Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2009 Earnings Presentation
46 slides from Pirelli & C's earnings presentation, 2009
Slide 1: Pirelli Group 1Q09 Financial Results
ItReEcu PIRELLI GROUP 1009 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 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 2
Slide 4: Group 1Q09 Key Messages
Pirelli Group 1Q09 Key Messages A strong impact by the economic crisis on demand, but the conditions for a recovery remain (low inflation, low interest rate, low cost of raw materials) Restructuring program in progress both in Tyre & Real Estate Tyre: drop in volumes in line with expectations, stron
Slide 5: Group 1Q09 vs '09 targets
Pirelli Group 1Q09 vs ‘09 targets €/bln 1Q09 2009 Targets Group Revenues 1.0 ~4.3 EBIT % After continuous restructuring 4,5% 4.5-5.0% NFP 1.3 1.0 (*) Green revenues and Capex information will be completed at the year end 4
Slide 6: Agenda: Pirelli Group 1Q09 Financial Review
Agenda Pirelli Group 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 5
Slide 7: Group: 1Q09 Key Financial Results
Pirelli Group: 1Q09 Key Financial Results €/mln 1Q09 1Q08 YoY % Results Drivers Revenues (Organic) 1,043.0 1.165.3 -10.5% (*) Bearish market conditions for both EBITDA before Restructuring Costs 101.7 172.1 -40.9% Tyre & PRE Margin 9.8% 14.4% -4.6pp Tyre: Price mix and efficiencies still EBIT before
Slide 8: Group: EBIT 1Q09 vs 1Q08
Pirelli Group: EBIT 1Q09 vs 1Q08 (post restructuring costs and results from equity participations) €/mln ∆ Organic EBIT: -69.6 98.6 47.6 17.3 1.4 (3.6) 1.3 (41.8) (0.7) (24.9) 1Q08 Tyre Eco Real Broadband Other Restruct. Results 1Q09 Tech Estate access Bus/interc. Costs from equity particip. 7
Slide 9: Group: attributable net income 1Q09 vs 1Q08
Pirelli Group: attributable net income 1Q09 vs 1Q08 ∆ organic EBIT: (69.6) 33.8 ∆ rest. Costs: 1.3 ∆ Results from equity participations: 17.3 37.0 9.5 (51.0) 4.2 3.7 (18.2) 1Q08 ∆EBIT post ∆ financial ∆ tax charges ∆ discontinued ∆ minorities 1Q09 restruct. & results charges operations from equity 8
Slide 10: Group: 1Q09 net financial position
Pirelli Group: 1Q09 net financial position €/mln EBIT: (46.8) Dep/Am: (51.4) Tyre 39.0 Capex: 42.9 PRE 6.8 ∆ NWC & others: 258.7 46.5 45.8 (6.6) 1,278.9 203.4 (37.9) 1,027.7 2008 Operating Financial Inc./Expen. Fin. Invest. Cash out Others 1Q09 NFP Cash Flow & Fiscal Charg. & Other Restr. Costs NFP
Slide 11: Group: Debt Structure as of March 31, 2009
Pirelli Group: Debt Structure as of March 31, 2009 Net Financial Position Gross Debt Maturity €/mln 1,004 2,365 1,086 756 Committed Line 1,147 Drawdown 1,279 166 248 69 332 97 202 Other Borrowing 1,068 863 130 120 Corporate bond 150 593 Gross Fin. Net Fin. Redeemed on April 7, 2009 Debt Assets * Pos
Slide 12: Agenda: Pirelli Real Estate Results
Agenda Pirelli Group 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 11
Slide 13: Consolidated Income Statement
Consolidated Income Statement €/mln 1Q09 1Q08 Consolidated Revenues 53.8 74.7 EBIT before Restructuring costs (2.2) 22.7 Net Income from Investments (12.5) (0.2) EBIT including net income from investments before Restructuring costs (14.7) 22.5 Restructuring Costs 0.0 (2.3) EBIT including income from
Slide 14: Breakdown of EBIT including income from equity participations before Restructuring costs
Breakdown of EBIT including income from equity participations before Restructuring costs €/mln EBIT (24.9) 22.5 (5.6) Income from equity partitipations (12.3) (17.0) (6.5) (5.8) 10.0 (10.0) (2.3) (14.7) Consolidated Berenice NPL Savings Services and SPVs Derivatives (**)1Q08 SPVs Result 1Q09 Fees Pl
Slide 15: Real Estate Sales, Rents & Acquisitions 100% and Pro Quota
Real Estate Sales, Rents & Acquisitions 100% and Pro Quota €/mln REAL ESTATE SALES REAL ESTATE RENTS REAL ESTATE ACQUISITIONS -13% +41% 199.8 201.5 174.8 143.1 -24% 41.2 +24% 66.9 50.5 47.3 38.1 8.7 1Q08 1Q09 1Q08 1Q09 1Q08 1Q09 100% Pro quota 14
Slide 16: Cost Saving program for 2009
Cost Saving program for 2009 In 1Q09 cost saving reached 10 €/mln For FY 2009 we expect total savings for 50 € /mln of which: Labor costs and costs related for approx. 30 € /mln Headquarters /IT & other for approx. 10 € /mln Consulting & Marketing costs for approx. Euro 10 € /mln In the savings prog
Slide 17: NFP change excluding shareholders' loans
NFP change excluding shareholders’ loans (€/mln) 5.5 898.4 6.8 5.7 10.9 7.7 861.8 NFP December Financial Equity NPls Lay-off Other NFP March 2008 Investments Injection payment (2008 accrual) 2009 16
Slide 18: Net Invested Capital Breakdown excluding shareholders' loans
Net Invested Capital Breakdown excluding shareholders’ loans €/bln NIC 1.3 Sources 1.3 Net Capital Ita 0.8 0.4 and Funds Real Estate 1.1 Ger 0.3 0.9 NFP excluding shareholders’ loans (*) NPL 0.2 Real Estate Net Invested Capital (approx 1.1 €/mln) is allocated as follows: 0.8 Italy and 0.3 Germany (*
Slide 19: Pirelli RE Targets
Pirelli RE Targets As indicated in the three year plan, the company will focus on a turnaround targeting, a positive Operating result including income from equity participations already in 2009 This goal will be achieved through the following actions: 1. Cost cutting and organization reshaping Expec
Slide 20: Agenda: Pirelli Tyre Results
Agenda Pirelli Group 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 19
Slide 21: 1Q09 Pirelli Tyre performance impacted by negative market trends
1Q09 Pirelli Tyre performance impacted by negative market trends €/mln, Percent Profit & Loss 1Q09 1Q08 ∆% ∆ Price/Mix +6.9% Revenues 926.9 1076.9 -13.9% ∆ Volume -18.1% EBITDA (before ∆ Rev. (before restructuring costs) 107.8 151.0 -28.6% -11.2% Exch. rate impact) margin 11.6% 14.0% ∆ Exchange Rate
Slide 22: Tyre 1Q09 operating performance
Pirelli Tyre 1Q09 operating performance Raw materials: (38.6) €/mln Labour / energy / other: (15.3) (28.7) +43.0 (53.9) 102.8 (1.2) +0.6 61.0 (1.6) EBIT 1Q008 Price Volume Cost of inputs Efficiencies Exchange Depreciation/ EBIT 1Q009 (before restr costs) & mix rate other (before restr.costs) Positiv
Slide 23: Tyre 1Q09 NFP evolution
Pirelli Tyre 1Q09 NFP evolution €/mln EBIT (post restr. costs): (58) Investments & Depreciation: (9) ∆ NWC: 249 Other variations: (1) Financial / fiscal charges: 46 227 1,522 39 1,267 (11) 2008 Turkish minorities Restructuring Net Cash Flow before NFP YEAR END purchase and Cash out dividends 2009 -
Slide 24: Tyre restructuring program in progress
Pirelli Tyre restructuring program in progress 100 million Euro was funded in 2008 balance sheet to speed up restructuring in Europe. Restructuring Program Target: 1,500 people by 2009 Spanish Factory shut down expected by year end Settimo (Italy) old car factory shut down expected by year end (to b
Slide 25: Consumer Business in Q1 '09
Consumer Business in Q1 ‘09 Car tyre shipments, Percent (yoy) Market trends Q4 ‘08 Q1 ‘09 Pirelli Economics €/Mln, Percent OE Europe -23% ∆ Price/Mix +6.6% -34% ∆ Volume -14.7% ∆ Rev. (before -8.1% Replacement -5% Exch. rate impact) -9% 1Q09 1Q08 ∆% ∆ Exchange Revenues 670.5 748.3 -10.4% Rate -2.3%
Slide 26: Industrial Business in 1Q09
Industrial Business in 1Q09 Truck Tyre shipments, Percent (yoy) €/Mln, Percent Market trends Q4 ‘08 Q1 ‘09 Pirelli Economics ∆ Price/Mix +7.2% ∆ Volume -25.7% ∆ Rev. (before -18.5% OE Exch. rate impact) Europe -23% Q1 09 Q108 ∆% ∆ Exchange Rate -3.5% -69% Revenues 256.4 328.6 - 22% Replacement EBITD
Slide 27: Recent Pirelli Tyre Highlights
Recent Pirelli Tyre Highlights: Pirelli and Metzeler play a leading role at the 6° Annual INTERMOT Motorcycle and Scooter Fair in Cologne and at the 66th EICMA International Bicycle and 26/01/2009 Motorcycle Exhibition in Milan. In Cologne Pirelli introduced Angel ST, designed to fit sport-touring m
Slide 28: Cinturato: introducing the Green Performance tyre
Cinturato: introducing the Green Performance tyre THE MARKET SEGMENT Environment-sensitive consumers asking for low-impact products THE TECHNOLOGY Distinctive features thanks to new bio-materials LRR improvement at high performance level THE PRODUCT The Green Performance tyre already homologated on
Slide 29: Agenda: Pirelli Eco Technology
Agenda Pirelli Group 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 28
Slide 30: Eco Technology - Achievements
Pirelli Eco Technology - Achievements Solid growth in retrofit systems sales, in main accessible markets (Italy and Holland) Homologation in Germany and China expected at beginning second half ‘09: about to enter promising “emissions controlled” markets Scouting activities and new trials in Brazil,
Slide 31: Eco Technology 1Q09 Key Financial Results
Pirelli Eco Technology 1Q09 Key Financial Results €/mln 1Q09 1Q08 YoY Volumes Filters 903 122 Gecam (l/mln) 21.5 24.5 -12.2% Revenues 14.3 16.6 -13.9% Filters 3.5 0.5 Gecam 9.0 14.7 Ebitda (2.3) (1.9) n.m. Margin n.m n.m Ebit (2.8) (2.1) n.m. Margin n.m. n.m. Net income (3.4) (2.2) NFP 26.8 8.3 30
Slide 32: Agenda: Appendix
Agenda Pirelli Group 1Q09 Key messages Pirelli Group 1Q09 Financial Review Pirelli Real Estate Results Pirelli Tyre Results Pirelli Eco Technology Appendix 31
Slide 33: Group – Results as of March 31, 2009
Pirelli Group – Results as of March 31, 2009 Profit & Loss and Net Financial Position by Business Unit Pirelli Pirelli Tyre Pirelli Real Estate Broadband Access Others Pirelli & C. Cons. Eco Technology €/mln 31.03.09 31.03.08 31.03.09 31.03.08 31.03.09 31.03.08 31.03.09 31.03.08 31.03.09 31.03.08 31
Slide 34: Group: Net financial position 1Q09 by business
Pirelli Group: Net financial position 1Q09 by business €/mln TYRE PRE Other Corporate P&C Business Group Cons Gross Debt 1,844 948 39 611 2,365 to Corporate 518 492 37 Financial receivables (106) (609) (34) (1,049) (721) Cash and cash equivalents (216) (30) (3) (116) (365) Net Financial Position 1,5
Slide 35: 1Q09 Pirelli Tyre
1Q09 Pirelli Tyre Sales by segment Sales by region Europe Car Latin 46% Moto 10% America 62% 31% Steelcord & others Truck 3% MEA 10% Asia North Pacific 25% America 5% 8% Raw material mix Sales by channel Synt. Rubber 27% Carbon Replacement Natural 82% black Rubber 11% 25% Chemicals 15% Steel 9% Text
Slide 36: 1Q09 Pirelli Tyre
1Q09 Pirelli Tyre Headcount People by region 28.601 North America 27.304 Europe 1% 40% Latin Asia America Pacific MEA 42% Dec 08 Mar 09 7% 10% People by contract People by cluster Blue Collar workers Permanent 81% 92% Staff Temps & 18% Agency Management 8% 1% 35
Slide 37: 1Q09 Pirelli Tyre factories
1Q09 Pirelli Tyre factories Italy U.K. Germany Bollate (Mi) Car Burton-on-trent Car Carlisle Settimo Torinese Car Car Breuberg Car/Motorcycle Carlisle Car Settimo Torinese Truck Merzig Steelcord Figline Valdarno Steelcord Spain Turkey Manresa Car Izmit Car/Truck Izmit Seelcord U.S.A. Romania Rome (G
Slide 38: PRE Consolidated Balance Sheet
PRE Consolidated Balance Sheet €/mln 1Q09 Dec. 2008 1Q08 Fixed Assets 555.9 589.1 869.4 Of which participations 374.4 405.7 582.3 Of which Goodwill 137.8 137.8 222.5 Net Working Capital 139.4 133.1 205.8 Net Invested Capital 695.3 722.2 1,075.2 Net Equity 320.1 366.4 717.6 Of which Group net equity
Slide 39: PRE Consolidated Net Cash Flow
PRE Consolidated Net Cash Flow €/mln 1Q09 1Q08 EBIT including net income investments before Restructuring costs and devaluations (2.2) 22.7 Depreciation 1.7 1.9 Change in non-current financial assets (8.3) (0.9) Change in other non-current assets 0.1 (4.6) Change in Net Working Capital, Provisions a
Slide 40: PRE Breakdown by Business
PRE Breakdown by Business €/mln 1Q09 SPVs and Total Service Fund & asset Holding/ Total Funds Results Platform MNGT fees Agency Property Facility NPL Service other Consolidated Revenues 53.8 6.1 45.4 15.1 6.0 16.4 4.3 3.6 2.3 EBIT before restructuring costs (2.2) (0.9) 3.7 5.2 (1.8) 2.7 0.6 (2.9) (5
Slide 41: PRE Breakdown by Country
PRE Breakdown by Country €/mln 1Q09 Holding/ Total Italy Germany Poland NPL other Consolidated Revenues 53.8 31.3 13.5 2.3 4.6 2.3 EBIT before restructuring costs (2.2) 2.4 2.3 0.5 (2.3) (5.0) Net income from investments (12.5) (8.2) (7.1) 0.2 2.6 0.0 EBIT including net income from investments (14.7
Slide 42: 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 FY 2008 FY Real Estate by Country 15.4* 12.6* 50% Italy 71% Germany 49% 27% Poland 2% 1% 2007 FY 2008 FY * Of which participated by PRE: 12 €/bln in 2007 and 15 €/bln in 2008 41
Slide 43: Real Estate Portfolio in Italy (market value)
Real Estate Portfolio in Italy (market value) By Cluster 2008 FY 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%
Slide 44: Real Estate Portfolio in Germany (market value)
Real Estate Portfolio in Germany (market value) By Cluster 2008 FY 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. -
Slide 45: 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 46: Broadband Access Key Financial Results
Pirelli Broadband Access ’08 Key Financial Results €/mln 1Q09 1Q08 YoY Revenues 44.0 28.3 +55.5% Ebitda 2.7 1.3 +107.6% Margin 6.1% 4.6% +1.5pp Ebit 2.5 1.1 +127.3% Margin 5.6% 3.9% +1.7pp Net income 2.8 (1.0) n.m. NFP (32.3) 33.4 n.m. 45