Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2008 Earnings Presentation
42 slides from Pirelli & C's earnings presentation, 2009
Slide 1: Pirelli Group 2008 Financial Results
ItReEcu PIRELLI GROUP 2008 FINANCIAL RESULTS
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute forward-looking statements and does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned and is directed to professionals of the financial community. These statem
Slide 3: Agenda
Agenda Pirelli Group 2008 Financial Review Pirelli Tyre Results Pirelli Real Estate Results Appendix 2
Slide 4: Group: 2008 Key Financial Results
Pirelli Group: 2008 Key Financial Results €/mln FY ‘08 YoY % 4Q ‘08 YoY % 4Q ‘08 Results Drivers Revenues (Organic) 4,660.2 -0.1%(*) 992.2 -8.5% (*) Deterioration of market conditions for EBITDA before Restructuring Costs 396.1 -30.8% 5.2 -96.0% both Tyre & PRE Margin 8.5% -3.5pp 0.5% -10.9pp Manufa
Slide 5: Group: EBIT 2008 vs 2007
Pirelli Group: EBIT 2008 vs 2007 (post restructuring costs and results from equity participations) €/mln 512.6 3 (107.4) (8.0) (4.1) (29.7) Δ organic EBIT: -146.2(*) (114.7)** 27.3 2008 Group (144.2) 2007 Tyre Eco Tech Real Broadband Other Results Restruct. Turkish Group (filter) Estate access Bus/i
Slide 6: Group: analysis of 2008 non recurring items
Pirelli Group: analysis of 2008 non recurring items 2008 2007 Δ YoY Restructuring Costs (144.2) - (144.2) Tyre (100.0) - - PRE (44.2) - - Listed stocks devaluation (263.1) (29.7) (233.4) Telecom Italia (177.1 mln shares at 1.149 €) (173.0) (22.0) RCS (39.1 mln shares at 1.70 €) (65.7) - Avanex (1.9
Slide 7: Group: attributable net income 2008 vs 2007
Pirelli Group: attributable net income 2008 vs 2007 Δ Organic EBIT: (146.2) 164.5 Results from equity participations: (114.7) Δ Non recurring items: (575.0) 224.1 50.4 53.8 (4.4) (347.5) (835.9) 2007 Group ΔEBIT post Δ financial Δ tax charges Δ discontinued Δ minorities 2008 Group restruct. & result
Slide 8: Group: 2008 vs 2007 financial position
Pirelli Group: 2008 vs 2007 financial position €/mln 4Q ‘08 108.3 (81.3) 1,027.7 168.0 (57.1) 835.5 Turkish min: 43.3 CY Optics inv.: 12.7 PRE inv. in Highstreet 59.8 (302.1) PRE share purchase 20.3 Other inv.: 41.0 PRE Facility Mgmt (68.8) 18.8 152.6 66.3 146.7 2007 Operating Financial Income Speed
Slide 9: Group: Net financial position 2008 by business
Pirelli Group: Net financial position 2008 by business €/mln TYRE PRE Other Corporate P&C Business Group Cons Gross Debt 1,610 915 29 531 2,114 to Corporate 432 492 27 Financial receivables (121) (590) (17) (959) (716) Cash and cash equivalents (222) (36) (3) (109) (370) Net Financial Position 1,267
Slide 10: Group: Debt Structure as of Dec. '08
Pirelli Group: Debt Structure as of Dec. ‘08 Net Financial Position Gross Debt Maturity €/mln 913 2,114 1,086 681 Committed Line 1,070 Drawdown 1,028 161 232 69 306 92 170 Other Borrowing 894 734 136 150 Corporate bond 150 434 Gross Fin. Net Fin. Debt Assets * Position 150 2008 2009 2010 2011 2012 6
Slide 11: Agenda
Agenda Pirelli Group 2008 Financial Review Pirelli Tyre Results Pirelli Real Estate Results Appendix 10
Slide 12: 2008 Pirelli Tyre performance adversely impacted by unforeseeable market conditions
2008 Pirelli Tyre performance was adversely impacted by unforeseeable market conditions Million €, Percent Δ Price/Mix +7.3% Δ Price/Mix +14.2% Δ Volume -6.0% Δ Volume -19.2% Profit & Loss 2008 2007 Δ% Δ Rev. (net of +1.3% 4Q ‘08 4Q ‘07 Δ% Δ Rev. (net of -5.0% Exch. rate impact) Exch. rate impact) Δ
Slide 13: Tyre 2008 operating performance
Pirelli Tyre 2008 operating performance Million € 76 74 31 14 Raw materials: -195 Q1 Q2 Q3 Q4 Labour / energy / other: -73 263.2 (72.4) (267.5) 358.1 (4.6) (15.4) (10.7) (100) 250.7 150.7 EBIT Price Volume Cost of inputs Efficiencies Exchange Depreciation / EBIT 2008 restr. costs EBIT 2007 & mix rat
Slide 14: Tyre restructuring program
Pirelli Tyre restructuring program 100 million € have been committed to speed up restructuring in Europe: Headcount reduction in WE (-1,500 people already identified in 2H ‘08) Industrial footprint reshaping in WE factories: the closing down within 2009 of one factory was already announced Funding r
Slide 15: Tyre 2008 NFP evolution
Pirelli Tyre 2008 NFP evolution EBIT: (251) Investments & Depreciation: +95 Δ NWC: +156* Other variations: +8 Financial / fiscal charges: +153 161 1,267 93 452 560 NFP Speed acquisition and Dividends Net Cash Flow NFP 2007 Turkish minorities before dividends 2008 repurchase & others * of which stock
Slide 16: Consumer Business in 2008
Consumer Business in 2008 Car tyre shipments, Percent (yoy) 2008 Market Q4 FY Pirelli Economics Million €, Percent Δ Price/Mix +6.5% Europe OE -5% Δ Volume -5.8% -23% Δ Rev. (net of +0.7% FY Exch. rate impact) Replacement -5% -9% FY '08 FY '07 Δ% Δ Exchange Rate -2.8% Revenues 2,801 2,861 - 2.1 Nort
Slide 17: Tyre positioning in the consumer business
Pirelli Tyre positioning in the consumer business SALES BREAKDOWN BY AREA PIRELLI STRENGTH PRODUCTION BY AREA % of sales volume % of production volume 100% 100% Pirelli segment Segment 100% 100% 10% share (08) North America 29% 39% Prestige High 54% #1 cost 60% Europe 32% Premium Strong, 10% 2 digit
Slide 18: Industrial Business in 2008
Industrial Business in 2008 Truck Tyre shipments, Percent (yoy) Million €, Percent 2008 Market Q4 FY Pirelli Economics Δ Price/Mix +9.1% Δ Volume -6.6% Δ Rev. (net of +2.5% OE -1% FY Exch. rate impact) Europe -13% FY '08 FY '07 Δ% Δ Exchange Rate -2.7% Revenues 1,299 1,300 - 0.1 Replacement EBITDA (
Slide 19: Industrial Business: a unique competitive position
Industrial Business: a unique competitive position SALES BREAKDOWN BY AREA PIRELLI MARKET STRENGTH PRODUCTION BY AREA % of sales % of production volume volume 100% 100% Area Pirelli rank 100% 100% ~13% ~25% Mercosur #1 Mature 40% High cost ~40% Southern EU #2 and Near-East ~87% ~75% Emerging 60% Nor
Slide 20: 4Q 08 Pirelli Tyre Highlights
4Q 08 Pirelli Tyre Highlights: Scorpion ATR: the best choice. 06/10/2008 In the United States the Union of Consumers published the results of 4x4 testing. Pirelli Tyre win on all types of terrain. Pirelli is by far the tyre brand best remembered in Brazil. That is the result 06/11/2008 of the latest
Slide 21: Recent Pirelli Tyre Highlights
Recent Pirelli Tyre Highlights: Pirelli and Metzeler play a leading role at the 6th Annual INTERMOT Motorcycle and Scooter Fair in Cologne and at 66th EICMA, International Bicycle and 26/01/2009 Motorcycle Exhibition in Milan. In Cologne Pirelli introduced Angel ST, designed to fit sport-touring mot
Slide 22: Cinturato: introducing the Green Performance concept
Cinturato: introducing the Green Performance concept THE TECHNOLOGY Distinctive features offered by new bio- materials, such as silica derived by rice husk ash, enhancing LRR performance at lower cost THE SEGMENT Environment-sensitive consumers choosing low-impact products THE PRODUCTS New Cinturato
Slide 23: 2008 Pirelli Tyre
2008 Pirelli Tyre Sales by segment Sales by region Europe Car Latin 45% Moto 9% America 60% 33% Steelcord & others Truck 2% MEA 11% Asia North Pacific 29% America 4% 7% Raw material mix Sales by channel Synt. Rubber 22% Carbon Replacement Natural 76% black Rubber 12% 28% Chemicals 14% Steel 13% Text
Slide 24: 2008 Pirelli Tyre factories
2008 Pirelli Tyre factories Italy U.K. Germany Bollate (Mi) Car Burton-on-trent Car Carlisle Torinese Settimo Car Car Breuberg Car/motorcycle Carlisle Car Settimo Torinese truck Merzig steelcord Figline Valdarno steelcord Spain Turkey Manresa Car Izmit Car/truck Izmit steelcord U.S.A. Romania Rome (
Slide 25: 2008 Pirelli Tyre
2008 Pirelli Tyre People by region People by contract People by cluster Permanent Blue Collar workers Europe North America 91% 81% 41% 1% Latin Staff Asia Temps & America Management 18% Pacific MEA Agency 7% 41% 9% 1% 10% 24
Slide 26: Agenda
Agenda Pirelli Group 2008 Financial Review Pirelli Tyre Results Pirelli Real Estate Results Appendix 25
Slide 27: Consolidated Income Statement
Consolidated Income Statement €/mln 2007 Net of temp. FY ‘08 consolidation FY ‘07 of DGAG Consolidated Revenues (*) 365.1 334.1 428.8 EBIT before restructuring costs and property writedowns/revaluations (17.7) 12.0 33.4 Net income from investments before property writedowns/revaluations (42.0) 71.6
Slide 28: Details on 2008 Operating results
Details on 2008 Operating results €/bln (113.6) 83.6 Income from equity participations (29.7) (21.6) (74.0) (18.0) (59.7) Success SPVs(**) Derivatives FY ‘07 EBIT Fees (*) FY ‘08 Results on SPVs (*) Including promote and disposal of 20% stake of the German AM platform (**) SPVs=special purpose vehic
Slide 29: Total Real Estate Sales, Rents and Acquisitions
Total Real Estate Sales, Rents and Acquisitions 100% and Pro Quota €/bln Pro quota 100% REAL ESTATE SALES REAL ESTATE RENTS REAL ESTATE ACQUISITIONS 4,957.7 +102 % 2,452.5 o/w Highstreet 4.6 €/bln 1,804.9 -52 % 864.9 -27 % +25 % 669.2 -31 % 535.8 908.2 + 4% 908.2 662.4 662.4 526.8 361.8 158.3 164.9
Slide 30: Investment Asset Allocation (Market Value)
Investment Asset Allocation (Market Value) €/bln NPL (book value) By Product 17.3 15.0 15.4 12.6 2.4 1.9 2007 2008 Real Estate by Country 15.4* 12.6* 50% Italy 71% Germany 49% 27% Poland 2% 1% 2007 2008 * Of which participated by PRE: 12 €/bln in 2007 and 15 €/bln in 2008 29
Slide 31: Real Estate Portfolio in Italy
Real Estate Portfolio in Italy (market value) By Cluster 2008 Focus on commercial portfolio(3) €/bln €/bln Core asset: 80% in Rome & Milan 100% (market value) 7.6(1) Core Yielding Total Commercial 67% Core (26%) Yielding (41%) Total portfolio 1.6 2.6 4.2 Rent Yield 5.7% 7.0% 6.5% Development 16% Pre
Slide 32: Real Estate Portfolio in Germany
Real Estate Portfolio in Germany (market value) By Cluster 2008 Focus on commerc. / resid. Portfolio(2) €/bln €/bln 100% (market value) 7.6(1) Commercial Residential Total Commercial 60% Total portfolio 4.6 2.7 7.3 Core (26%) Yielding (34%) Gross Yield 6.3% 6.9% 6.6% Contract duration 12.5 n.m. - Re
Slide 33: Pirelli Real Estate: Net Asset Value as of Dec. 2008
Pirelli Real Estate: Net Asset Value as of Dec. 2008 €/bln Real Estate NAV at 100% Real Estate NAV Pro Quota* AUM RE participated 14.1 15.0** 11.3 3.5 3.8 3.0 10.1 2.6 1.2 0.4 SHL* 0.8*** SHL* 3.7 Book Value Mkt Value Net Debt NAV Book Value Mkt Value Net Debt NAV Despite devaluation in 2008, the re
Slide 34: Quarterly Evolution of Net Debt excluding shareholders' loans
Quarterly Evolution of Net Debt excluding shareholders’ loans €/bln Net Debt Net Debt excluding Shareholders’ loans Highstreet acquisition Disposal 935 Facility Mgmt 862 816 808 810 290 300 324 271 289 2007 A Mar-08 Jun-08 Sep-08 2008 A Net Equity* 720.1 366.4 Gearing 1.13 2.35 * PRE net equity: 715
Slide 35: Evolution of Net Debt excluding shareholders' loans
Evolution of Net Debt excluding shareholders’ loans €/mln 27.9 167.9 85.1 35.8 861.8 816.1 (76.2) (194.8) NFP 2007 Dividends Acquisitions of Net revenues Financial Facility Mmgmt Restructuring NFP 2008 which 109.1 from real expenses and (decons. € 102.4 costs and is Highstreet estate sales income ta
Slide 36: Financial Situation of Funds/SPVs participated by PRE
Financial Situation of Funds/SPVs participated by PRE as of Dec.’08 €/bln 100% 13.0 3.0 3.6 Ero B o M?? 0.6 Real Estate 11.3 0.4 0.2 2.6 3.0 1.7 0.6 0.4 NPL SPVs debt Pro-Quota Shareholders’ PRE Loans Net Bank Debt €/mln 2,577 154 176 MATURITY 778 425 1,469 High Street Real Estate Assets 2009 2010 2
Slide 37: Agenda
Agenda Pirelli Group 2008 Financial Review Pirelli Tyre Results Pirelli Real Estate Results Appendix 36
Slide 38: Pirelli & C. Group – Results as of December 31, 2008
Pirelli & C. Group – Results as of December 31, 2008 Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Pirelli Real Estate Broadband Access Others Business Others Pirelli & C. Cons. €/mln 31.12.08 31.12.07 31.12.08 31.12.07 31.12.08 31.12.07 31.12.08 31.12.07 31.12.08 31.12.07 3
Slide 39: Pirelli & C. Group – 4Q 2008 Results
Pirelli & C. Group – 4Q 2008 Results Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Pirelli Real Estate Broadband Access Others Business Others Pirelli & C. Cons. €/mln Q4 ‘08 Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08 Q4 ‘07 Q4 ‘08 Q4 ‘07 Sales 871.0 969.9 68.6
Slide 40: Pirelli & C. Group – Results at September 30, 2008
Pirelli & C. Group – Results at September 30, 2008 Profit & Loss and Net Financial Position – Per Business Unit Pirelli Tyre Pirelli Real Estate Broadband Access Others Business Others Pirelli & C. Cons. €/mln 30.09.08 30.09.07 30.09.08 30.09.07 30.09.08 30.09.07 30.09.08 30.09.07 30.09.08 30.09.07
Slide 41: Pirelli Eco Technology '08 Key Financial Results
Pirelli Eco Technology ’08 Key Financial Results €/mln 2008 2007 YoY Revenues 62.9* 67.4 -6.7% Ebitda (11.0) (3.0) n.m. Margin n.m n.m Ebit (11.8)** (3.8) n.m. Margin n.m. n.m. Financial/Income charges (1.6) (0.5) Tax charges 0.2 (0.5) Net income (13.2) (4.8) NFP 19.0 9.0 (*) Includes sales of GECAM
Slide 42: Pirelli Broadband Access '08 Key Financial Results
Pirelli Broadband Access ’08 Key Financial Results €/mln 2008 2007 YoY Revenues 124.6 112.5 +10.8% Ebitda 4.8 1.9 +152.6% Margin 3.8% 1.7% +2.1pp Ebit 3.9 0.9 +333.3% Margin 3.1% 0.8% +2.3pp Financial/Income charges (2.6) (3.5) Tax charges 0.7 0 n.m. Net income 2.0 (2.6) n.m. NFP (15.0) 21.5 n.m. 41