Pirelli & C. S.p.a. · MIL:PIRC

Pirelli & C — Pirelli & C Spa Azioni — Q1 2023 Earnings Presentation

31 slides from Pirelli & C's earnings presentation, May 11, 2023

  1. Slide 1: 1Q 2023 Financial Results

    1Q 2023 Financial Results May 11th, 2023 1Q 2023 Financial Results

  2. Slide 2: Disclaimer

    Disclaimer In General. This disclaimer applies to this document and any oral comments of any person presenting it. This document, taken together with any such oral comments, is referred to herein as the “Presentation”. This document has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company

  3. Slide 3: Agenda

    Agenda 1 1Q’23 KEY MESSAGES 2 PIRELLI & C. – 1Q’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 2 1Q 2023 Financial Results

  4. Slide 4: Key Messages

    Key Messages › 1Q’23 performance confirming the resilience of our business model • Market share gain in ≥18” driven by our product portfolio • Strong price/mix (+15% yoy) more than offsetting external headwinds (raw mat, inflation and FX) • Efficient stock management with a progressive rebalance of

  5. Slide 5: 1Q'23 Results highlights

    1Q’23 Results highlights Solid quarterly delivery despite a still challenging environment € million Net Sales Adjusted EBIT1 +12% +9% 1,521 1,700 229 248 STD H.V. 74% 75% 1Q’22 1Q’23 1Q’22 1Q’23 margin 15.0% 14.6% Net Income Net Financial Position Net Cash Flow +5% -691 110 115 3,244 2,553 -673 in 1

  6. Slide 6: 1Q'23 update on Sustainability

    1Q’23 update on Sustainability Area KPIs 2021A 2022A 2025T 1Q’23 PROGRESS SAFETY FIRST Accident 0.21 0.20 • Bio & Circular materials: Strong focus in Towards zero accidents ≤ 0.10 frequency index -4.5% yoy -4.5% yoy upcoming new product lines at work Rolling • Tyre Wear & Innovation: working towards

  7. Slide 7: Agenda: PIRELLI & C. – 1Q'23 Results

    Agenda 1 1Q’23 KEY MESSAGES 2 PIRELLI & C. – 1Q’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 6 1Q 2023 Financial Results

  8. Slide 8: 1Q'23 Car volumes – Pirelli vs. Market

    1Q’23 Car volumes – Pirelli vs. Market Outperformance confirmed on ≥18’’ driven by North America and APac Market Pirelli TOTAL ≥18” ≤17” 20 15 10 TOTAL 10 4.9% 5 2.6% 0 -6.0% 0 -4.1% -2.0% -11.3% -10 15 15 0.7% O.E. 10 10 7.1% 7.5% 5 2.7% 2.0% 5 0 0 -12.7% 20 20 REPL. 10 3.0% 10 0 0 -0.2% -10 -8.0%

  9. Slide 9: 2023 Strategy implementation: 1Q'23 delivery in line with targets

    2023 Strategy implementation: 1Q’23 delivery in line with targets Main programs 2023 targets 1Q’23 main achievements › • Focus on HV, outperforming market in ≥18” ›• Car ≥18”: +5% vs. market +3% with: • solid Repl. demand across regions Commercial › • More selective approach to O.E. • O.E. strong fo

  10. Slide 10: 1Q'23 Commercial program delivery

    1Q’23 Commercial program delivery Higher weight of ≥18” on Car Volumes, with increasing incidence of Elect and sales in US 1Q’23A Volume variance (Car) Key programs highlights Volume trend Market 1Q’22 A 42% 58% H.V. Repl. Confirmed weight of H.V. Regions (>90%) PULL H.V. Repl. ≥18” YoY increase • ~

  11. Slide 11: 1Q'23 Innovation program delivery

    1Q’23 Innovation program delivery Car : EV & Sustainability at the core 2 wheels: we sell what we race EV positioning further enhanced: Confirmed Sole Supplier until 2026 › >350 homologations worldwide › OE Premium/Prestige EV mkt share: 1.5x vs. ICE › Concluded the last program generation process w

  12. Slide 12: Wave 3 Competitiveness programs: 1Q'23 results

    Wave 3 Competitiveness programs: 1Q’23 results Achievement in line with expectations and the seasonality of programs’ delivery 2022 2023 E FY ACT Focusing on: FY GUI 1Q ACT › Modularity  Equally split Product Cost › Design speed and virtualization  in 1H/2H › Industrial IoT and flexible factory 

  13. Slide 13: 1Q'23 Sales bridge

    1Q’23 Sales bridge Top line trend driven by a solid price/mix improvement € million -3.1% +15.1% +12.0% -0.3% +11.7% 1,700 1,521 230 (4) (47) STD 1,704 H.V. 74% 75% 1Q’22 Δ Volumes Δ Price/mix Organic Growth Δ Forex 1Q’23 4Q'22 -3.8% +18.6% +14.8% +2.2% +17.0% 1Q'22 -1.4% +20.4% +19.0% +3.2% +22.2%

  14. Slide 14: 1Q'23 adjusted EBIT bridge

    1Q’23 adjusted EBIT bridge Profitability supported by internal levers offsetting the negative external scenario € million Net impact +46 Net impact +105 Net impact -59 (78) 198 (15) 10 (69) 248 229 ▬ Commodities -72 (6) 0 (20) adj. EBIT ▬ FX -6 1Q’22 Volume Price/ Raw Mat. FX Effic. Inflation D&A Ot

  15. Slide 15: 1Q'23 Net Income bridge

    1Q’23 Net Income bridge Earnings driven by improving operating performance € million (2) 2 (9) 20 (6) 115 110 Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial income Δ Taxes Net Income 1Q’22 restr. costs loss from equity / expenses 1Q’23 participations % of sales 7.2% 6.8% 1Q 2022 1Q 2

  16. Slide 16: 1Q'23 Net Financial Position

    1Q’23 Net Financial Position Cash Flow trend basically stable YoY and in line with business seasonality € million Net Cash Flow (before dividends): -691 (-673 in 1Q’22) Operating Cash Flow: -577 (-565 in 1Q’22) 3,244 52 29 33 2,553 869 • Non-rec. / restr. 13 (360) 15 • FX, others 20 53 NFP FY’22 EBI

  17. Slide 17: Total Gross Debt structure as of March 31st 2023

    Total Gross Debt structure as of March 31st 2023 Debuts as IG-Rated company in the Debt Capital Market and Sustainability Linked space grant liquidity margin fully covering debt maturities up to 2Q’25 and reduce refinancing risk in volatile financial markets € million Net Financial Position Gross De

  18. Slide 18: Agenda: FY'23 Outlook and Targets

    Agenda 1 1Q’23 KEY MESSAGES 2 PIRELLI & C. – 1Q’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 17 1Q 2023 Financial Results

  19. Slide 19: 2023 Global Car Tyre Market Outlook

    2023 Global Car Tyre Market Outlook High Value resilience confirmed, expected to outperform the Standard market by 7pp Car tyre market (million pcs) 1,540 -2% ~ flat 1,402 1,426 ≥18" 265 O.E. ~+7% 295 +5% 317 ~+5% REPL ~+3% 1,275 1,109 O.E. flat ≤17" -3% ~-2% 1,107 REPL ~-2.4% 2019 A 2022 A Δ YoY 20

  20. Slide 20: FY 2023 Targets confirmed

    FY 2023 Targets confirmed 2022 A 2023 E € billion Target @ 22-Feb -23 Target @ 11-May-23 Net Sales 6.62 ~6.6 ÷ ~6.8 confirmed • Vol.: flat / ~+1% • Price/mix: ~+4.5% ÷ ~+5.5% • Forex: ~-4.5% ÷ ~-3.5% adj. EBIT margin 14.8% >14%÷ ~14.5% confirmed CapEx 0.40 ~0.40 confirmed (% of Sales) (6.0%) (~6%) N

  21. Slide 21: Agenda: Appendix

    Agenda 1 1Q’23 KEY MESSAGES 2 PIRELLI & C. – 1Q’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 20 1Q 2023 Financial Results

  22. Slide 22: A globally acknowledged sustainability leadership

    A globally acknowledged sustainability leadership Major ratings Last update Score Positioning in the reference sector 2022 86 Top score ATX Auto Components 2023 TOP 1% ESG Max Score 2022 A Max Score SUPPLIER 2022 ENGAGEMENT Max Score LEADER 2023 4.4 / 5 Top score Autoparts 2023 11.7 Top ESG Rated 20

  23. Slide 23: Key Car Market Trends: Europe

    Key Car Market Trends: Europe Market trend (∆% YoY) FY’21 1Q’22 2Q’22 3Q’22 4Q’22 FY’22 1Q’23 Total 27 18 11 1 3 O.E. -7 -16 10 8 5 Replacement 0 -5 -9 -10 7 4 3 0 Total (O.E.+Repl.) -1 -5 -6 ≥18” & ≤17” 26 28 24 14 8 10 O.E. 1 2 1 3 5 ≤17" ≥18” -11 -10 -20 24 22 16 11 8 6 3 7 Replacement -1 -2 -1 -

  24. Slide 24: Key Car Market Trends: North America

    Key Car Market Trends: North America Market trend (∆% YoY) FY’21 1Q’22 2Q’22 3Q’22 4Q’22 FY’22 1Q’23 Total 19 12 9 7 8 O.E. 0 -1 13 6 Replacement1 -5 -5 -8 -8 -9 11 4 Total (O.E.+Repl.) -3 -4 -2 -5 -7 ≥18” & ≤17” 15 19 19 7 8 7 8 11 10 O.E. 5 5 5 ≤17" ≥18” -8 -9 20 15 11 1 2 1 3 Replacement1 -4 0 -8

  25. Slide 25: Key Car Market Trends: Asia Pacific

    Key Car Market Trends: Asia Pacific Market trend (∆% YoY) FY’21 1Q’22 2Q’22 3Q’22 4Q’22 FY’22 1Q’23 Total 26 O.E. 3 0 4 -7 -2 -3 4 4 Replacement 0 -6 -7 -14 -13 12 4 Total (O.E.+Repl.) -3 -3 -2 -11 -8 ≥18” & ≤17” 24 32 O.E. 11 5 6 10 ≤17" 0 2 3 ≥18” -1 -1 -4 -6 -9 13 9 3 4 6 Replacement -5 -6 -1 -7

  26. Slide 26: Key Car Market Trends: Russia, MEAI / South America

    Key Car Market Trends: Russia, MEAI / South America Market trend (∆% YoY) FY’21 1Q’22 2Q’22 3Q’22 4Q’22 FY’22 1Q’23 Russia, MEAI 18 14 O.E. -1 0 0 -4 -14 13 3 Replacement 0 -4 -8 -10 -8 14 2 3 Total (O.E.+Repl.) -6 -3 -7 -11 South America 30 15 15 O.E. 5 9 -4 -14 25 Replacement1 1 0 -1 -2 -2 -7 23 T

  27. Slide 27: Financial Results Highlights

    Financial Results Highlights € million 1Q 2023 1Q 2022 ∆ YoY Net Sales 1,700 1,521 +11.7% Organic Growth1 +12.0% High Value Revenues (% on total) 75.1% 73.7% +1.4 p.p. adj. EBITDA2 360 333 +8.0% Margin 21.2% 21.9% -0.7 p.p. adj. EBIT3 248 229 +8.6% Margin 14.6% 15.0% -0.4 p.p. PPA amortization (28)

  28. Slide 28: Consolidated Balance Sheet

    Consolidated Balance Sheet € million 31-Mar-2023 31-Dec-2022 31-Mar-2022 Fixed assets 8,855 8,911 8,911 Inventories 1,458 1,458 1,222 Trade receivables 929 637 908 Trade payables (1,368) (1,973) (1,197) Operating net working capital 1,019 121 933 % of net sales1 15.0% 1.8% 16.6% Other receivables /

  29. Slide 29: Net Cash Flow

    Net Cash Flow € million 1Q 2023 1Q 2022 Adjusted EBIT1 248 229 Depreciation & Amortization (excl. PPA amortization) 112 105 Capital expenditures (53) (49) Rights of use (IFRS 16) (15) (8) Change in working capital / other (869) (842) Operating Cash Flow (577) (565) Financial income / (expenses) (52)

  30. Slide 30: Raw material costs trend and mix

    Raw material costs trend and mix Main raw materials price trend 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 98.9 ; +40% YoY 1.406 ; +3% YoY 1.317 ; -6% YoY 1.678 ; +27% YoY 1.548 ; -8% YoY $ / kg Brent Oil (in $ / barrel) Natural Rubber (in $ / kg) yearly avg.; Δ YoY $ / barrel 1.95 130 115 1.70

  31. Slide 31: Pirelli manufacturing footprint

    Pirelli manufacturing footprint U.K. Germany Romania •› Burton – ›• Breuberg – •› Slatina – Car Semi-finished Car / Moto •› Carlisle – Car U.S. •› Rome – Car Russia •› Kirov – Car •› Voronezh – Car China Mexico •› Yanzhou – Italy Car / Moto •› Silao – Car •› Jiaozuo – Car •› Bollate – •› Shenzhou –

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