Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2015 Earnings Presentation
33 slides from Pirelli & C's earnings presentation, Mar 15, 2016
Slide 1: 2015 Financial Results
2015 Financial Results March 15, 2016
Slide 2: Key Messages
KEY MESSAGES 1 2015 Operating results in line with guidance, with progress in Consumer business more than compensating for weakness in Industrial business end-markets 2 Partnership with ChemChina: integration plan in progress, aiming to improve coverage of strategic markets and creating the world’s
Slide 3: Pirelli Financial Communication Going Forward
PIRELLI FINANCIAL COMMUNICATION GOING FOWARD Both classes of Pirelli shares (Ordinary and Savings) now delisted Special Meeting of Savings Shareholders of February 15th 2016 approved mandatory conversion of savings shares into a special class of delisted shares (last day of trading of saving share
Slide 4: ChemChina-Pirelli Long-Term Partnership and Industrial Business Integration
CHEMCHINA-PIRELLI LONG-TERM PARTNERSHIP AND INDUSTRIAL BUSINESS INTEGRATION > Objective: strengthening Pirelli’s development plans Consumer business: strengthening of Premium strategy, reinforcing coverage of strategic geographical areas such as China Industrial business: creating the 4th global tyr
Slide 5: Agenda
AGENDA 1 2015 RESULTS 2 PIRELLI RE-FINANCING 3 PIRELLI TYRE OVERVIEW 4 APPENDIX FY 2015 RESULTS 4
Slide 6: FY 2015 Operating Results in Line with Guidance
FY 2015 OPERATING RESULTS IN LINE WITH GUIDANCE 2015 targets November 2015 2015 Results Revenues > 6,25 €/bln 6.31 €/bln • Volumes -0.5% ÷ -1% -1.6% Worsening trends in Emerging Markets (LatAm) - o/w Premium ≥ 10% +12.7% • Price/mix ≥+5.5% +7.1% Record price/mix improvement due to • Foreign Exchange
Slide 7: 2015 Consumer & Industrial Results in Line vs Guidance
2015 CONSUMER & INDUSTRIAL RESULTS IN LINE VS GUIDANCE Consumer Business Industrial Business 2015 Targets 2015 Targets November 2015 2015 Results November 2015 2015 Results Revenues > 5.0 € bln 5.05 € bln Revenues ~1.25 € bln 1.25 € bln • Volumes ~+1% +0.3% • Volumes ~ -6% -7.9% - o/w Premium ≥+10%
Slide 8: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS €/Mln FY 14 FY 15 Δ yoy 4Q 14 4Q 15 Δ yoy FY/4Q Highlights Revenues 6,018.1 6,309.6 +4.8% 1,489.4 1,597.7 +7.3% • Faster organic growth in Q4, fuelled Organic Growth1 +5.4% +11.9% by Premium and Price/Mix EBITDA before non recurring items and • Full Year top line perfor
Slide 9: FY 2015 Performance by Region
FY 2015 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin** €/Mln Organic Organic Organic Δ YoY Δ YoY Δ YoY growth* growth* growth* Total 6,300.8 +4.9% +5.5% 5,048.2 +9.5% +7.9% 1,252.6 -10.3% -2.6% 14.7% (flat yoy) Europe 35% +7.0% +5.7% 40% +8.6% Europe Mid-teens (s
Slide 10: Update on Venezuela
UPDATE ON VENEZUELA Worsening macro-economic conditions and FX currency availability have limited our ability to make and execute operational decisions at our Venezuela subsidiary which as of 31.12.2015 is accounted for as an investment, in line with the approach of several multinationals active in
Slide 11: Pirelli Net Income FY 2015 vs FY 2014
PIRELLI NET INCOME FY 2015 VS FY 2014 €/Mln Non-recurring fiscal impact linked to the new financial structure of Pirelli after its merger with Marco Polo 45.6 332.8 12.4 315.2 298.2 (17.6) (65.8) (9.2) Venezuela impact (107.6) Higher inflation effect (114.5) Lower financial charges 1 +48.1 (559.5)
Slide 12: FY 2015 Net Financial Position
FY 2015 NET FINANCIAL POSITION €/Mln EBIT before restr. costs 261.3 Depreciation/Amortisation 88.0 Investments1 (129.6) NWC & other 707.4 179,5 1.685,5 350,7 12,7 (45,6) (17,1) 225,7 277,7 1.199,1 267,6 15,4 979,6 921,4 (120,0) EBIT before restr. costs 657.2 (927,1) Depreciation/Amortisation 236.2
Slide 13: Agenda
AGENDA 1 2015 RESULTS 2 PIRELLI RE-FINANCING 3 PIRELLI TYRE OVERVIEW 4 APPENDIX FY 2015 RESULTS 12
Slide 14: New Debt Structure Post Marco Polo Merger into Pirelli
NEW DEBT STRUCTURE POST MARCO POLO MERGER INTO PIRELLI Pirelli YE 2015 Gross Debt pro-forma Breakdown of Gross Debt YE 2015 to be refinanced in 2016 €/Mln 4,241.1 6,670.5 € 5,395.4 mln 1,275.1 Total debt to be refinanced in FY2016 4,241.1 2016 Bond (500 €/mln) already reimbursed US Private Place
Slide 15: Rating and Refinancing Plan
RATING AND REFINANCING PLAN RATING: A public credit rating of Pirelli debt will be issued by at least 2 major agencies, applicable to > new notes > 2016 RE-FINANCING PLAN UP TO 7 € BLN (approved by Pirelli Board of Directors on February 15th) Refinancing 5.4€ bln of Debt in 2016 and accommodating
Slide 16: Agenda
AGENDA 1 2015 RESULTS 2 PIRELLI RE-FINANCING 3 PIRELLI TYRE OVERVIEW 4 APPENDIX FY 2015 RESULTS 15
Slide 17: Key Tyre Results
KEY TYRE RESULTS €/Mln Q1‘15 ∆% Q2‘15 ∆% Q3‘15 ∆% Q4‘15 ∆% FY‘15 ∆% Revenues 1,565.3 +6.5% 1,608.4 +6.4% 1,531.3 -0.5% 1,595.8 +7.3% 6,300.8 +4.9% o/w Premium 726.9 +13.6% 770.5 +19.4% 765.1 +17.9% 754.6 +25.3% 3,017.1 +19.0% EBITDA before non recur. 293.5 +4.7% 319.1 +3.4% 285.4 -0.6% 351.5 +16.9%
Slide 18: Pirelli Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE €/Mln 5.6 21.8 (13.0) (13.6) (7.2) (11.0) 112.6 (54.2) (41.7) (6.6) 212.3 205.0 EBIT Price/ Efficien- Volume D&A Other Raw FX Other Input Non recur. Industrial EBIT 4Q ‘14 Mix cies costs Materials Costs items and BU 4Q ‘15 (Labour / restr. costs separation Energy /
Slide 19: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/Mln Q1‘15 ∆% Q2‘15 ∆% Q3‘15 ∆% Q4‘15 ∆% FY‘15 ∆% Revenues 1,237.4 +9.6% 1,284.3 +10.8% 1,239.9 +5.3% 1,286.6 +12.5% 5,048.2 +9.5% o/w Premium 726.9 +13.6% 770.5 +19.4% 765.1 +17.9% 754.6 +25.3% 3,017.1 +19.0% % revenues 58.7% +2.0 p.p. 60.0% +4.4 p.p. 61.7% +
Slide 20: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 4Q’14 FY’14 1Q’15 2Q’15 3Q’15 4Q’15 FY’15 % YoY 10 4 7 7 6 7 2 OE Europe* 11 2 3 3 4 REPLACEMENT -1 -8 5 5 3 4 2 2 2 OE NAFTA 3 5 5 1 4 2 REPLACEMENT** -4 South America OE -9 -17 -15 -16 -21 -20 -29 7 5 2 2 5 2 3 REPLACEMENT*** 16 China 9 9 10 7 4 OE
Slide 21: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/Mln Q1‘15 ∆% Q2‘15 ∆% Q3‘15 ∆% Q4‘15 ∆% FY‘15 ∆% Revenues 327.9 -3.8% 324.1 -7.8% 291.4 -19.3% 309.2 -10.0% 1,252.6 -10.3% EBITDA before non recur. 47.2 -22.5% 42.3 -33.5% 29.5 -50.2% 46.1 -21.2% 165.1 -31.8% items and restr. costs Margin 14.4% -3.5 p.p. 13
Slide 22: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 4Q’14 FY’14 1Q’15 2Q’15 3Q’15 4Q’15 FY’15 % YoY 13 10 17 11 5 OE Europe * -12 -4 2 6 9 4 5 REPLACEMENT -1 -1 South America OE -33 -23 -39 -42 -48 -53 -58 REPLACEMENT** -3 -8 -7 -10 -12 -14 -10 China OE -5 -6 -16 -23 -23 -29 -31 * Turkey included an
Slide 23: Agenda
AGENDA 1 2015 RESULTS 2 PIRELLI RE-FINANCING 3 PIRELLI TYRE OVERVIEW 4 APPENDIX FY 2015 RESULTS 22
Slide 24: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’14 FY’15 FIXED ASSETS 3,874.0 3,780.5 Inventories 1,055.0 1,053.9 Trade receivables 673.8 676.2 Trade payables (1,394.4) (1,313.1) NET OPERATING WORKING CAPITAL 334.4 417.0 Other payables/receivables 33.9 (107.6) Net Working Capital 368.3 309.4 Net Invested Capital hel
Slide 25: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 1Q’15 2Q’15 3Q‘15 4Q‘15 FY’15 EBIT before restructuring costs 213.4 238.0 205.8 261.3 918.5 Depreciation / Amortisation 78.5 79.7 78.0 88.0 324.2 Net investments (85.6) (103.2) (73.0) (129.6) (391.4) Working capital / other variations (895.2) 151.6 (113.7) 707.4 (149.9)
Slide 26: Pirelli Debt Structure as of December 31, 2015
PIRELLI DEBT STRUCTURE AS OF DECEMBER 31, 2015 Net Financial Position Gross Debt Maturity €/Mln €/Mln 2,429.4 1,230.3 96.7 386.3 Committed Line 6.8 379.5 Cash & Cash 0.3 Drawdown 379.5 96.4 Equivalents 639.1 1,160.9 627.6 Debt Capital Market 1,274.8 45.3 1,199.1 113.7 69.4 1,148.3 13.8 11.5 99.9 537
Slide 27: Net Financial Debt
NET FINANCIAL DEBT Net Financial Position trend €/Mln Leverage ratio (Net Financial Debt / LTM EBITDA) 1,966 2,004 1,935 1,733 1,686 1,664 1.8x 1,199 1.7x 1.7x 980 1.5x 1.4x 1.4x 921 1.0x NFP Excluding 0.8x 0.7x Venezuela deconsolidation impact Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 2014 FY 2015 Gross Debt 2.46
Slide 28: Operating Net Working Capital and Capex Seasonality Trend
OPERATING NET WORKING CAPITAL AND CAPEX SEASONALITY TREND Operating Net Working Capital Capex €/Mln €/Mln NWC on 5.6% 6.6% Sales % 378 €/Mln 391 €/Mln 6.3% on sales 6.2% on sales Δ = 782 €/Mln Δ = 640 €/Mln 133 130 1.131 1.116 1.134 1.057 964 970 103 101 86 78 73 65 417 334 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 29: FY 2015 Pirelli Tyre Mix
FY 2015 PIRELLI TYRE MIX Sales by Business Sales by Segment Industrial Car 20% 74% Consumer 80% Agro 2% Motorbike Truck 18% 6% Sales by Channel Sales by Region NAFTA South America OE 14% 29% Asia Pacific 22% 11% MEAI Replacement 8% 78% Russia Europe 3% 35% FY 2015 RESULTS 28
Slide 30: December 2015 Pirelli People
DECEMBER 2015 PIRELLI PEOPLE Headcount People by Region NAFTA 37,561* South America 5% 36,753 35% Asia Pacific 10% MEAI 9% Russia Europe 9% Dec ’14 Dec ’15 31% * Without Steelcord headcount People by Contract People by Cluster Temps & Agency Management 5% 1% Employees Workers 95% Staff 80% 19% FY 20
Slide 31: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD U.S.A. U.K. ITALY GERMANY RUSSIA Rome Car Burton Car Bollate Car Breuberg Car/Moto Kirov Car Carlisle Car Settimo Torinese Car Voronezh Car MEXICO ROMANIA Guanajuato Car Slatina Car VENEZUELA CHINA Guacara Car Yanzhou Car / Moto / Truck BRAZIL ARGENTINA EGYPT TURKEY INDON
Slide 32: 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 4,519 Yearly Average 3,380 3,156 108.9 111.0 111.7 99.5 2,517 80.2 1,801 1,711 56.6 62.7 1,370 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q1
Slide 33: Disclaimer
DISCLAIMER This presentation is not and does not constitute an offer to sell or the solicitation, invitation or recommendation to purchase any securities in the United States or any other jurisdiction. The information included in this presentation is not intended to constitute or form part of, and s