Pirelli & C. S.p.a. · MIL:PIRC

Pirelli & C — FY2020 Earnings Presentation

33 slides from Pirelli & C's earnings presentation, Mar 10, 2021

  1. Slide 1: FY 2020 Preliminary Financial Results

    FY 2020 PRELIMINARY FINANCIAL RESULTS Milan, March 10th, 2021 FY 2020 PREL. UNAUDITED RESULTS Milan, March 10th, 2021

  2. 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 wit h 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 “Compan

  3. Slide 3: Key Messages

    KEY MESSAGES > 2020 was a very challenging year, in which we protected the interests of all Stakeholders > High Value tyre market proved once again its resilience in one of the greatest global market crisis > Full Year results are in line with November Guidance. Top Line and Cash Flow matched April

  4. Slide 4: Agenda

    AGENDA 1 2020 DELIVERY AND 2021 OUTLOOK 2 2020 MARKET AND PIRELLI PERFORMANCE 3 2020 FINANCIAL REVIEW 4 APPENDIX FY 2020 PREL. UNAUDITED RESULTS 3 Milan, March 10th, 2021

  5. Slide 5: In 2020 we took great care in protecting all our stakeholders

    IN 2020 WE TOOK GREAT CARE IN PROTECTING ALL OUR STAKEHOLDERS Employees • Average employees in Remote working (staff) ~60% • Plants open >85% of the year, guaranteeing the highest levels of safety standards • ~3,000 employees involved in Up-skilling initiatives • Launched “From welfare to well-being

  6. Slide 6: We strengthened our leadership in sustainability

    WE STRENGHTENED OUR LEADERSHIP IN SUSTAINABILITY 2020 MAIN KPIs 2020 MAIN ACHIEVEMENTS 2019 2020 Confirmed in Global Compact LEAD Companies list Eco & Safety revenues2 55.8% 58.0% YoY +2.2pp Global sustainability Leader in the S&P Dow Jones Sustainability Indices (World & EU) for the Auto Car tyres

  7. Slide 7: In a crisis year, H.V. market proved its resilience

    IN A CRISIS YEAR, WORSE THAN 2008 FINANCIAL MELT DOWN, H.V. MARKET PROVED ITS RESILENCE TOTAL TYRE MARKET TOTAL TYRE MARKET ≥18” TYRE MARKET & Financial crisis ’08-’09 Covid crisis ’19-’20 PIRELLI VOLUMES ‘20 million tyres million tyres 1,282 1,573 OE REPL 1Q 2Q 3Q 4Q FY ≥18” -24% +6% 93 ≤17” -10% f

  8. Slide 8: April guidance delivered in terms of revenues and cash flow

    OVERALL, APRIL GUIDANCE – THE ONLY ONES TO GIVE IT – WAS DELIVERED IN TERMS OF REVENUES AND CASH FLOW € billion 2019 A 2020 E guidance @ 4 April 2020 E @guidance 11-Nov 2020 A D vs. Gui Nov. April Net Sales 5.3 ~4.3 ÷ ~4.4 ~4.18 ÷ ~4.23 4.30 adj. EBIT margin 17.2% ~14% ÷ ~15% ~11.5% ÷ ~12% 11.6% Cap

  9. Slide 9: Turning to 2021, promising market outlook in High Value

    TURNING TO 2021, PROMISING MARKET OUTLOOK IN HIGH VALUE Global Total Car tyre market Global ≥18" Car tyre market million tyres High Double -15% single -10% digit 1,573 digit 261 >’19 levels 1,332 236 O.E. 431 -18% 355 Double digit O.E. 110 -13% Double digit 95 High single Repl. 1,142 -15% 977 digit

  10. Slide 10: Even more active in preparing programs for 2021

    WE HAVE BEEN EVEN MORE ACTIVE IN PREPARING PROGRAMS FOR 2021 2021 PRIORITIES ENHANCE HIGH VALUE LEADERSHIP THANKS TO MATURING ≥19’’ PULL DEMAND MORE BALANCED OE/REPLACEMENT GROWTH RICH PRODUCT PIPELINE IN REPLACEMENT, PARTICULARLY IN PUSH LINES CHINA ACCELERATION WITH STRONG ONLINE SALES IMPLEMENT T

  11. Slide 11: Which underlie the 2021 targets

    WHICH UNDERLY THE 2021 TARGETS Net Sales adj. EBIT Net Cash Flow margin bef. dividends ~ €4.7B ÷ €4.8B >14% ÷ ~15% ~ €300m ÷ €340m (€4.3B in 2020) (11.6% in 2020) (~€208m1 in 2020)  Keep outperforming market on  Price/Mix off-setting Raw Mat.  CapEx back to ~7% on Net Sales Car ≥18”  Net Efficie

  12. Slide 12: Agenda

    AGENDA 1 2020 DELIVERY AND 2021 OUTLOOK 2 2020 MARKET AND PIRELLI PERFORMANCE 3 2020 FINANCIAL REVIEW 4 APPENDIX FY 2020 PREL. UNAUDITED RESULTS 11 Milan, March 10th, 2021

  13. Slide 13: Pirelli over-performing car tyre market in 2H 2020

    PIRELLI OVER-PERFORMING CAR TYRE MARKET IN 2H 2020 TOTAL ≥18” ≤17” 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY 2% 5% MARKET -6% -1% -12% -10% -7% -2% -21% -15% -17% -22% TOTAL -35% -35% -35% -18% -43% -4% +2% -16% -14% -35% +5% +13% -8% -21% -51% -11% -7% -23% 0% 0% 9% MARKET -4% -16% -13% -6% -3%

  14. Slide 14: In Car ≥18” constant share gain in O.E., Replacement back on track in 2H

    IN CAR ≥18” CONSTANT SHARE GAIN IN O.E., IN REPLACEMENT BACK ON TRACK IN 2H AFTER A SLOW START IN 1Q O.E. ≥18” REPL. ≥18” 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY 9% 3% 3% 0% MARKET -13% -9% -7% -16% -47% -26% -9% -43% +4% +19% -6% -18% -29% +6% +7% -9% H.V. O.E over performing market in each Quarter, with cus

  15. Slide 15: Strengthened High Value distribution and protected customer service level

    STRENGHTENED HIGH VALUE DISTRIBUTION AND PROTECTED CUSTOMER SERVICE LEVEL DESPITE SIGNIFICANT STOCK REDUCTION WIDENING HIGH VALUE DISTRIBUTION REACH • 500 new Point of Sales added in 2020 • Increasing weight of strategic channels (Tier1, Car-Dealer, Direct Retail, APAC online) DEVELOPING ONLINE BUSI

  16. Slide 16: Competitiveness program delivered, Covid actions safeguarded profitability

    COMPETITIVENESS PROGRAM DELIVERED, «COVID ACTIONS» SAFEGUARDED PROFITABILITY AGAINST SLOWDOWN € million FY 2020 4Q 2020 COMPETITIVENESS PLAN COVID ACTIONS COMPETITIVENESS PLAN COVID ACTIONS (19-Feb) (Actual) (Actual) Product Cost  Manufacturing  Organization  SG&A  Total Gross Impact ~ 180 ~ 160

  17. Slide 17: Boosting innovation through homologations, product launches and new technologies

    BOOSTING INNOVATION THROUGH HOMOLOGATIONS, PRODUCT LAUNCHES AND ADVANCES IN NEW TECHNOLOGIES INTRODUCTION OF NEW CINTURATO P7 FLAGSHIP PRODUCT • ‘intelligent’ compound that adapts itself to temperature and driving conditions • ~90 homologations already achieved STRENGHTENING KEY HOMOLOGATIONS • ~30%

  18. Slide 18: Agenda

    AGENDA 1 KEY MESSAGES AND 2021 OUTLOOK 2 2020 MARKET AND PIRELLI PERFORMANCE 3 2020 FINANCIAL REVIEW 4 APPENDIX FY 2020 PREL. UNAUDITED RESULTS 17 Milan, March 10th, 2021

  19. Slide 19: FY 2020 Net Sales Bridge

    FY 2020 NET SALES BRIDGE o/w Organic -15.3% +1.2% -5.1% -19.2% -14.1% € million 5,323 -817 4,302 63 -267 High Value Standard -9.0% -21.4% 67% o/w Car ≥18” 70% O.E. -6.3% -7.8% Repl. -8.9% Net Sales Volumes Price/Mix FX Net Sales FY’19 FY’20 High Value Standard 4Q‘20 +10.3% +1.1% -7.3% +0.6% -7.8% -6

  20. Slide 20: FY 2020 Price Mix Trend

    FY 2020 PRICE MX TREND 3.3% 2.3% 1.2% 0.6% -1.3% 1Q’20 A 2Q’20 A 3Q’20 A 4Q’20 A FY’20 A REGION - China impacted + China recovery + Solid demand in China, POSITIVE MIX by Covid demand recovery in EU (3Q) and in N.A. (4Q) CHANNEL - O.E. outperf. market + O.E.: impacted by = Balanced O.E. vs. - O.E. g

  21. Slide 21: FY/4Q 2020 Adjusted EBIT Bridge

    FY/4Q 2020 ADJUSTED EBIT BRIDGE € million 917 Net eff. +110 Net impact +32 (351) 110 (78) (50) FY 160 (147) 20 (20) 501 (60) ▬ D&A -30 ▬ Other -117 FY’19 Volume Price/mix Efficiencies Inflation Covid Cost Slowdown D&A / Other Raw Mat. FX FY’20 Cutting margin 17.2% 11.6% Net eff. +37 Net impact +21 (

  22. Slide 22: FY 2020 Net Income Bridge

    FY 2020 NET INCOME BRIDGE € million 458 (416) 43 (108) 150 6 (47) Net Income Δ adj. EBIT Δ non rec. / Δ Net income Δ Financial Δ Taxes Net Income reported restr. costs / loss from income / reported FY’19 equity charges FY’20 participations % on Sales 8.6% 1.0% FY’19 FY’20 Net Income reported 458 43

  23. Slide 23: FY 2020 Cash Flow and Net Financial Position

    FY 2020 CASH FLOW AND NET FINANCIAL POSITION € million Net C.F. before div. & conv. bond impact: +208 (+344 in FY’19) 3,507 Operating Cash Flow: +591 (+808 in FY’19) 3,258 (41) (893) 384 93 69 140 Net Cash Flow: +249 (+167 in FY’19) NFP adjusted CapEx Increase in ∆ W.C. & other Int. / Tax Convertibl

  24. Slide 24: Total Gross Debt Structure

    TOTAL GROSS DEBT STRUCTURE € million Net Financial Position Gross Debt maturity 5.996 (2,738) Liquidity position 1,770 Loan 1,617 can be extended to 2024 Bond (2.334) 1,306 3.334 1,150 IFRS 16 (403) 3.258 125 937 1,617 795 Other 200 641 1.525 Fin. receivables 75 82 971 & other 466 580 597 472 192 67

  25. Slide 25: Agenda

    AGENDA 1 2020 DELIVERY AND 2021 OUTLOOK 2 2020 MARKET AND PIRELLI PERFORMANCE 3 2020 FINANCIAL REVIEW 4 APPENDIX FY 2020 PREL. UNAUDITED RESULTS 24 Milan, March 10th, 2021

  26. Slide 26: 2020 Results Highlights by Quarter

    2020 RESULTS HIGHLIGHTS BY QUARTER € million 1Q’19 1Q’20 Δ YoY 2Q’19 2Q’20 Δ YoY 3Q’19 3Q’20 Δ YoY 4Q’19 4Q’20 Δ YoY FY’19 FY’20 Δ YoY Revenues 1,314 1,052 -20.0% 1,341 765 -43.0% 1,382 1,277 -7.5% 1,287 1,208 -6.1% 5,323 4,302 -19.2% Organic Growth1 -18.5% -38.3% -1.5% +1.7% -14.1% High Value Reven

  27. Slide 27: Key Car Market Trends: Europe

    KEY CAR MARKET TRENDS: EUROPE Market trend 4Q’19 FY’19 1Q’20 2Q’20 3Q’20 4Q‘20 FY’20 ∆% YoY O.E. -3 -5 -10 -1 -16 -24 Total Car market -63 0 Replacement -1 -3 -5 -13 -13 -34 Total (O.E.+Repl.) -1 -2 -5 -4 -14 -16 -41 ≤17" 5 3 1 ≥18” -6 -7 -8 -15 -1 O.E. -15 -17 -23 -25 of which ≥18” & ≤17” -62 -65 1

  28. Slide 28: Key Car Market Trends: North America

    KEY CAR MARKET TRENDS: NORTH AMERICA Market trend 4Q’19 FY’19 1Q’20 2Q’20 3Q’20 4Q‘20 FY’20 ∆% YoY 0 2 O.E. -10 -4 -11 -20 Total Car market -68 2 Replacement -1 -4 -2 -9 -11 -32 1 Total (O.E.+Repl.) -2 -3 -1 -10 -13 -40 ≤17" 4 8 2 ≥18” O.E. -2 -4 -4 -17 -4 of which ≥18” & ≤17” -10 -16 -24 -16 12 14

  29. Slide 29: Key Car Market Trends: Asia Pacific

    KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend 4Q’19 FY’19 1Q’20 2Q’20 3Q’20 4Q‘20 FY’20 ∆% YoY O.E. -3 -6 -1 0 Total Car market -15 -12 -32 3 7 Replacement 0 -2 -16 -13 -43 4 Total (O.E.+Repl.) -1 -1 -1 -16 -12 -38 ≤17" 10 5 14 ≥18” 4 O.E. of which ≥18” & ≤17” -3 -4 -6 -9 -16 -12 -14 -4 -33 -28 7

  30. Slide 30: Key Car Market Trends: Russia & Nordics / South America

    KEY CAR MARKET TRENDS: RUSSIA & NORDICS / SOUTH AMERICA Market trend 4Q’19 FY’19 1Q’20 2Q’20 3Q’20 4Q‘20 FY’20 ∆% YoY 0 O.E. -9 -11 -7 -10 Russia & Nordics -18 -44 Replacement -8 -5 -7 -7 -19 -19 -39 Total (O.E.+Repl.) -8 -4 -7 -8 -18 -19 -40 1 O.E. -3 -3 -17 -21 -31 South America -82 4 Replacement1

  31. Slide 31: 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

  32. Slide 32: Manufacturing Footprint as of December 31st, 2020

    MANUFACTURING FOOTPRINT AS OF DECEMBER 31ST, 2020 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 – Car China ▬ Settimo – Car ▬ Yanzhou – Car / Moto ▬ Jiaozuo – C

  33. Slide 33: FY 2020 PREL. UNAUDITED RESULTS

    FY 2020 PREL. UNAUDITED RESULTS Milan, March 10th, 2021

Pirelli & C. — FY2020 Earnings Presentation on 6ix