Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — 9M 2015 Earnings Presentation
37 slides from Pirelli & C's earnings presentation, Nov 11, 2015
Slide 1: Pirelli 9M 2015 Results
PIRELLI 9M 2015 RESULTS MILANO – NOVEMBER 11, 2015
Slide 2: Key Messages
KEY MESSAGES 9M Financial results and updated 2015 Guidance > Sound results despite ~1/3 of our business being in countries (e.g. South America and Russia) where the external scenario suddenly deteriorated in mid-August; FX volatility increased, demand fell sharply in the OE Channel (both Car and Tr
Slide 3: Agenda
AGENDA 9M 2015 RESULTS 2015 OUTLOOK & TARGETS 9M 15 TYRE OVERVIEW APPENDIX 9M 2015 RESULTS 2
Slide 4: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS €/Mln 9M 14 9M 15 Δ yoy 3Q 14 3Q 15 Δ yoy Q3 Highlights Revenues 4,528.7 4,711.9 +4.0% 1,541.8 1,533.4 -0.5% • Sound organic growth despite South American and Russian market Organic Growth* +3.3% +3.7% deterioration EBITDA before Restr. Costs 867.7 893.4 +3.0% 284.9 283
Slide 5: 9M 2015 Performance by Region
9M 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 4,705.0 +4.1% +3.4% 3,761.6 +8.5% +5.9% 943.4 -10.5% -5.1% 13.9% (-0.3 pp) Europe 35% +5.0% +3.6% 40% +5.9% Europe Low-teens (stable
Slide 6: Premium Performance by Region
PREMIUM PERFORMANCE BY REGION €/Mln Organic Δ YoY growth* Total 1,933.9 2,262.5 +17% +9% • Strong performance in Q3 (best quarter ytd): − Premium volumes outperformance vs. market − Sustained mix improvement Europe 50% 46% +7% • Leadership in Super Premium confirmed, increasing QoQ; • Outperformance
Slide 7: Pirelli Net Income 9M 2015 vs 9M 2014
PIRELLI NET INCOME 9M 2015 VS 9M 2014 €/Mln One-off impact of FX losses mainly related to the Turkish Steelcord 26.1 operations sold in Feb. ‘15 18.4 300.0 297.4 291.2 (44.8) 276.6 (2.6) (5.9) (14.6) Bolivar devaluation (23.3) Financial charges (21.5) Net Disc. Net Income Δ EBIT Δ Results Δ Financia
Slide 8: Pirelli Debt Structure as of September 30, 2015
PIRELLI DEBT STRUCTURE AS OF SEPTEMBER 30, 2015 Net Financial Position Gross Debt Maturity €/Mln 2,666 980 468.2 Committed Line 0.7 93.7 374 Cash & Cash Drawdown Equivalents 639.1 897 12.3 373.8 1,686 626.8 Debt Capital 1,277 84 117.2 42.3 Market 826.0 Fin. 20.4 Receivables 96.8 536.0 Other 572.8 29
Slide 9: Pirelli 9M 2015 Net Financial Position
PIRELLI 9M 2015 NET FINANCIAL POSITION €/Mln 179.5 119.5 3.7 14.4 1,685.5 1,664.4 231.2 9.0 2.3 (60.0) (19.4) (97.1) 322.8 EBIT before restr. costs 205.8 979.6 Depreciation/Amortisation: 78.0 Investments*: (73.0) EBIT before restr. costs 451.4 NWC & other: (113.7) Depreciation/Amortisation: 158.2
Slide 10: Agenda
AGENDA 9M 2015 RESULTS 2015 OUTLOOK & TARGETS 9M 15 TYRE OVERVIEW APPENDIX 9M 2015 RESULTS 9
Slide 11: 2015 Macroeconomic Scenario
2015 MACROECONOMIC SCENARIO WHAT HAS CHANGED vs 1H 2015: BRAZIL AND RUSSIA IN DEEPER RECESSION GDP $/Trillion Mature Economies RDEs Δ %YOY Europe Brazil China 20.7 21.1 21.1 10.3 11.0 11.0 2.3 2.3 2.3 14A 15E Old* 15E New* 14A 15E Old* 15E New* 14A 15E Old* 15E New* Δ YoY % +1.8% +1.8% Δ YoY % -1.5%
Slide 12: Emerging Car Tyre Market: Weaker Emerging Market Trend
CAR TYRE MARKET: WEAKER EMERGING MARKET TREND vs. 1H 2015 EXPECTATIONS Car tyre market – FY ’15 changes in estimates Focus on key Emerging Markets OE Replacement Mln pcs Δ YoY % +1% +1% Δ YoY % -1% -3% • OE: weak trend expected in 1,450 1,441 83 82 4Q due to OEMs extended 30% 30% 19% 18% halt in pro
Slide 13: Emerging Truck Tyre Market: Worsening LatAm Demand and China Slowdown
TRUCK TYRE* MARKET: WORSENING LATAM DEMAND AND CHINA SLOWDOWN Truck tyre market – FY ’15 changes in estimates Focus on key Emerging Markets OE Replacement Mln pcs Δ YoY % -1% -2% Δ YoY % ~ -9% > -15% 148 146 11 10 18% 18% 11% 10% • OE: steep decline in vehicle GLOBAL LATAM production • Replacement:
Slide 14: 2015 Regional Targets Update
2015 REGIONAL TARGETS UPDATE: NAFTA AND EUROPE MITIGATE THE SLOWDOWN IN LATAM AND RUSSIA Tyre Market ( yoy) 2015 Pirelli Tyre Business Target Highlights Revenues EBIT Margin** • Supportive ForEx, mix improvement and NAFTA Car ~ +2% Mid single-digit Low twenties o/w Premium ~ +6% organic growth incr
Slide 15: FY 2015 Guidance
FY 2015 GUIDANCE 2015 targets 2015 targets August 2015 November 2015 Main changes vs. previous Guidance Revenues > 6.35 € bln > 6.25 € bln • Volumes +0.5% ÷ +1% -0.5% ÷ -1% • Volumes: -1/-2 p.p. in growth due to market drop in Brazil (in deeper recession since mid-August 2015) and Russia - o/w Premi
Slide 16: FY'15 EBIT: New vs. Old
FY’15 EBIT (Before non recurring items & restructuring costs): NEW vs. OLD €/Mln Internal levers External levers 10 45 ~ 960 (22) (38) ~ 925 -1/-2 p.p. volumes growth vs. previous Guidance due to the (30) worsening of macroeconomic scenario in Brazil and Russia Sudden devaluation of Real, weaker Rub
Slide 17: 2015 Consumer & Industrial Guidance
2015 CONSUMER & INDUSTRIAL GUIDANCE Consumer Business Industrial Business 2015 targets 2015 Targets 2015 targets 2015 Targets August 2015 November 2015 August 2015 November 2015 Revenues > 5.0 € bln confirmed Revenues ~1.35 € bln ~1.25 € bln • Volumes +1.5% ÷ +2% ~+1% • Volumes ~ -3% ~ -6% - o/w Pre
Slide 18: 2015 Profitability Guidance
2015 PROFITABILITY GUIDANCE Driver 2015 targets 2015 targets vs. previous guidance Aug 2015 Nov 2015 on revenues on Ebit Volumes +0.5% ÷ +1% of sales -22 € mln (lower volumes with below-average -0.5% ÷ -1% of sales -80 € /mln profitability) Price/Mix ~ +4% of sales ≥+5.5% of sales +110 €/mln +45 €
Slide 19: 2015 Raw Material Guidance
2015 RAW MATERIAL GUIDANCE Raw Material Breakdown 9M 2015 Textile Natural Rubber 2015 Old Guidance 2015 New Guidance 11% 19% Average cost of Steel goods sold 13% (€/Mln) 2014A 2015E Δ YOY 2015E Δ YOY Synthetic Rubber Natural Rubber ~1.950 ~1.500 +111 ~1.450 +120 25% TSR20 ($/ton) Chemicals 20% Brent
Slide 20: Agenda
AGENDA 9M 2015 RESULTS 2015 OUTLOOK & TARGETS 9M 15 TYRE OVERVIEW APPENDIX 9M 2015 RESULTS 19
Slide 21: Key Tyre Results
KEY TYRE RESULTS €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 3Q‘15 ∆% 9M‘15 ∆% Revenues 1,565.3 +6.5% 1,608.4 +6.4% 1,531.3 -0.5% 4,705.0 +4.1% o/w Premium 726.9 +13.6% 770.5 +19.4% 765.1 +17.9% 2,262.5 +17.0% EBITDA before restr. costs 293.5 +4.7% 319.1 +3.4% 285.4 -0.6% 898.0 +2.5% Margin 18.8% -0.3 p.p. 19.8% -0.6 p
Slide 22: Pirelli Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE €/Mln 26.8 48.4 (16.7) (2.4) 206.3 (14.5) (0.2) 1.0 (10.9) 204.0 (25.0) (8.8) Steelcord sourcing (10.2) LatAm lower plant saturation (4.7) Others 0.4 EBIT Price/ Efficien- Volume D&A Other Raw FX Other Input Restr. Industrial EBIT 3Q ‘14 Mix cies costs Materials Co
Slide 23: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 3Q‘15 ∆% 9M‘15 ∆% Revenues 1,237.4 +9.6% 1,284.3 +10.8% 1,239.9 +5.3% 3,761.6 +8.5% o/w Premium 726.9 +13.6% 770.5 +19.4% 765.1 +17.9% 2,262.5 +17.0% % revenues 58.7% +2.0 p.p. 60.0% +4.4 p.p. 61.7% +6.6 p.p. 60.1% +4.3 p.p. EBITDA befor
Slide 24: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 3Q‘15 ∆% 9M’15 ∆% Revenues 327.9 -3.8% 324.1 -7.8% 291.4 -19.3% 943.4 -10.5% EBITDA before restr. costs 47.2 -22.5% 42.3 -33.5% 29.5 -50.2% 119.0 -35.2% Margin 14.4% -3.5 p.p. 13.1% -5.0 p.p. 10.1% -6.3 p.p. 12.6% -4.8 p.p. EBIT before
Slide 25: Appendix
AGENDA 9M 2015 RESULTS 2015 OUTLOOK & TARGETS 9M 15 TYRE OVERVIEW APPENDIX 9M 2015 RESULTS 24
Slide 26: Pirelli Group – 3Q 2015 Results
PIRELLI GROUP – 3Q 2015 RESULTS Profit & Loss Statement and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. €/Mln 3Q’14 3Q’15 3Q’14 3Q’15 3Q’14 3Q’15 SALES 1,539.2 1,531.3 2.6 2.1 1,541.8 1,533.4 EBITDA before Restr. Costs 287.2 285.4 (2.3) (1.6) 284.9 283.8 % of sales
Slide 27: Pirelli Group – 9M 2015 Results
PIRELLI GROUP – 9M 2015 RESULTS Profit & Loss Statement and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. €/Mln 9M’14 9M’15 9M’14 9M’15 9M’14 9M’15 SALES 4,520.0 4,705.0 8.7 6.9 4,528.7 4,711.9 EBITDA before Restr. Costs 876.2 898.0 (8.5) (4.6) 867.7 893.4 % of sales
Slide 28: Pirelli Group – 2014 Quarterly Results
PIRELLI GROUP – 2014 QUARTERLY RESULTS Q1’14 Q2’14 Q3’14 Q4’14 FY’14 €/Mln Tyre Group Tyre Group Tyre Group Tyre Group Tyre Group SALES 1,469.5 1,473.2 1,511.3 1,513.7 1,539.2 1,541.8 1,487.5 1,489.4 6,007.5 6,018.1 EBITDA before Restr. Costs 280.3 277.3 308.7 305.5 287.2 284.9 300.7 300.3 1,176.9 1
Slide 29: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 3Q’14 9M’14 1Q’15 2Q’15 1H’15 3Q‘15 9M’15 EBIT before restructuring costs 208.9 647.8 213.4 238.0 451.4 205.8 657.2 Depreciation / Amortisation 76.0 219.9 78.5 79.7 158.2 78.0 236.2 Net investments (101.1) (244.7) (85.6) (103.2) (188.8) (73.0) (261.8) Working capital /
Slide 30: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’14 9M’15 FIXED ASSETS 3,874.0 3,825.5 Inventories 1,055.0 1,062.2 Trade receivables 673.8 1,035.0 Trade payables (1,394.4) (1,040.4) NET OPERATING WORKING CAPITAL 334.4 1,056.8 Other payables/receivables 33.9 102.5 Net Working Capital 368.3 1,159.3 Net Invested Capital
Slide 31: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 3Q’14 4Q’14 FY’14 1Q’15 2Q’15 3Q’15 9M’15 % YoY 7 7 8 7 2 2 4 OE Europe* 1 2 2 3 2 REPLACEMENT -1 -8 8 5 5 2 4 2 OE 0 NAFTA 4 3 5 5 3 2 REPLACEMENT** -4 South America OE -9 -19 -17 -15 -16 -17 -21 4 7 5 2 2 5 3 REPLACEMENT*** China 6 9 9 10 4 3 OE -6
Slide 32: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 3Q’14 4Q’14 FY’14 1Q’15 2Q’15 3Q’15 9M’15 % YoY 5 13 10 10 OE Europe * -5 -12 -4 2 6 9 5 REPLACEMENT -3 -1 -1 South America OE -29 -33 -23 -39 -42 -46 -53 REPLACEMENT** -3 -3 -8 -7 -9 -10 -12 China OE -11 -5 -16 -23 -29 -31 -28 * Turkey included an
Slide 33: 9M 2015 Pirelli Tyre Mix
9M 2015 PIRELLI TYRE MIX Sales by Business Sales by Segment Consumer Car 80% 73% Agro 2% Motorbike Industrial Truck 7% 20% 18% Sales by Channel Sales by Region Replacement South America NAFTA 78% 28% 14% Asia Pacific 11% MEAI 9% Russia OE Europe 3% 22% 35% 9M 2015 RESULTS 32
Slide 34: September 2015 Pirelli People
SEPTEMBER 2015 PIRELLI PEOPLE Headcount People by Region NAFTA 37,561* 37,616 South America 5% 36% Asia Pacific 10% MEAI 10% Russia Europe 9% 30% Dec ’14 Sep ’15 * Without Steelcord headcount People by Contract People by Cluster Temps & Agency Management 6% 1% Employees Workers 94% Staff 80% 19% 9M
Slide 35: 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 36: 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 2,517 99.5 80.2 62.7 1,711 1,801 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Slide 37: 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