Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — H1 2021 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Aug 5, 2021
Slide 1: 1H 2021 Financial Results
1H 2021 FINANCIAL RESULTS Milan, August 5th, 2021 1H 2021 RESULTS Milan, August 5th, 2021
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: Key Messages
KEY MESSAGES > Post Pandemic recovery accelerating • Global GDP growth expected at >+5% CAGR ‘20-’22 • Strengthened demand in H.V., driven by Replacement, while O.E. impacted by chip-shortage • Healthy pricing environment > Industrial Plan Key Programs progressing well • Significant share gains in ≥
Slide 4: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1H 2021 MARKET AND PIRELLI PERFORMANCE 3 1H 2021 FINANCIALS IN DETAIL 4 APPENDIX 1H 2021 RESULTS 3 Milan, August 5th, 2021
Slide 5: Post Pandemic Recovery Accelerating in 2021
POST PANDEMIC RECOVERY ACCELERATING IN 2021 MACRO-ECON TYRE DEMAND PRICING RAW MATERIALS Accelerating GDP Improved High Value Supportive pricing Inflationary recovery demand outlook environment scenario >+5% GDP ‘21-’22 avg. FY21E ≥18” demand Healthy inventories at Oil derivatives prices growth (Ind
Slide 6: Strategic Implementation Plan: 2Q / 1H 2021 Top Achievements
STRATEGIC IMPLEMENTATION PLAN: 2Q / 1H 2021 TOP ACHIEVEMENTS PLAN TARGETS 1H MAIN ACHIEVEMENTS • Capturing H.V. rebound and gaining • Volume +16pp vs. WW market trend in ≥18” share • 66% weight of ≥19” (+3pp YoY)1, • Growing exposure towards higher rims Elect volumes 9x 1H’20 levels Commercial and t
Slide 7: Pirelli 1H 2021 Results Highlights
PIRELLI 1H 2021 RESULTS HIGHLIGHTS € million Net Sales adjusted EBIT1 +41% +311 2,565 377 1,816 Standard High Value 70.8% +1.1pp 71.9% 67 1H’20 1H’21 1H’20 1H’21 1H margin 3.7% 14.7% Net Income Net Financial Position 2Q Net Cash Flow +233 173 before dividends 132 +654 -93 3,912 3,819 3,258 -102 1H’2
Slide 8: FY 2021 Car Tyre Market Outlook
FY 2021 CAR TYRE MARKET OUTLOOK CAR TYRE MARKET YEARLY TREND CAR TYRE MARKET 2H TREND Δ ’21 vs. ‘19 Δ ’21 vs. ‘19 ~+10% -15% (old gui +10%) -4% -6% ~-2% -6% ≥18” ≥18” +5% +3% +2% -9% ~+15% ~-1% (old gui +13%) ≤17” ~+8% ≤17” -16% -9% -6% ~-3% -8% (old gui +9%) FY 2019A FY 2020A FY 2021E 2H 2019A 2H 2
Slide 9: Pirelli FY 2021 Targets Update
PIRELLI FY 2021 TARGETS UPDATE @ 31-Mar @ 05-Aug € billion 2020 A 2021 E 2021 E • Vol. +14% ÷ +15% (old. guid. +11% ÷ +13%) Net Sales 4.3 ~4.7 ÷ ~4.8 ~5.0 ÷ ~5.1 • P/Mix: +4.5% ÷ +5.0% (old. guid. +2.5% ÷ +3%) • FX: -2.5% ÷ -2.0% Adj. EBIT margin 11.6% >14% ÷ ~15% ~15% ÷ ~15.5% (old. guid. -3.5%) Ca
Slide 10: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1H 2021 MARKET AND PIRELLI PERFORMANCE 3 1H 2021 FINANCIALS IN DETAIL 4 APPENDIX 1H 2021 RESULTS 9 Milan, August 5th, 2021
Slide 11: In 1H 2021 Share Gains in All Segments
IN 1H 2021 SHARE GAINS IN ALL SEGMENTS TOTAL ≥18” ≤17” 2020 2021 2020 2021 2020 2021 1Q 2Q 1Q 2Q 1H 1Q 2Q 1Q 2Q 1H 1Q 2Q 1Q 2Q 1H ≥19" 41% +65% 55% 37% 25% 35% 23% 13% 20% ≥19" 12% TOTAL MARKET +43% -6% vs -7% vs -6% vs +9% vs +6% vs +7% vs -9% vs -9% vs -9% vs -17% 1Q’19 2Q’19 1H’19 -10% 1Q’19 2Q’1
Slide 12: Commercial 2Q / 1H 2021: Technologies Boosting Growth in H.V.
COMMERCIAL 2Q / 1H 2021: TECHNOLOGIES BOOSTING GROWTH IN H.V. 1H 2021A Volume variance (Car) Key Programs Highlights Performance vs. market 1H ’20 A 49% 51% Market H.V. Repl. Growing in all H.V. Regions, especially PULL in APac H.V. Repl. ≥18” YoY increase >70% of the increase in EU and USA PUSH • >
Slide 13: Innovation Program 1H 2021: New High Load Technology
INNOVATION PROGRAM 1H 2021: NEW HIGH LOAD TECHNOLOGY SUPPORTING GROWTH IN EV FITMENTS Tyre for EVs Technologically challenging In 1H Pirelli brought to life new HL technology EVs Customers looking for Performance & Safety FIRST TYRE WITH THE NEW EV tyres with challenging technological requirements:
Slide 14: Innovation Program 1H 2021: The New Scorpion AS Plus 3
INNOVATION PROGRAM 1H 2021: THE “NEW SCORPION AS PLUS 3” UNVEILED IN NORTH AMERICA, AFTER LAUNCHING EU PRODUCTS IN 1Q 1H 2021 RESULTS 13 Milan, August 5th, 2021
Slide 15: World Premiere of FSC-Certified Tyre
INNOVATION PROGRAM 1H 2021: WORLD PREMIERE OF FOREST STEWARDSHIP COUNCIL-CERTIFIED TYRE THE FSC-CERTIFIED PIRELLI P-ZERO TYRE First and only Forest Stewardship Council-certified tyres, containing FSC-certified natural rubber and rayon WHAT DOES THE FSC CERTIFICATION ENSURE? FULL TRACEABILITY CONSERV
Slide 16: Competitiveness Program 1H Delivery in Line with FY Targets
COMPETITIVENESS PROGRAM 1H DELIVERY IN LINE WITH FY TARGETS Wave 1 - ‘20 Wave 2 - ’21-22 FY’20 focusing on: ’21-’22 FY’21 o/w 1H’21 Modularity Product Cost Design speed and ~50% in 1H virtualization Footprint optimization mostly in 2Q Manufacturing Industrial IOT and flexible (YoY recovery) factory
Slide 17: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1H 2021 MARKET AND PIRELLI PERFORMANCE 3 1H 2021 FINANCIALS IN DETAIL 4 APPENDIX 16 1H 2021 RESULTS 16 Milan, August 5th, 2021
Slide 18: Top Line Supported by Strong Commercial Performance
TOP LINE SUPPORTED BY STRONG COMMERCIAL PERFORMANCE; PRICE INCREASE EFFECTIVE IN 2Q € million 2,565 55 (74) 1,816 768 ▬ USD vs. EUR -9% Standard ▬ BRL vs. EUR -17% ▬ RUB vs. EUR -15% 72% High Value 71% 1H’20 Δ Volumes Δ Price/mix Δ Forex 1H’21 High Value Standard o/w Organic 1H‘21 +46.3% +42.3% +38.
Slide 19: Strong Internal Levers Contribution Leading to Profitability Improvement
STRONG INTERNAL LEVERS CONTRIBUTION LEADING TO A PROFITABILITY IMPROVEMENT € million Net impact -4 Net impact +50 Net impact -10 83 (32) (6) 377 47 (39) (13) (54) 44 (34) 315 ▬ Commodities -10 ▬ R&D/Mkt expenses -32 67 ▬ FX -29 ▬ Mgmt. Incentives (STI/LTI) -23 ▬ Other +21 1H’20 Volume Price/ Raw Mat
Slide 20: 1H 2021 Net Income Bridge
1H 2021 NET INCOME BRIDGE € million (5) 7 1 (80) 132 311 (102) Net Income Δ adj. EBIT Δ non rec. / Δ Net income Δ Financial Δ Taxes Net Income reported restr. costs / loss from income / reported 1H’20 equity charges 1H’21 participations % on Sales n.m. 5.1% 1H’20 1H’21 Net Income reported -102 132 P
Slide 21: Cash Flow Trend Better vs 1H19 Due to Working Capital Mgmt.
CASH FLOW TREND BETTER VS 1H19 DUE TO WORKING CAPITAL MGMT. € million Net Cash Flow (before dividends): -481 (-641 in 1H’19) 3,819 79 Operating Cash Flow: -273 (-375 in 1H’19) 65 72 72 ▬ Non-rec. / restr. -69 3,258 ▬ FX / other +4 644 (574) 50 153 Δ Net Fin. Position: -560 (-817 in 1H’19) NFP FY’20
Slide 22: Total Gross Debt Structure
TOTAL GROSS DEBT STRUCTURE € million Net Financial Position Gross Debt maturity 5,037 (1,219) Liquidity position 1,314 Loan 901 can be 1,245 (833) extended to 2024 1,159 Bond (386) 3,819 125 2,619 IFRS 16 795 Fin. receivables & other 1,101 647 Other 493 1,448 971 80 597 477 476 181 413 494 69 181 74
Slide 23: Agenda
AGENDA 1 2021 SCENARIO, STRATEGY & TARGETS 2 1H 2021 MARKET AND PIRELLI PERFORMANCE 3 1H 2021 FINANCIALS IN DETAIL 4 APPENDIX 1H 2021 RESULTS 22 Milan, August 5th, 2021
Slide 24: Pirelli Leading Position in Sustainability Rankings & Initiatives
PIRELLI LEADING POSITION IN SUSTAINABILITY RANKINGS & INITIATIVES last positioning in the Major sustainability ratings (Aug-21) score update reference sector 2020 84 #1 ATX Auto Components 2021 Gold class #1 Max score 2020 A #1 Max score 2021 AA #2 Auto Components (PI #2 / 36) 2021 4.5 / 5 #1 Auto &
Slide 25: Pirelli 2Q / 1H Results Highlights
PIRELLI 2Q / 1H RESULTS HIGHLIGHTS € million 2Q’20 2Q’21 Δ YoY 1H’20 1H’21 Δ YoY Revenues 765 1,320 +72.6% 1,816 2,565 +41.2% Organic Growth1 +73.9% +45.3% High Value Revenues (% on total) 72.4% 71.2% -1.2pp 70.8% 71.9% +1.1pp adj. EBITDA2 24 307 n.m. 268 574 n.m. Margin 3.1% 23.3% +20.2pp 14.7% 22.
Slide 26: Pirelli Balance Sheet
PIRELLI BALANCE SHEET € million 30-June-2020 31-Dec-2020 30-June-2021 Fixed assets (before IFRS 16) 8,619 8,423 8,446 Right of use IFRS 16 449 434 442 Fixed assets (incl. IFRS 16) 9,068 8,857 8,888 Inventories 962 836 957 Trade receivables 628 598 803 Trade payables (858) (1,268) (967) Operating net
Slide 27: Pirelli 2Q / 1H Group Cash Flow
PIRELLI 2Q / 1H GROUP CASH FLOW € million 2Q’20 2Q’21 1H’20 1H ‘21 Adjusted EBIT1 (74) 209 67 377 Depreciation & Amortization (excl. PPA amortization) 98 99 201 197 Capital expenditures (25) (63) (81) (153) Rights of use (IFRS 16) (24) (23) (47) (50) Change in working capital / other 132 73 (729) (6
Slide 28: Key Car Market Trends: Europe
KEY CAR MARKET TRENDS: EUROPE Market trend 2Q’20 3Q’20 4Q’20 FY’20 1Q’21 2Q‘21 1H’21 ∆% YoY 88 0 22 O.E. Total Car market -10 -23 -7 -63 39 21 0 9 Replacement -6 -13 -35 46 21 0 5 Total (O.E.+Repl.) -7 -15 -41 106 ≤17" 79 1 3 15 34 ≥18” O.E. 0 -8 -15 -25 -20 -12 -66 -55 ≥18” & ≤17” 52 37 34 15 21 19
Slide 29: Key Car Market Trends: North America
KEY CAR MARKET TRENDS: NORTH AMERICA Market trend 2Q’20 3Q’20 4Q’20 FY’20 1Q’21 2Q‘21 1H’21 ∆% YoY 132 0 2 32 O.E. Total Car market -20 -4 -68 64 34 11 Replacement -4 -2 -11 -32 72 34 7 Total (O.E.+Repl.) -3 -1 -13 -40 ≤17" 118 146 ≥18” O.E. 6 23 41 5 2 -6 -2 -25 -16 -11 ≥18” & ≤17” -70 -66 65 62 33
Slide 30: Key Car Market Trends: Asia Pacific
KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend 2Q’20 3Q’20 4Q’20 FY’20 1Q’21 2Q‘21 1H’21 ∆% YoY 36 23 12 O.E. Total Car market -1 0 -15 -12 36 16 Replacement 6 2 -1 -12 -9 36 19 Total (O.E.+Repl.) 3 6 -1 -13 -10 ≤17" 53 31 36 ≥18” 9 9 9 22 19 O.E. -5 -4 -3 -3 -14 ≥18” & ≤17” -18 62 34 Replacement
Slide 31: Key Market Trends: Russia, Nordics, MEAI / South America
KEY MARKET TRENDS: RUSSIA, NORDICS, MEAI / SOUTH AMERICA Market trend 2Q’20 3Q’20 4Q’20 FY’20 1Q’21 2Q‘21 1H’21 ∆% YoY 119 48 Russia, Nordics, MEAI O.E. 5 -19 0 -21 -46 52 18 Replacement -14 -2 -30 -25 -44 67 25 Total (O.E.+Repl.) -11 -1 -28 -24 -45 290 O.E. 7 62 1 South America -21 -31 124 -82 48 R
Slide 32: 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
Slide 33: Pirelli Manufacturing Footprint
PIRELLI MANUFACTURING FOOTPRINT U.K. Germany Romania Russia ▬ Burton – ▬ Breuberg – ▬ Slatina – Car ▬ Kirov – Car U.S. Semi-finished Car / Moto ▬ Voronezh – ▬ Carlisle – Car Car ▬ Rome – Car Italy China ▬ Bollate – ▬ Yanzhou – Cycling Car / Moto Mexico ▬ Settimo – Car ▬ Jiaozuo – Car ▬ Shenzhou – ▬
Slide 34: 1H 2021 Results
1H 2021 RESULTS Milan, August 5th, 2021