Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2005 Earnings Presentation
27 slides from Pirelli & C's earnings presentation, Mar 13, 2006
Slide 1: FY 2005 Group Results
FY 2005 Group Results 13 March 2006
Slide 2: Disclaimer
DISCLAIMER This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current ex
Slide 3: Group Mission: Exploiting Value
GROUP MISSION: EXPLOITING VALUE Dynamic Management of leading companies with solid organic growth and a sound cash generation Seeding new ideas Reliable & Skilled coming from management team PLabs research with an international culture Driven by an effective Corporate Governance 2
Slide 4: Exploiting Value: Announcements
EXPLOITING VALUE: ANNOUNCEMENTS • PIRELLI TYRE: IPO of a minority stake of the share capital on the Milan Stock Exchange; Pirelli & C. will maintain the control • FINANCIAL ASSETS: disposals for approximately €0.4 bn (current market values) Proceeds will be reinvested in CORE BUSINESSES 3
Slide 5: Exploiting Value: 2005 Pirelli Achievements
EXPLOITING VALUE: 2005 PIRELLI ACHIEVEMENTS • Energy and Telecom Cables and Systems deal completed on July 2005: €1.2 bn positive financial effect • Olimpia: €152 mn increased contribution on P&L • Pirelli Tyre: Sales at €3,633 mn (+11.7% YoY), EBIT at €329 mn (+19.6% YoY) 9% ROS target achieved wit
Slide 6: FY 05 Pirelli Group Results
FY 05 PIRELLI GROUP RESULTS FY 05 FY 04 ∆ 05/04 €/mn IAS/IFRS IAS/IFRS Net Sales (as reported) 4,546 3,967 14.6% Net Sales (organic) (*) 4,153 9.5% EBIT 355 269 32.0% EBIT margin 7.8% 6.8% Result from Equity Participations 115 (included dividends) 149 Olimpia 152 7 EBIT including Result from Equity
Slide 7: FY 2004 – FY 2005: Group EBIT Variation
FY 2004 – FY 2005: GROUP EBIT VARIATION €/mn 45 355 1 27 (2) (11) (*) 26 269 EBIT Including Results from Equity Participations: €53 mn YoY GROUP Exchange Tyre Broadband Pirelli RE Pirelli Ambiente Others GROUP EBIT Rates EBIT Solutions EBIT EBIT EBIT FY 2004 Variation Variation EBIT Variation Variat
Slide 8: FY 2004 – FY 2005: Group Net Financial Position Variation
FY 2004 – FY 2005: GROUP NET FINANCIAL POSITION VARIATION €/mn Pirelli & C. Capital Increase €(1,062) mn Olimpia Capital Increase €1,344 mn 139 1,601 282 27 1,177 209 (343) 149 259 59 (1,205) GROUP FREE PIRELLI & C./ TELECOM CABLES NET CHINA PIRELLI & C. FINANCIAL OTHERS GROUP NFP CASH FLOW OLIMPIA
Slide 9: FY 05 Pirelli Tyre Results
FY 05 PIRELLI TYRE RESULTS €/mn FY 05 FY 04 Variation IAS/IFRS IAS/IFRS ∆Price/mix: +5.6% ∆Volumes: +1.8% Net ∆Actual Variation: +7.4% 3,633 3,253 +11.7% Sales ∆Exch. Rates: +4.3% EBITDA 518 452 +14.6% ∆Total: +11.7% EBITDA margin 14.3% 13.9% 275 +19.6% ∆Commercial Variations: €126 mn EBIT 329 ∆Effi
Slide 10: FY 05 Tyre Sector Sales
FY 05 TYRE SECTOR SALES FY 2005 Sales Breakdown FY 2005 Sales Breakdown by Business Segments by Geographic Area Asia, Africa Industrial Italy 13% and Pacific 31% 13% South America 25% Rest of Europe 40% North America 9% Consumer 69% 9
Slide 11: 2006 Pirelli Tyre Outlook
2006 PIRELLI TYRE OUTLOOK • Sustained growth also in 2006 coming from Premium Consumer segments (therein NAFTA) and emerging Industrial markets (therein China) • High pressure on raw materials and energy costs in 2006 necessarily asking for new additional price increases • Incremental investments in
Slide 12: PirelliFilm
PIRELLIFILM Enhancing brand name... ...with an impressive advertising campaign 11
Slide 13: FY 05 Pirelli Broadband Solutions Results
FY 05 PIRELLI BROADBAND SOLUTIONS RESULTS €/mn FY 05 FY 04 Variation IAS/IFRS IAS/IFRS Net 112 63 +77.8% Sales EBITDA (6) (8) n.m. EBITDA margin n.m. n.m. EBIT (7) (8) n.m. EBIT margin n.m. n.m. Net Income (8) (12) n.m. • Further Sales growth driven by Broadband Access • FY 2005 EBIT improved, as a
Slide 14: Broadband Access: Enlarging Clients Portfolio
BROADBAND ACCESS: ENLARGING CLIENTS PORTFOLIO • Increasing contribution to Revenues from businesses with Italian TLC carriers • Scouting the European TLC market to provide value added BBA solutions DiscusTM DiscusTM MultiMediaGate Multiplay Access Hybrid-STB Gateway 13
Slide 15: Photonics: Becoming a Reality
PHOTONICS: BECOMING A REALITY • First revenues contribution in 3Q 2005 (CWDM City 8 TM) • DTL qualification test CWDM City 8 TM Dynamically Tunable Laser 14
Slide 16: 2006 Pirelli Broadband Solutions Outlook
2006 PIRELLI BROADBAND SOLUTIONS OUTLOOK • Revenues growth >30% vs 2005 • EBIT close to breakeven • Internationalization of Broadband Access • Switch from accessories to modules in Photonics offer 15
Slide 17: Pirelli Environment: Group's Solutions
PIRELLI ENVIRONMENT: GROUP’S SOLUTIONS PIRELLI AMBIENTE PIRELLI AMBIENTE PIRELLI AMBIENTE TECNOLOGIE BONIFICHE Energy recovery from Environmental Gecam TM, Filters municipal solid waste Reclamation (SRF-P) Reducing CO 2 Reclamation and Reducing the emissions, Riduzione complete emissions of developi
Slide 18: FY 2005 Pirelli RE Achievements at a Glance
FY 2005 PIRELLI RE ACHIEVEMENTS AT A GLANCE • Ebit Including Income from Equity Participations grew by 40%(*) to €186 mn • Net profit increase by 24% to €145.4 mn • PRE completed acquisitions for €3.2 bn and sales for approx €2.5 bn with a 27% gross capital gain vs 25% in 2004 • Asset Under Manageme
Slide 19: FY2005 Pirelli RE Consolidated P&L
FY2005 PIRELLI RE CONSOLIDATED P&L €/mn Actual Actual December December Growth (%) 2005 2004 Aggregate Production Value Net of Acquisitions 3.507,2 2.714,0 29 Consolidated Production Value 700,2 586,2 EBIT Incl. Income from Equity Participations 186,1 133,0 40 Profit before Extraordianry Items 187,4
Slide 20: FY 2005 Pirelli RE Consolidated Balance Sheet
FY 2005 PIRELLI RE CONSOLIDATED BALANCE SHEET Actual Actual €/mn December December 2005 2004 Fixed Assets 410,7 375,7 Of which investments in participated companies 303,3 241,5 Net Working Capital 215,9 204,6 Net Invested Capital 626,6 580,3 Shareholders’ Equity 552,1 491,9 Of which minority interes
Slide 21: FY 2005 Pirelli RE Net Asset Value
FY 2005 PIRELLI RE NET ASSET VALUE €/mn UCG Pro-quota Book-Value Book-Value Market Value Market Value December 100% Pro-quota 100% Pro-quota 2005 RESIDENTIAL 1.186,3 441,1 1.475,8 558,5 117,4 COMMERCIAL 7.051,0 1.277,3 8,617,7 1,584.4 307,1 LAND 135,7 55,9 163,3 68.0 12,1 NPL 1.192,7 363,3 1.263,0 3
Slide 22: Pirelli RE 2006-2008 Targets
PIRELLI RE 2006-2008 TARGETS Strategic guidelines 2006-2008 KEY INDICATORS 2006 - 2008 • EBIT incl. IEP growth target CAGR 10-15% • Increase of the contribution of Services, Franchising Up to 50% on total Network and Fee Income Operating results From € 10.8 Bn (Dec 2005) • Increase of Asset Under Ma
Slide 23: Statutory Accounts: Dividend Proposed
STATUTORY ACCOUNTS Pirelli & C. S.p.A. Net Profit 140 €/mn Dividend Proposed Ordinary Shares 0.0210 € Savings Shares 0.0364 € Pirelli confirms its policy of dividend distribution, in line with 2004 22
Slide 24: Pirelli Group Outlook FY 2006
PIRELLI GROUP OUTLOOK FY 2006 Growth in sales and operating results is reasonably expected in 2006 23
Slide 25: Backup
BACKUP FrRecou
Slide 26: Pirelli Group Structure
PIRELLI GROUP STRUCTURE Main Shareholders Pirelli & C. SpA Camfin 25.4% Assicurazioni Generali 5.2% Edizione Holding 4.5% Mediobanca 4.5% 100% Fondiaria – SAI 4.3% Engine of Pirelli R.A.S. SpA 4.3% Innovation Labs 100% 51% Pirelli Pirelli Start-Ups Broadband Ambiente Solutions 100% 51% 57.7% Core Pi
Slide 27: FY 2005 Group Results
FY 2005 GROUP RESULTS Pirelli Pirelli Environment Pirelli Tyres Pirelli RE Others PIRELLI GROUP Broadband Solutions €/mn FY 05 FY 04 ∆ 05/04 FY 05 FY 04 ∆ 05/04 FY 05 FY 04 ∆ 05/04 FY 05 FY 04 FY 05 FY 04 FY 05 FY 04 ∆ 05/04 Net Sales (as reported) 3,633 3,253 11.7% 112 63 77.8% 700 586 19.5% 62 2 3