Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Q1 2013 Earnings Presentation
33 slides from Pirelli & C's earnings presentation, May 7, 2013
Slide 1: Pirelli Q1 2013 Results
PIRELLI Q1 2013 RESULTS MAY 7, 2013 Q1 2013 RESULTS
Slide 2: 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
Slide 3: Agenda
AGENDA KEY MESSAGES Q1 2013 RESULTS TYRE BUSINESS Q1 2013 OVERVIEW 2013 OUTLOOK & TARGETS APPENDIX Q1 2013 RESULTS 2
Slide 4: Key Messages
KEY MESSAGES Q1 2013 Performance Our distinctive geographic footprint made us grow in a lagging global market and be best performers in the Industrial Business In Europe, we are investing in the next upturn leveraging on Premium OE/Replacement pull-through 2013 Industry Outlook Slowdown in global ty
Slide 5: Agenda
AGENDA KEY MESSAGES Q1 2013 RESULTS TYRE BUSINESS Q1 2013 OVERVIEW 2013 OUTLOOK & TARGETS APPENDIX Q1 2013 RESULTS 4
Slide 6: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS Q1 13 Q1 12* D YoY Results key drivers €/mln Revenues 1,536.3 1,556.5 -1.3% Favourable exposure to growing markets Organic growth** 3.6% led to +3.6% Top Line organic growth EBITDA before Restr. Costs 255.3 279.1 -8.5% Margin 16.6% 17.9% Profitability trend reflects
Slide 7: 1Q 2013 Performance: Exposure to Growing Markets Softens Weak Europe
1Q 2013 PERFORMANCE: OUR DISTINCTIVE EXPOSURE TO GROWING MARKETS SOFTENS THE IMPACT OF A WEAK EUROPE Tyre Sales Consumer Sales Industrial Sales Tyre Ebit Margin o/w Premium €/mln 1,526.7 -1.0% yoy 1,116.7 -3.0% yoy 548.1 -2.8% yoy 410 +4.9% yoy 12.2% (-2.0pp) Europe 33% -15% Europe High single-digit
Slide 8: Russia Project Update
RUSSIA PROJECT UPDATE Product and OE Strategy Distribution Marketing New winter studded product lines Increasing our pervasiveness Further strengthening Brand specifically engineered for Nordic awareness markets Pirelli Ice Zero Car + Suv 16‟‟ – 21‟‟ 950 retail store presence New advertising c
Slide 9: Pirelli Net Income Q1 13 vs Q1 12
PIRELLI NET INCOME Q1 13 VS Q1 12 €/mln 123.6 (7.1) (34.3) (32.9) 22.8 72.1 Of which RCS (6.8) Net Income DEBIT D Results D Financial D Taxes Net Income Q1 12 from particip. income/ Q1 13 charges * Before deferred tax assets (positive impact) Q1 2013 RESULTS 8
Slide 10: Pirelli Debt Structure as of March 31, 2013
PIRELLI DEBT STRUCTURE AS OF MARCH 31, 2013 Net Financial Position Gross Debt Maturity €/mln 2,476.6 796.4 168.3 52.9 Committed Line 605 Cash & Cash 209.8 466.3 Equivalent 115.4 Drawdown 167.1 Fin. 781.1 42.7 330.1 Receivables 167.1 Debt Capital 772.1 Market 614 745.8 575 1,680.2 605 Other 1,099.5 1
Slide 11: Pirelli Q1 13 Net Financial Position
PIRELLI Q1 13 NET FINANCIAL POSITION €/mln EBIT before restr. costs 183.0 Dep/Am: 72.3 Investments*: (79.7) D NWC & other: (492.4) 49.6 1,680.2 101.1 7.5 316.8 NWC dynamics 1,205.2 D Operating Working Capital: +492 Inventories: +26 D NFP +475.0 Receivables: +319 Payables: +141 Others: +6 FY 12 Opera
Slide 12: Agenda
AGENDA KEY MESSAGES Q1 2013 RESULTS TYRE BUSINESS Q1 2013 OVERVIEW 2013 OUTLOOK & TARGETS APPENDIX Q1 2013 RESULTS 11
Slide 13: Key Tyre Results
KEY TYRE RESULTS 1Q’12 YoY% 1Q’13 YoY% Q1 Highlights (Restated IAS 19) €/mln Revenues 1,542.6 1,526.7 -1.0% +3.9% organic growth driven by Emerging EBITDA (before 283.6 260.1 -8.3% Markets, Industrial business rebound and restruct. costs) margin 18.4% 17.0% -1.4p.p. full contribution of Russian JV
Slide 14: Pirelli Tyre Q1 13 Operating Performance
PIRELLI TYRE Q1 13 OPERATING PERFORMANCE 13.1 218.5 12.8 17.9 (5.5) (1.2) 185.6 (19.6) (40.8) (9.6) Raw materials: 37.0 Labour / energy / other: (24.2) Depreciation: (10.8) Industrial cost**: (10.0) One-off positive impact in 1Q‟12 (10.0) Others: (10.0) EBIT Q1 12* Price mix Volume Cost of inp
Slide 15: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE 1Q’12 1Q’13 YoY% Results key drivers (Restated IAS 19) €/mln Slight revenue increase before the impact of Foreign Revenues 1,151.8 1,116.7 -3.0% Exchange EBITDA (before 235.4 194.8 -17.2% Widening volume performance gap among markets: restruct. costs) -13%
Slide 16: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE 1Q’12 YoY% 1Q’13 YoY% Results key drivers (Restated IAS 19) €/mln Industry leading performance thanks to exposure to Revenues 390.8 410.0 +4.9% growing markets EBITDA (before 48.2 65.3 +35.5% restruct. costs) Record volume growth (+12%) with market share
Slide 17: 2013 Raw Materials Guidance
2013 RAW MATERIALS GUIDANCE BREAKDOWN FY 2012 Update Guidance (based on purchase cost) March 2013 May 2013 Average Cost of 2012A 2013 Δ yoy 2013 Δ yoy Synthetic Rubber Goods Sold (2013 vs 2012) (2013 vs 2012) €/mln 31% Natural Rubber Natural Rubber 3,450 ~3,000 ~+100 ~2,800 +132 26% TSR20 ($/ton) Ca
Slide 18: Agenda
AGENDA KEY MESSAGES Q1 2013 RESULTS TYRE BUSINESS Q1 2013 OVERVIEW 2013 OUTLOOK & TARGETS APPENDIX Q1 2013 RESULTS 17
Slide 19: 2013 Outlook by Region (Car)
2013 OUTLOOK BY REGION (CAR) Old Guidance New Guidance Region Tyre market Revenue trend EBIT% Revenue trend EBIT% (Total Tyre Car Market in Mln pcs) Europe Mid single-digit decline, Basically stable Double-digit Slight reduction High single-digit Total: 314 Premium resilient (flat to +2%) Prem
Slide 20: Pirelli 2013 Targets Confirmed
PIRELLI 2013 TARGETS CONFIRMED Softer European profitability offset by higher raw material tailwind and improvement in LatAm, APAC and NAFTA €/bln 2013 Targets Δ YoY 2013 Targets March „13 update Revenues ~ 6.3 / <6.4 +4% / +5% Confirmed Volumes ~ +3% / ~ +4% Confirmed: high end of range more likely
Slide 21: 2013 Consumer & Industrial Targets
2013 CONSUMER & INDUSTRIAL TARGETS Consumer business Industrial business 2013Targets 2013 Targets 2013Targets 2013 Targets March „13 update March „13 update €/bln Revenues ~ 4.6 Confirmed Revenues ~ 1.7 Confirmed Volumes +3% / +4% Confirmed Volumes +3.5% / +4.5% High end of range more likely o/w Pre
Slide 22: Agenda
AGENDA KEY MESSAGES Q1 2013 RESULTS TYRE BUSINESS Q1 2013 OVERVIEW 2013 OUTLOOK & TARGETS APPENDIX Q1 2013 RESULTS 21
Slide 23: Pirelli Group – Q1 13 Results
PIRELLI GROUP – Q1 13 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. Q1 13 Q1 12 Q1 13 Q1 12 Q1 13 Q1 12 €/mln Sales 1,526.7 1,542.6 9.6 13.9 1,536.3 1,556.5 EBITDA before Restruct. Costs 260.1 283.6 (4.8) (4.5) 255.3 279.1 % on sales 17.0% 18
Slide 24: Pirelli Balance Sheet
PIRELLI BALANCE SHEET 1Q13 FY12 €/mln Fixed Assets 3,892.9 3,877.2 Inventories 1,129.0 1,102.6 Trade receivables 1,023.6 704.6 % Net Invested Capital Trade payables (1,127.4) (1,268.7) Net Operating Working Capital 1,025.2 538.5 1Q13 FY12 Other payables/receivables 34.9 11.0 Pirelli Tyre 95,0% 93.7%
Slide 25: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 1Q’12 2Q’12 3Q’12 4Q’12 Q1’13 EBIT before restructuring costs 214.7 205.1 199.1 212.7 183.0 Depreciation 64.4 66.1 68.4 72.4 72.3 Net investments (80.1) (114.8) (132.5) (143.5) (79.7) Working capital/other variations (511.1) (237.2) (197.2) 594.6 (492.4) OPERATING CASH
Slide 26: 2013 Main Profitability Drivers – Q1 Update
2013 MAIN PROFITABILITY DRIVERS – Q1 UPDATE Driver Impact Highlights Volumes +3% / +4% revenue growth Growth to come from Emerging Markets (high end of range more likely) +4% / +5% revenue growth Price/Mix Price ~ flat, mix improvement our internal lever (low end of range more likely) Weaker S
Slide 27: 2013 Cash Flow Generation
2013 CASH FLOW GENERATION Starting to reap the benefits of our past investments Net Cash Flow Before dividends 2012 2013 -59 €/mln > 200 €/mln before Russia, Däckia before Prelios and Campneus impact acquisitions MAIN DRIVERS EBITDA* YoY IMPROVEMENTS: +70 ÷ 110 €/mln CAPEX ~400 €/mln OPERATING
Slide 28: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 1Q12 2Q12 3Q12 4Q12 1Q13 OE* Europe -6% -8% -9% -11% -11% Replacement** -12% -13% -11% -13% -11% +27% +16% +16% +10% America +1% North OE Replacement -1% -7% -3% -7% -8% +14% +8% +3% Mercosur OE -7% -9% +4% +5% +7% 0% Replacement*** -2% +15% +16% +10% +1% +
Slide 29: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 1Q12 2Q12 3Q12 4Q12 1Q13 OE -6% Europe* -7% -8% -10% -6% +1% Replacement -1% -10% -30% -26% +44% OE Mercosur -30% -27% -28% -31% +11% Replacement** +3% +0% -13% -7% OE China -7% -19% -6% -24% -24% Replacement +4% na na na -10% (*)Turkey included and Russi
Slide 30: Q1 13 Pirelli Tyre Mix
Q1 13 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 65% 73% Motorbike 8% Steelcord Truck & other Industrial 27% 25% 2% SALES BY CHANNEL SALES BY REGION Nafta Replacement South 11% 75% America Asia Pacific 35% 7% MEA 9% Russia 5% OE Europe 25% 33% Q1 2013 RESULTS 29
Slide 31: March 2013 Pirelli People
MARCH 2013 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION Nafta 37,846 Europe 3% 36,068 42% South America 37% Asia Pacific MEA Mar. 2012 Mar. 2013 9% 9% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 92% 80% Staff 19% Temps & Agency Management 8% 1% Q1 2013 RESULTS 30
Slide 32: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD MEXICO Italy Germany Russia U.K. Bollate (MI) Car Breuberg Car/Moto Settimo Torinese Car Merzig Steelcord Kirov Car Burton Car Figline Valdamo Steelcord Voronezh Car Carlisle Car Turkey U.S.A Car/Truck Izmit Rome Car Steelcord Mexico Romania Guanajuato Car Slatina Car/Ste
Slide 33: Raw Materials
RAW MATERIALS RAW MATERIAL PRICE TREND 5,251 5.251 Brent Oil (in usd/bbl) 4.671 Natural Rubber (in usd/tons) 4.565 4.25 4 3.587 3.687 3.380 123 3.301 117 3.096 118 11 110 113 3.022 111 8 110 99 3.148 112 2.513 112 109 3.156 109 96 2.943 2.973 2.531 105 2.962 2.750 2.884 2.653 80 69 87 63 80 77 57 1.