAY ’19) 2019 TARGETS 2019 OPERATIONAL DRIVERS 2018A 2019E 2019E 2019E 2019E (guid. Feb 2019) (guid. May 2019) (guid. Feb 2019) (guid. May 2019) Net Sales €5,195 mln +4% ÷ +6% +3% ÷ +4% Volumes 0% ÷ +1.0% ~ -1.0% High Value weight ~ 64% ~ 67% confirmed ▬ High Value volumes ~
Slide 15: Net Income Bridge
1Q 2019 NET INCOME BRIDGE € million 101 101 2 0 7 92 (1) 1 o/w -7 of IFRS 16 impact Net Income Δ EBIT Δ Net income / Δ Financial Δ Taxes Net Income Disc. oper. Net Income bef. disc. loss from equity income / charges bef. disc. reported oper. participations oper. 1Q’19 1Q’18 1Q’19 % on Sales 7.1% 7.7
Slide 16: Cash Flow and Net Financial Position
1Q 2019 CASH FLOW AND NET FINANCIAL POSITION € million Net C.F. bef. extr. oper. & equity trans.: -700 (-862 in 1Q’18) 4,387 (16) Op. C.F.: -602 (-726 in 1Q’18) 490 3,913 48 20 17 16 30 3,180 836 ▬ Non-rec. / restr. 16 ▬ FX / other 4 (316) 81 929 in 1Q 2018 Net Cash Flow: -733 (-720 in 1Q 2018) NFP
Slide 17: Current Capital Structure (March 2019)
CURRENT CAPITAL STRUCTURE (MARCH 2019) € million NET FINANCIAL POSITION GROSS DEBT MATURITY 1,806 Cash & Cash equivalents 5,610 (1,223) 1,012 1,013 (972) 851 4,387 779 Loan (251) 3,030 200 499 Bond Fin. receivables 77 1,735 & other 969 596 IFRS 16 1,270 200 574 91 474 149 Other 835 20 222 82 162 Gro
Slide 18: Agenda
AGENDA 1Q 2019 RESULTS HIGHLIGHTS AND FY 2019 GUIDANCE REVIEW OF 1Q 2019 RESULTS AND OPERATIONAL TARGETS APPENDIX 1Q 2019 RESULTS PIRELLI, GLOBAL HIGH VALUE 17 14 May 2019
Slide 19: Results Highlights
1Q 2019 RESULTS HIGHLIGHTS € million 1Q’18 1Q’19 Δ YoY Revenues 1,310 1,314 +0.3% Organic Growth1 +1.2% High Value Revenues 834 895 +7.3% Organic Growth1 +5.3% % on total Revenues 63.6% 68.1% +4.5 pp EBITDA adjusted w/o start-up costs2 298 3274 +9.7% Margin 22.7% 24.9% +2.2 pp EBITDA adjusted3 288 3
Slide 20: Balance Sheet
1Q 2019 BALANCE SHEET € million 31-Mar-2018 31-Dec-2018 31-Mar-2019 Fixed assets related to continuing operations 8,958 9,018 9,070 Rights of use (IFRS 16) n.a. n.a. 472 Inventories 940 1,129 1,166 Trade receivables 876 628 858 Trade payables (1,062) (1,605) (1,143) Operating net working capital rel
Slide 21: Cash Flow
1Q 2019 CASH FLOW € million 1Q ‘18 1Q ‘19 EBIT adjusted1 218 219 Depreciation & Amortization (excl. PPA amortization) 70 97 Capital expenditures (85) (81) Change in working capital / other (929) (836) Operating Cash Flow (726) (602) Financial income / (expenses) (55) (48) Taxes paid (31) (30) Cash-o
Slide 22: 2019E Raw Material Guidance
2019E RAW MATERIAL GUIDANCE € million 13% Natural Rubber 10% Steel Reinf. 17% Textiles Breakdown FY 2018 A 27% Synthetic Rubber Raw Materials based on 35% on Sales purch. costs 23% Chemicals 10% Carbon Black COMMODITIES - AVERAGE QUOTATION COMMODITIES: AVERAGE COST OF GOODS SOLD 2019E 2018 A 2019 E
Slide 23: 2019E Forex Guidance
2019E FOREX GUIDANCE € million 13% other 6% GBP 37% EUR 3% RUB breakdown FY 2018 A 11% BRL based on currency 12% CNY 18% USD ∆ YoY MAIN AVERAGE EXCHANGE RATES 2018 A 2019 E ∆ YoY 2019 E May-19 guidance vs. EUR Feb-19 guidance EUR / USD / 1.145 1.15 +0.4% +0.4% 1.145 USD / CNY / 6.863 6.9 +0.5% +1.0%
Slide 24: Key Car Market Trends: EMEA
KEY CAR MARKET TRENDS: EMEA Market trend FY’17 1Q’18 2Q’18 3Q’18 4Q’18 FY'18 1Q’19 ∆% YoY 2 5 1 O.E. Total Car market -3 -7 -11 -10 2 4 3 2 Replacement 1 -2 -5 2 4 Total (O.E.+Repl.) 1 -1 0 -4 -3 ≥18” 8 9 11 1 3 4 New Premium & Standard ≤17" O.E. -1 -2 -2 -4 -5 -9 -12 -13 16 15 17 10 12 11 Replaceme
Slide 25: Key Car Market Trends: North America
KEY CAR MARKET TRENDS: NORTH AMERICA Market trend FY’17 1Q’18 2Q’18 3Q’18 4Q’18 FY'18 1Q’19 ∆% YoY O.E. 1 2 Total Car market -3 -2 -1 -3 -4 5 7 Replacement 4 4 4 0 -2 5 6 2 3 2 Total (O.E.+Repl.) -1 -3 ≥18” 9 New Premium & Standard ≤17" O.E. 3 5 5 5 1 -1 -1 -7 -8 -8 16 -4 15 13 -5 -6 11 9 13 11 2 5
Slide 26: Key Car Market Trends: Asia Pacific
KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend FY’17 1Q’18 2Q’18 3Q’18 4Q’18 FY'18 1Q’19 ∆% YoY O.E. 3 6 Total Car market -1 -3 -2 -8 -8 Replacement 5 2 2 0 1 1 2 Total (O.E.+Repl.) 4 1 4 0 -1 -3 -2 ≥18” 21 16 16 New Premium & Standard ≤17" 5 7 11 12 O.E. 0 -3 -5 -4 -3 -11 -9 18 11 11 12 9 11 11 R
Slide 27: Key Market Trends: Russia & Nordics / South America
KEY MARKET TRENDS: RUSSIA & NORDICS / SOUTH AMERICA Market trend FY’17 1Q’18 2Q’18 3Q’18 4Q’18 FY'18 1Q’19 ∆% YoY 22 22 23 18 14 11 7 O.E. Russia & Nordics 11 13 12 10 9 Replacement 2 -3 13 14 12 12 10 Total (O.E.+Repl.) 3 -2 17 14 12 5 7 O.E. South America -3 -5 11 Replacement1 3 -4 -10 -7 -8 -14 1
Slide 28: Raw Material Costs Trend and Mix
RAW MATERIAL COSTS TREND AND MIX MAIN RAW MATERIALS PRICE TREND 45.0 ; -16% YoY 54.8 ; +22% YoY 71.5 ; +31% YoY 1.378 ; +1% YoY 1.651 ; +20% YoY 1.365 ; -17% YoY $ / kg Brent Oil (in $ / barrel) $ / barrel 2.50 85 2.25 Natural Rubber (in $ / kg) 75 2.00 yearly avg. ; Δ YoY 65 1.75 55 1.50 45 1.25 35
Slide 29: Manufacturing Footprint as of March 31st 2019
MANUFACTURING FOOTPRINT AS OF MARCH 31ST 2019 U.K. Germany Romania Russia ▬ Burton – Car ▬ Breuberg – ▬ Slatina – Car ▬ Kirov – Car U.S. ▬ Carlisle – Car Car / Moto ▬ Voronezh – Low-cost countries Car ▬ Rome – Car Mexico ▬ Silao – Car Italy ▬ Bollate – Car China ▬ Settimo – Car ▬ Yanzhou – Car / Mot