Slide 1: 9M 2012 Results
19M 2012 RESULTS =]- 2, 2012
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 TYRE BUSINESS APPENDIX 2
Slide 4: Key Messages
KEY MESSAGES 9M ‘12 results Value strategy and efficiency gains deliver strong profitability Outlook to year end Unfavorable demand trend in Europe counterbalanced by Emerging Markets and Premium. Pricing discipline confirmed across markets. Internal levers and supportive raw material costs secure p
Slide 5: Market Outlook Update
MARKET OUTLOOK UPDATE MARKET HIGHLIGHTS PIRELLI 2H’12 CAR VOLUME OUTLOOK Old (July ’12) New Double-digit reduction Double-digit reduction Premium: single-digit growth Premium: stable North West: Market downturn North West: >+10% North West: mid single-digit growth Europe spreading to this side
Slide 6: Change vs November 2011 Industrial Plan
CHANGE VS NOVEMBER 2011 INDUSTRIAL PLAN: Out of low-end Tyres and full-fledged into Premium ∆ 2012 Revenues ∆ 2012 Ebit vs Ind.Plan (Nov 2011) vs Ind. Plan (Nov 2011) CONSUMER INDUSTRIAL CONSUMER INDUSTRIAL Car -4.5 mln pcs STD and -0.4 mln Premium -510* -145 Moto/Scooter -2.6 mln pcs STD and -0.4 m
Slide 7: 2012 Enhanced Efficiency Plan
2012 ENHANCED EFFICIENCY PLAN ~155 €/Mln ~150 €/Mln 71% Achieved 9M 2012 120 €/Mln -4 81% 17% Vs Indus.Plan 20% Achieved (Nov. 2011) Use of alternative Raw Materials 9M 2012 Raw 25% Weight reduction 74% +5 Materials Achieved 10% Vs Indus.Plan Waste improvement 9M 2012 (Nov. 2011) 12% Labour
Slide 8: Pirelli 2012 Targets Update
PIRELLI 2012 TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (July 26, 2012) (November 12, 2012) Δ % YoY Δ % YoY Total Revenues 5.65 ~ 6.4 +13% ~ 6.15 +9% Russia JV - ~ 0.25 ~ 0.2 Däckia - ~ 50€/mln confirmed Foreign Exchange -1% Organic Revenues ~ 6.1 +8% ~ 5.9 ~4.5% Volumes +1.4% -3% /
Slide 9: 2012 Consumer Targets Update
2012 CONSUMER TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (July 26, 2012) (November 12, 2012) Δ % YoY Δ % YoY Revenues 3.9 ~ 4.65 +18% ~ 4.48 +14% Russia JV - ~0.25 ~ 0.2 Däckia - ~ 50€/mln confirmed Organic ~ 4.35 +11% ~ 4.23 ~7.5% Revenues Volumes +3% -2.5% / -3.5% -4.5% / -5.0% o/
Slide 10: 2012 Industrial Targets Update
2012 INDUSTRIAL TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (July 26, 2012) (November 12, 2012) Δ % YoY Δ % YoY Revenues 1.68 ~ 1.7 +0% / +1% ~ 1.63 -2.5% Volumes -1.7% -5% / -6% -6.5% / -7.0% o/w Radial -3% -4% / -4.5% o/w Conventional -20% -21% Price/mix +17.8% +5% / +6% ~6.0% EBIT
Slide 11: Russia: Healthy Premium market confirmed
RUSSIA Healthy Premium market confirmed New Car Car Tyre Repl. Car Tyre Repl. Registrations Market (Volume) Market (Value) mln pcs mln pcs €/mln 37.2 +4% yoy 1,950 +14% yoy 35.6 1,714 2.9 +9% yoy 2.65 26% 42% A Brand 25% A Brand 41% Imported Brands 34% 37% 29% 32% B Brand 26% B Brand 29% Foreign Loc
Slide 12: Russia: Pirelli on the right track
RUSSIA Pirelli on the right track Industrial side Kirov Voronezh 9M Achievements Commercial side 9M Achievements 40% of 3Y Pirelli Retail network: Capex 2012-’14 100€/mln 100€/mln investment plan On track in place ~800 POS by 2012 (85% achieved) (>40% of total Russian POS) New mixing rooms Complet
Slide 13: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 12
Slide 14: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 9M12 9M11 D YoY 3Q12 3Q11 D YoY 3Q Highlights €/mln Revenues 4,574.1 4,265.8 +7.2% 1,552.3 1,476.5 +5.1% Premium segment is the engine of Organic growth* +7.9% +6.3% growth (revenues +19%, volumes +12.5%) EBITDA before Restr. Costs 809.9 631.1 +28.3% 264.2 220.2 +20.0
Slide 15: 9M 2012 Performance by Region
9M 2012 PERFORMANCE BY REGION Tyre Sales Ebit % Highlights YoY YoY Reaping the benefits of a well balanced Total growth Premium growth 9M’12 geographical exposure. APAC and North & South America contributed the most to Ebit growth €/mln 4,542.9 +7.5% 1,612.3 +24% 13.5% (+2pp yoy) South Europe: f
Slide 16: Pirelli Net Income 9M12 vs 9M11
PIRELLI NET INCOME 9M12 VS 9M11 €/mln 141.6 (29.4) (24.2) 308.3 Of which RCS 22.6 €/mln (31.0) 251.3 Net Income DEBIT D Results D Financial D Taxes Net Income 9M 11 from particip. income/ 9M 12 charges 15
Slide 17: Pirelli 9M12 Net Financial Position
PIRELLI 9M12 NET FINANCIAL POSITION €/mln EBIT before restr. costs 195.8 Dep/Am: 68.4 Investments*: (132.5) DNWC/Other: (199.0) Focus on NWC dynamics 16.4 1,868.8 81.8 3.6 -3 D Operating Working Capital: 199 67.3 Inventories: -47 Initial benefits from production cuts 1,702.7 In line with business Re
Slide 18: Pirelli Debt Structure as of September 30, 2012
PIRELLI DEBT STRUCTURE AS OF SEPTEMBER 30, 2012 Net Financial Position Gross Debt Maturity €/mln 2,662.6 793.6 81.2 617.7 117.7 Committed Line Drawdown 870 1,868.8 500 1047.6 Bond 500 870 177.6 Other 100.6 1,292.6 Borrowings 495.3 319.8 12.0% 18.6% 3.8% 39.3% 23.2% 3.1% Gross Fin. Net Fin. Debt Asse
Slide 19: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 18
Slide 20: Key Tyre Results
KEY TYRE RESULTS €/mln 1Q’12 YoY% 2Q’12 YoY% 3Q’12 YoY% 9M’12 YoY% Revenues 1,542.6 +11.4% 1,457.7 +5.9% 1,542.6 5.3% 4,542.9 7.5% 3Q highlights: o/w Premium 584.4 +29.2 % 502.5 +22.3% 525.4 18.9% 1,612.3 23.5% Top line growth supported by EBITDA (before 280.3 +33.8% 275.9 +26.3% 269.5 18.0% 825.7
Slide 21: Pirelli Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE €/mln 82.6 (37.7) 48.1 171.9 198.7 (14.3) (1.5) 3Q 2012 (27.3) (22.8) (0.3) Raw materials: +2.4 Labour / energy / other: (29.7) EBIT 3Q11 Price mix Volume Cost of inputs Efficiencies Slowdown Restructuring Depreciation/ Exchange EBIT 3Q12 Costs other costs rate €
Slide 22: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 3Q11 4Q11 1Q12 2Q12 3Q12 9M12 Europe +3% +1% OE* +6% -6% -8% -9% -8% Replacement** -4% -12% -13% -11% -12% +27% +20% +16% +16% America +14% North +8% OE Replacement -2% -4% -7% -5% -8% -1% +3% +3% Mercosur OE -8% -7% -9% -4% +4% +4% +4% 0% 0% Replacement***
Slide 23: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’12 YoY% 2Q’12 YoY% 2Q’12 YoY% 3Q’12 YoY% 9M’12 YoY% Revenues 1.151.8 +17.1% 1,078.3 +12.5% 1,116.8 +9.0% 3,346.9 +12.8% o/w Premium +29.2% +22.3% +18.9% +23.5% EBITDA (before restruct. costs) 232.1 +44.5% 213.4 +25.8% 206.7 +20.0% 652.2 +29.8% margin 2
Slide 24: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 3Q11 4Q11 1Q12 2Q12 3Q12 9M12 +24% Europe* OE +2% -6% -7% -8% -7% Replacement -9% -10% -18% -26% -22% -30% +21% +16% OE Mercosur -27% -28% -28% Replacement** -30% -6% -7% -13% -7% +0% -7% OE China -15% -24% -24% -23% -27% (as of August 2012) Replacement +
Slide 25: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’12 YoY% 2Q’12 YoY% 2Q’12 YoY% 3Q’12 YoY% 9M’12 YoY% Revenues 390.8 -2.6% 379.4 -9.1% 425.8 -3.3% 1,196.0 -5.0% EBITDA (before restruct. costs) 48.2 -1.4% 62.5 +28.3% 62.8 +11.7% 173.5 +12.8% margin 12.3% +0.1p.p. 16.5% +4.8p.p. 14.7% +1.9p.p. 14.5% +
Slide 26: A Walk Through 4Q 2012
A WALK THROUGH 4Q 2012 9M’12 A 4Q’12 E FY’12 E EBIT 593 €/mln ~ 210 ~ 800 €/MLN Volumes - 6.8% flat yoy (-3.9% in 4Q’11) -5%/-5.5% strong Premium in Emerging Markets and Nafta; improvement in LatAm; Winter expected down ~15% yoy Price Mix +11.8% >8.5% >11% firm pricing policy confirmed; mix
Slide 27: 2012 Cash Flow Update vs Industrial Plan
2012 CASH FLOW UPDATE VS INDUSTRIAL PLAN €/Bln INDUSTRAL PLAN Capex: 0.45 Excl. Russia ~ 0.25 <1 NOV. 2011 ~0.7 ~0.05 ~ 0.75 0.4 <0.75 (>0.4) 2011 RUSSIA 2011E NFP OPERATING FINANCIAL 2012E NFP RUSSIA 2012E NFP BEFORE CASH FLOW & FISCAL BEFORE (asset acquisition BEFORE RUSSIA CHARGES DIVIDENDS and c
Slide 28: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 27
Slide 29: Pirelli Group 9M12 Results
PIRELLI GROUP 9M12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. €/mln 9M12 9M11 9M12 9M11 9M12 9M11 Sales 4,542.9 4,225.7 31.2 40.1 4,574.1 4,265.8 EBITDA before Restruct. Costs 825.7 656.3 (15.8) (25.2) 809.9 631.1 % on sales 18.2% 15.5% 17
Slide 30: Pirelli Group 3Q12 Results
PIRELLI GROUP 3Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. €/mln 3Q12 3Q11 3Q12 3Q11 3Q12 3Q11 Sales 1,542.6 1,464.8 9.7 11.7 1,552.3 1,476.5 EBITDA before Restruct. Costs 269.5 228.4 (5.3) (8.2) 264.2 220.2 % on sales 17.5% 15.6% 17.0%
Slide 31: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/mln 9M 12 1H 12 FY 11 Fixed Assets 3,814.2 3,813.4 3,577.5 Inventories 1,153.7 1,200.4 1,036.7 Commercial receivables 1,115.5 964.3 745.2 Commercial payables (1,054.9) (1,149.0) (1,382.8) Net Operating Working Capital 1,214.3 1,015.7 399.1 % Net Invested Capital Other receiva
Slide 32: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 3Q12 9M12 3Q11 9M11 EBIT before restructuring costs 195.8 611.0 163.3 461.1 Depreciation 68.4 198.9 56.9 170.0 Net investments (132.5) (327.4) (162.1) (396.2) Working capital/other variations (199.0) (950.6) (100.6) (396.0) OPERATING CASH FLOW (67.3) (468.1) (42.5) (161
Slide 33: Raw Materials
RAW MATERIALS Guidance Guidance Update Industrial Plan Nov. 2011 July 2012 November 2012 BREAKDOWN FY 2011 Average Cost of (based on purchasing cost) Goods Sold 2011 2012 Headwind 2012 Headwind 2012 Headwind €/mln (2012 vs 2011) (2012 vs 2011) (2012 vs 2011) Synthetic Rubber 27% Natural Rubber 4,600
Slide 34: 9M12 Pirelli Tyre Mix
9M12 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 67% 74% Motorbike 7% Steelcord & others Truck Industrial 26% 2% 24% SALES BY CHANNEL SALES BY REGION Nafta Replacement South 12% Asia Pacific 75% America 7% MEA 34% 8% Russia 4% OE Europe 25% 35% 33
Slide 35: September 2012 Pirelli People
SEPTEMBER 2012 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION Russia Nafta 37,269 Europe 10% 2% 34,259 33% South America 37% Asia Pacific MEA Dec. 2011 Sep. 2012 9% 9% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 93% 80% Staff 19% Temps & Agency Management 7% 1% 34
Slide 36: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD MEXICO Italy Germany Russia U.K. Bollate (MI) Car Breuberg Car/Moto Settimo Torinese Car/Truck Merzig Steelcord Kirov Car Burton Car Figline Valdamo Steelcord Voronezh Car Carlisle Car Turkey U.S.A Car/Truck Izmit Rome Car Steelcord Mexico Romania Guanajuato Car Slatina C
Slide 37: Raw Materials
RAW MATERIALS RAW MATERIAL PRICE TREND 5,251 4.671 4.565 Brent Oil (in usd/bbl) 4.254 Natural Rubber (in usd/tons) 3.587 3.687 123 3.301 117 3.380 96 2.513 3.14 118 118 99 3.09 3.02 112 110 2.943 2.97 8 87 105 109 109 2.653 6 2 3 80 2.531 1.837 77 80 57 1.330 1.523 69 76 63 77 2.750 1.553 60 1.801 4