Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2003 Earnings Presentation
18 slides from Pirelli & C's earnings presentation, May 2003
Slide 1: Group results for Q1 2003
Group results for Q1 2003 0
Slide 2: Pirelli SpA - Q1 2003 Group Results
Pirelli SpA - Q1 2003 Group Results Total variation - 14.2% Q1 03 Q1 02 Var. Exchange - 8.6% Metal prices - 1.6% Sales 1,449 1,688 - 14.2% Deconsolidation - 1.5% EBITDA 141 137 2.9% Actual variation - 2.5% EBITDA Margin 9.7% 8.1% Volume - 2.6% EBIT (*) 59 42 40.5% Price/Mix + 0.1% EBIT Margin 4.1% 2
Slide 3: Pirelli SpA - Q1 2003 details (Euro ml)
Pirelli SpA - Q1 2003 details (Euro ml) Q1 2003 Q1 2002 Var. % Q4 2002 Var. % FY 2002 Net Sales 1,449 1,688 -14.2% 1,501 -3.5% 6,311 EBITDA 141 137 +2.9% 112 +25.9 % 480 Ebitda Margin 9.7% 8.1% 7.5% 7.6% EBIT 59 42 + 40.5 % 22 + 168.2% 117 Ebit Margin 4.1 % 2.5 % 1.5% 1.9% Financial expenses (37) (3
Slide 4: Pirelli SpA Group Profit and Loss - Ebit variations (Euro ml)
Pirelli SpA Group Profit and Loss - Ebit variations (Euro ml) + 96.7% Including Including aa positive positive Including Including aa 35 35 mn mn Euro 30 mn variation Euro 30 mn variation negative variation negative variation of of LatAm LatAm prices prices for for LatAm LatAm raw raw material mater
Slide 5: Restructuring plan substantially achieved without endangering business prospects
Restructuring plan substantially achieved without endangering business prospects ... Rationale Total headcount reduction M+S Lab Tot Jan – Sept 2002 900 995 1,895 • Efficiency recovery from synergies across Sectors Oct – Dec 2002 389 764 1,153 • Unchanged commitment to R&D Total 2002 1,289 1,759 3,0
Slide 6: ... improving the Economic Results
… improving the Economic Results Quarter results 2003 Expectations Energy Cables: • Q1 ‘03 outperforms Q1 ‘02 in terms of • Profitability continues recovery in all business divisions profitability • Energy Cables expected to improve 2002 operating • EBIT margin and sales decrease vs Q4 ‘02 results d
Slide 7: Tyres: business structure
Tyres: business structure Geographical breakdown (FY2002) Sales and ROS (Q-o-Q) 13% Other 14% Italy 800 10.0% 19% Latin America 750 9.0% 8.0% 700 7.0% 650 6.0% 8% North 600 America 46% Rest of Europe 5.0% 550 4.0% Products breakdown (FY2002) 500 3.0% 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 70%
Slide 8: Pirelli Tyres: Profit And Loss (Euro ml)
Pirelli Tyres: Profit And Loss (Euro ml) Q1 2003 Q1 2002 Var. % Q4 2002 Var. % FY 2002 Net Sales 741 758 -2.2% 702 +5.6% 2,857 EBITDA 108 101 +6.9% 81 +33.3% 365 Ebitda margin 14.6% 13.3% 11.5% 12.8% EBIT 65 54 +20.4% 41 +58.5% 191 Ebit margin 8.8% 7.1% 5.8% 6.7% Currency -11 Total variation - 2.2%
Slide 9: Tyres Sector: outlook
Pirelli Tyres Sector: outlook ENVIRONMENT PIRELLI ACTIONS ¾ Consumer market (Car/LT and Moto) ¾ Higher saturation of plants, maximising output of showing growth in EU (particularly AM) and “higher value added” products; increase of LatAm (particularly OE); North American production capacity in low c
Slide 10: Energy cables and systems: business structure
Energy cables and systems: business structure Geographical breakdown (FY2002) Sales and ROS (Q-o-Q) 16% Italy 1200 3.5% 14% North 3.0% 1000 America 49% Rest 2.5% of Europe 800 2.0% 600 1.5% 7% Latin America 1.0% 14% Other 400 0.5% 200 0.0% Products breakdown (FY2002) 0 -0.5% 1Q01 2Q01 3Q01 4Q01 1Q02
Slide 11: Pirelli Energy Cables: Profit And Loss (Euro ml)
Pirelli Energy Cables: Profit And Loss (Euro ml) Q1 2003 Q1 2002 Var. % Q4 2002 Var. % FY 2002 Net Sales 623 796 -21.7% 715 - 12.9% 3,021 EBITDA 31 28 +10.7% 49 - 36.7% 158 Ebitda margin 5.0% 3.5% 6.9% 5.2% EBIT 8 1 n.m. 22 - 63.6% 55 Ebit margin 1.3% 0.1% 3.1% 1.8% Currency -3 Total variation - 21.
Slide 12: Energy Sector: outlook
Pirelli Energy Sector: outlook ENVIRONMENT PIRELLI ACTIONS ¾European demand weak in all segments ¾ Major focus kept on cash generation through capex selection and working capital efficiencies ¾Overcapacity still a market issue ¾ Restructuring effort pushed forward: headcount reduced by 22% since Jan
Slide 13: Telecom cables and systems: business structure
Pirelli Telecom cables and systems: business structure Geographical Breakdown (FY2002) Sales and ROS (Q-o-Q) 23% Other 6% Latin 9% Italy 450 20% America 400 10% 350 0% 300 250 -10% 40% Rest 22% North of Europe 200 -20% America 150 -30% 100 50 -40% Products Breakdown (FY2002) 0 -50% 60% Optical Fiber
Slide 14: Pirelli Telecom Cables and Systems: Profit And Loss (Euro ml)
Pirelli Telecom Cables and Systems: Profit And Loss (Euro ml) Q1 2003 Q1 2002 Var. % Q4 2002 Var. % FY 2002 Net Sales 89 164 - 45.7% 88 +1.1% 468 EBITDA (4) 14 n.m. (12) n.m. (22) Ebitda margin n.m. 8.5% n.m. n.m. EBIT (17) (2) n.m. (28) n.m. (84) Ebit margin n.m. n.m. n.m. n.m. Currency 0 Total var
Slide 15: Telecom Sector: outlook
Pirelli Telecom Sector: outlook ENVIRONMENT PIRELLI ACTIONS ¾ Optical cable demand: Q1 ‘03 = Q4 ‘02, ¾ Exploiting niche opportunities in long-haul market flat market (e.g. OPGW in Romania) ¾ Cable prices < 10% on previous quarter ¾ Development on specific regional projects (e.g. Far-Ice) ¾ Visibilit
Slide 16: Merger with Pirelli & C.: main steps
Merger with Pirelli & C.: main steps Transformation • Transformation of Pirelli & C. from Limited Partnership (“Società in of Pirelli & C. to Accomandita”) to Limited Company (“Società per Azioni”) and alignment of the Limited Company Pirelli & C. bylaws to the one of Pirelli S.p.A. • Capital increa
Slide 17: New Pirelli Group Structure
New Pirelli Group Structure As approved by Pirelli SpA EGM on 5th May 2003 Current Structure Envisaged Structure 100% Pirelli & C. Luxembourg 100% 100% 50,4% 100% 61,2% 27,5% 14,2% Pirelli Energy Telecom Olimpia Tyres Real Estate 100% 100% 50,4% 100% Cables Cables 61,2% Energy Telecom Olimpia Tyres
Slide 18: Pirelli RE: consolidated 3 year targets
Pirelli RE: consolidated 3 year targets EBIT EBIT incl. incl. income income from from Equity Equity Participations, Participations, ml ml Euro Euro AM - Asset Management Activities 25% 20 - SP - Service Provider Activities AGR ar C 3 ye AM AM 102 % 72 R AM AG rC AM AM Fees a ye AM Fees 3 20 AM Fees