Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2023 Earnings Presentation
97 slides from Pirelli & C's earnings presentation, Mar 6, 2024
Slide 1: Pirelli 2023 Results and 2024-25 Industrial Plan Update
Milan 6th March, 2024 PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 2: Agenda
Agenda TIME SESSION SPEAKER 14:00 - 14:10 Strategic guidelines M. Tronchetti Provera - Executive Vice Chairman 14:10 - 14:40 Industrial Plan update A. Casaluci - Chief Executive Officer 14:40 - 15:00 Innovation P. Misani - Chief Technology Officer 15:00 - 15:20 FY 2023 Results & 2024-25 Targets F. B
Slide 3: Strategic guidelines
Strategic guidelines M. Tronchetti Provera Executive Vice Chairman M. Tronchetti Provera Executive Vice Chairman PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 4: Agenda for today
Agenda for today 2021 2024 Q4 2025 / Q1 2026 31 March 2021 New 2021-2022 | 2025 Industrial Plan Industrial Plan 6 March 2023 Results 2024-25 Industrial Plan update PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 3 Wednesday, 6 March 2024
Slide 5: Strategy proved to be effective in a challenging and unforeseen context
Strategy proved to be effective in a challenging and unforeseen context … GDP growth affected by High Increasing geopolitical Increasing Environment interest hikes Inflation & supply chain risk regulations INCREASING FOCUS ON BOOSTING DEPLOYING MITIGATION ACCELERATING HIGH VALUE AND PRICE/MIX & EFFI
Slide 6: Strong performance delivered in 2021-23
… and we delivered a strong performance in 2021-23 We strengthened our HV weight on 2023 Revenues exposure to HV 75% +5 p.p. vs 2020 Two years in advance vs Industrial Plan 2021 target We maintained best-in-class Adjusted EBIT margin profitability among Tier 1 players 15% +3.5 p.p. growth vs 2020 +5
Slide 7: Macro scenario: still volatile in 2024, expected to gradually improve in 2025
Macro scenario: still volatile in 2024, expected to gradually improve in 2025 Actual World GDP World inflation Interest rates1 YoY % CPI YoY % 3-month Euribor %, Discount rate on 3-month Treasury bills % Revised assumptions -0.1pp -2.6pp -1.2pp -1.3pp 2.7% 2.3% 2.6% 5.6% 4.7% 3.1% 3.4% 3.6% 2.2% 5.1
Slide 8: Looking forward, key industry trends are confirmed
Looking forward, key industry trends are confirmed Resilient Innovation & Sustainability Electrification HV demand connectivity 5+% 80% 40% 32% CAGR of High Value of consumers consider of Premium & Prestige car of global car parc is expected segment in 2023-2030 sustainability in automotive producti
Slide 9: Pirelli long-term strategy
Pirelli long-term strategy Outpacing High Value growth rate Confirm and strengthen distinct Leading in profitability among Tier 1 tyre players position as the leading High Value Consumer Tyre Seizing tyre connectivity opportunities Player Setting the decarbonization benchmark in the tyre industry PI
Slide 10: Decarbonization plan
Leading the tyre industry sustainable transition 2023 2030 2040 Decarbonization Carbon Net -51%1 plan Scope 1+2 Neutrality2 Zero3 Scope 1+2 Scope 1+2+3 vs. 2021 Industrial Plan Outperformed4 Confirmed New vs. Tyre Industry PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 1. vs 2015 2. In comp
Slide 11: Industrial Plan update
Industrial Plan update M. Tronchetti Provera Executive Vice Chairman A. Casaluci Chief Executive Officer PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 12: 2023 results above targets, confirming solid execution of our strategy
2023 results above targets, confirming a solid execution of our strategy Financial performance Sustainability performance 6,650Mln € Revenues 1.7 Accident Frequency Index1 (November Target: ~6.6Bln €) -15% YoY driven by a continuous focus on health & safety +6.8% organic growth with top industry Pri
Slide 13: Tyre demand: recovering in 2024-25, supported by solid High Value growth
Tyre demand: recovering in 2024-25, supported by solid High Value growth High Value market trend in line with 2021 Industrial Plan assumptions, while Standard weakness weighs on Total Market Global car tyre market 1,430 ~flat ~+1% ~+1% Mln tyres ~+6% 302 ~+5% ~+5% ~+5% +6pp +6pp +6pp ≥18" 1,128 ~-1%
Slide 14: In 2024-25, strengthening High Value leadership through our key programs
In 2024-25, strengthening High Value leadership through our key programs Accelerating on EV & Specialties COMMERCIAL PROGRAM Seizing regional High Value growth opportunities Strengthening value chain resilience OPERATIONS PROGRAM Increasing efficiencies Leading Sustainability transition INNOVATION P
Slide 15: People are the foundations of past and future results
People are the foundations of past and future results New Experienced Passion and Organization Leadership Team Sense of Belonging Enabling streamlined Blending in-house expertise Enhancing engagement and decision-making and and external talents to deliver igniting a performance culture promoting fun
Slide 16: Industrial Plan update: Commercial
Industrial Plan update 1 Commercial 2 Operations 3 2024-25 Targets PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 15 Wednesday, 6 March 2024
Slide 17: Outperforming ≥18'' Replacement market & investing in fastest growing ≥18'' OE lines
Outperforming ≥18’’ Replacement market & investing in fastest growing ≥18’’ OE lines Lowering exposure to ≤17’’, mainly concentrated in Standard Regions Commercial strategy Market Performance 2023A-25E CAGR 2023A-25E ≥18’’ Replacement OE Driven Demand fueled by past homologations (increasing inciden
Slide 18: HV Replacement growth | Secured by superior portfolio of homologations
HV Replacement growth | Secured by superior portfolio of homologations Focus on Specialties and EV products ~300 ≥18'' homologations per year Specialties o/w 90+% ≥19'' RUNFLAT 66% 70% 36% SEAL INSIDE Safety % Specialties of homologations ≥18'' 2021A 2023A 2025E NOISE CANCELLING 67% SYSTEM 55% 26% E
Slide 19: HV Replacement growth | Driven by accelerated product range upgrade
HV Replacement growth | Driven by accelerated product range upgrade 2021-2023 2024-2025 7 new product lines per year 10 new product lines per year Driving 2024-2025 sales Enabling future growth Product examples Global product lines with best-in-class tech content Awarded Tyre of 5 ▪ Sustainable mate
Slide 20: HV OE - Electrification | Stronger leadership on EV
HV OE - Electrification | Stronger leadership on EV Leveraging on solid partnerships with Premium & Prestige OEMs and a superior technology Premium & Prestige car production Pirelli’s competitive advantage Pirelli expected growth in EV Preferred partner for incumbents & pure EV players EV OE+RE Volu
Slide 21: High Value regional growth opportunities and geographical diversification
High Value regional growth opportunities and geographical diversification 95% of total ≥18'' market volumes concentrated in 3 regions NORTH AMERICA EUROPE APAC Strengthening position in the Confirming leading position in Seizing new markets and largest High Value market RE1 and rebalancing exposure
Slide 22: Pirelli, the brand that matters: iconic competitive edge
Pirelli, the brand that matters: iconic competitive edge Our Brand, a key purchasing criterion Pirelli, the leading tyre HV brand 7 out of 10 1st High rating 1st High-value consumers are brand driven when in prestige/sporty in brand awareness/ in customer purchasing tyres1 and high-tech brand consid
Slide 23: Industrial Plan update: Operations
Industrial Plan update 1 Commercial 2 Operations 3 2024-25 Targets PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 22 Wednesday, 6 March 2024
Slide 24: Three priorities to improve operations efficiency and resilience
Three priorities to improve operations efficiency and resilience Resilient Efficiency Sustainability in Value Chain Program Operations from end to end, secured by our mostly driven by digitization with an ambitious and comprehensive Local-for-Local approach and automation decarbonization program ~90
Slide 25: Resilient value chain | Boosting Local-for-Local and risk mitigation approach
Resilient value chain | Boosting Local-for-Local and risk mitigation approach Well structured production capacity, more Local-for-Local Proactive supply chain risk control Mln tyres/ year 74 3 74 ≥18'' -2 End-to-end value chain de-risking ≤17" Monitoring and assessment of risks beyond Tier-1 74% 78%
Slide 26: Efficiency Program | Accelerating cost competitiveness
Efficiency Program | Accelerating cost competitiveness Leveraging on digital transformation programs launched in the past years Competitiveness | 2023-251 2023 2024 2025 Total Gross Impact 92Mln € ~140Mln € ~135Mln € ~370Mln € Impact Focusing on: cumulative 2023-25 Gross Impact Modularity Product Co
Slide 27: Sustainability in Operations | Commitment to reach Net Zero by 2040
Sustainability in Operations | Commitment to reach Net Zero by 2040 New Targets submitted to SBTI1, after having reached previous ones 2 years in advance2 SCOPE 3 SUPPLIER EMISSIONS -25%1 -28% -30% SCOPE 1+2 -45%1 OWN EMISSIONS -62% -80% ≥-90% 1.5° aligned 2018 2023 2027 2030 2040 Baseline year Carb
Slide 28: Sustainability in Operations | Tight roadmap of initiatives
Sustainability in Operations | Tight roadmap of initiatives to reach this goal SUPPLIER DECARBONIZATION PROGRAM >90% Scope 3 upstream emissions with > 40% Bio-based > 80% Bio-based available primary data and 100% and Recycled and Recycled SCOPE 3 requested to set SBTi targets by 2025 materials by 20
Slide 29: Industrial Plan update: 2024-25 Targets
Industrial Plan update 1 Commercial 2 Operations 3 2024-25 Targets PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 28 Wednesday, 6 March 2024
Slide 30: 2024-2025 targets
2024-2025 targets Financial targets 2023 A 2024 E 2025 E Billion € Revenues 6.65 6.6 ÷ 6.8 6.8 ÷ 7.0 Adj. EBIT margin % revenue ~15.1% >15% ÷ 15.5% ~16% Net Cash Flow 0.51 0.50 ÷ 0.52 0.55 ÷ 0.57 bef. Dividends Net Financial Position 2.26 ~1.95 ~1.6 NFP / adj. EBITDA 1.56x 1.32x ÷ 1.26x ~1.0x 2025 D
Slide 31: 2025 targets vs 2021 Industrial Plan
2025 targets vs 2021 Industrial Plan Revenues Adjusted EBIT NCF bef. Dividends FY 2025 FY 2025 Cumulative 2021-25 Billion € ~ +1.0 ~ in line ~ in line 6.9 2.5 2.5 1.1 1.1 5.9 Mar '21 Industrial Plan Mar '21 Industrial Plan Mar '21 Industrial Plan Industrial Plan Update Industrial Plan Update Industr
Slide 32: In an evolving HV market, Pirelli is strengthening its leadership
In an evolving HV market, Pirelli is strengthening its leadership We fully understand how the HV market is evolving… … and we are ready to continue to lead Connectivity Leveraging tyres sense of touch for value added services 1st sensorized tyre in mass production cars Sustainability Innovative mate
Slide 33: Innovation
Innovation M. Tronchetti Provera Executive Vice Chairman P. Misani Chief Technology Officer PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 34: Three key pillars to innovate and sustain leadership in High Value
Three key pillars to innovate and sustain leadership in High Value Product innovation Technology & Connectivity and leadership future factory solutions EV, Eco-safety design Innovation for future factory OE & car connectivity Sustainable materials IIoT, digital and automation Services & end-user PIR
Slide 35: EV Leadership | Pirelli secured its leadership in High Value EV market
EV Leadership | Pirelli secured its leadership in High Value EV market Leveraging on ELECTTM technology, applied across product families Superior results in key EV features without compromising performance ELECTTM Non-ELECTTM More battery range Rolling Resistance Up to 130% Battery Snow Range Up to
Slide 36: Eco-Safety Design | Consolidating leadership
Eco-Safety Design | Consolidating leadership Eco Safety Mileage & Wear rate Wet Aquaplaning Increased mileage vs. previous Improved wet enhancing tread P ZeroTM E as flagship product, product generation and wear rate compound and wet performance overperforming all eco-safety improved by 42%1 dimensi
Slide 37: Materials | Towards 100% of non-fossil origin, third-party certified
Materials | Towards 100% of non-fossil origin, third-party certified Targets % of bio-based and recycled materials in weight TOWARDS 100% NON-FOSSIL ORIGIN We push innovation to >80% increase bio-based and recycled materials while >70% decreasing fossil ones BEST PRODUCT1 >55% Old 2025 target: 43% T
Slide 38: Materials Roadmap
Materials Roadmap Innovation coming both from bio-based and recycled raw materials 2023 2025 2030 2040 Best new product 55% 70% 80% 100% Bio-based key raw materials introduced Natural Vegetable Vegetable Bio fillers Modified natural Bio-based Bio-based Bio-based rubber oils resins (e.g., cellulose)
Slide 39: Achieving targets and promoting circularity
Achieving targets and promoting circularity Pirelli is extending its ecosystem to develop sustainable material solutions Innovation on new materials New applications of New circular materials from for sustainability bio-based materials recovery of end-of-life tyres Joint Development Agreements Acqui
Slide 40: Factory of the Future | Transforming the manufacturing process
Factory of the Future | Transforming the manufacturing process To increase efficiency, quality and flexibility Upskilling & PME1 Digital & IIoT reskilling Romania Automation of finishing, handling and material flow (AGV2, AMR3, Gantry Robots, sorting, palletizing and traceability systems) Premium Qu
Slide 41: Connectivity | Mobility is rapidly becoming connected
Connectivity | Mobility is rapidly becoming connected – tyres will play a central role Connected vehicle parc will continue to grow, driven Tyres as the only point of contact by increasingly tech-oriented consumer habits between vehicle and road Share of connected vehicles in Consumers’ future use o
Slide 42: Connectivity | Cyber Tyre is the leading technology in the industry
Connectivity | CyberTM Tyre is the leading technology in the industry Data Flow for Customer Value and improved Tyre Development Pirelli cloud OEM END USER Raw data generation Tyre-integrated electronics Raw data processing Tyre layer knowhow INFRASTRUCTURE FLEETS Proprietary algorithms & AI Field d
Slide 43: Connectivity market | 2 worlds leveraging Cyber Tyre
Connectivity market | 2 "worlds" leveraging CyberTM Tyre OE & Car Connectivity Services & End-User OEMs expansion Control system Infrastructure Servitization integration monitoring Provide real-time data on Pre-integrate Collect and share data Leverage data to offer tyre condition to enhance CyberTM
Slide 44: Financials
Financials M. Tronchetti Provera Executive Vice Chairman F. Bocchio Chief Financial Officer PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 45: Financials: FY 2023 Results
Financials 1 FY 2023 Results 2 2024-25 Targets in detail PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 44 Wednesday, 6 March 2024
Slide 46: FY 2023 results highlights
FY 2023 results highlights: Performance above company targets (upgraded during the year) € billion 2022 2023 2023 A (Guidance Nov 9, 2023) Net Sales 6.62 ~6.6 6.65 +6.8% Δ YoY +0.5% organic growth adj. EBIT margin 14.8% ~15% 15.1% Δ YoY +0.3pp CapEx 0.40 ~0.40 0.41 % of Sales 6.0% ~6% 6.1% Net Cash
Slide 47: FY 2023 Sales bridge
FY 2023 Sales bridge Strong price/mix mitigates impact of weak demand and high currency volatility € million -1.8% +8.6% +6.8% -6.3% +0.5% 6,616 (416) 6,650 (117) 568 STD H.V. 71% 75% FY’22 Δ Volumes Δ Price/mix Organic Growth Δ Forex FY’23 4Q +2.1% +2.7% +4.8% -10.6% -5.8% Volumes growth of HV (+5%
Slide 48: FY 2023 adjusted EBIT bridge
FY 2023 adjusted EBIT bridge Net impact +139 € million Net impact +277 Net impact -138 (16) (194) 92 486 (230) 978 (32) 1,002 (51) (31) Commodities +28 FX -44 R&D / mktg. exp. -24 Stock & Others -7 margin 14.8% 15.1% FY’22 Volume Price/mix Raw Mat. FX Effic. Inflation D&A Other FY’23 4Q 224 219 marg
Slide 49: FY 2023 Net Income Bridge
FY 2023 Net Income Bridge Earnings growth (~+14% YoY) supported by improving operating performance and tax benefits € million 496 436 (7) 10 8 26 24 21.3% tax rate in FY due to Patent box benefit Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial income / Δ Taxes Net Income FY’22 restr.
Slide 50: FY 2023 Net Financial Position
FY 2023 Net Financial Position Solid Cash Flow driven by a strong operating performance and a positive working capital management (stock decrease YoY) € million Net Cash Flow (before dividends): 509 (516 in FY’22) Operating Cash Flow: 1,025 (1,009 in FY’22) 2,553 2,262 218 183 (1,446) 139 101 (85) 1
Slide 51: Total Gross Debt structure as of December 31st 2023
Total Gross Debt structure as of December 31st 2023 Liquidity Margin covering maturities up to 1Q’28 thanks to 500Mln € RCF1 issued in Dec’23. ESG weight on gross debt ~68% € million Net Financial Position Gross Debt maturity 3,982 (1,721) Liquidity position 1,384 Loan Bond (1,482) 2,096 2,262 808 7
Slide 52: Financials: 2024-25 Targets in detail
Financials 1 FY 2023 Results 2 2024-25 Targets in detail PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 51 Wednesday, 6 March 2024
Slide 53: 2024-25 Targets
2024-25 Targets 2023 A 2024 E 2025 E € billion Net Sales 6.65 6.6 ÷ 6.8 6.8 ÷ 7.0 Adj. EBIT margin 15.1% >15% ÷ 15.5% ~16% CapEx 0.41 ~0.40 ~0.42 % of Sales 6.1% ~6% ~6% Net Cash Flow 0.51 0.50 ÷ 0.52 0.55 ÷ 0.57 bef. Dividends Net Financial Position 2.26 ~1.95 ~1.6 NFP / adj. EBITDA 1.56x 1.32x ÷ 1
Slide 54: 2024-25 Revenues trend
2024-25 Revenues trend € billion 0 ÷ +2% +~3% 6.65 +3.5% ÷ +4.5% 6.6 ÷ 6.8 6.8 ÷ 7.0 70% Organic growth ~ 71% STD ~ 73% H.V. 75% ~78% 2023 A 2024 E 2025 E +1.5 ÷ +2.5% Low single-digit Volumes -1.8% Mid-single-digit growth in HV Slightly better than 2024 Lowering exposure to Standard Low single-digi
Slide 55: 2024-25 Profitability improvement driven by commercial performance
2024-25 Profitability improvement driven by commercial performance Price/Mix to offset FX and Raw Mat, Efficiencies to cover inflation 15.1% >15% ÷ 15.5% ~16% EBIT margin 70% ~ 71% ~ 73% 2023 A 2024 E 2025 E Assumptions on Raw Mat, Inflation and Efficiencies Neutral Headwind -16Mln € Raw mat includi
Slide 56: Net Cash Flow generation
Net Cash Flow generation Discounting 21Mln € Hevea-Tec acquisition1 € billion 0.51 0.50 ÷ 0.52 0.55 ÷ 0.57 Net cash Flow before % sales 7.7% ~8% ~8% dividends 2023 A 2024 E 2025 E Capex 0.4 (~6% on revenues) ~0.4 (~6% on revenues) ~0.4 (~6% on revenues) % sustainability & 53% 63% 64% technology inno
Slide 57: Sustainability Strategy & Targets Update
Sustainability Strategy & Targets Update 6th March, 2024 PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 56 Wednesday, 6 March 2024
Slide 58: Sustainability contents: action pillars
Content 1 Context and Sustainability macro-trends in our industry 2 Climate: fast forwarding our transition to Science Based Net Zero ACTION PILLARS 3 Product: pioneering sustainability of Global High Value Tyre 4 Nature: redefining business interactions with Natural Capital 5 People: at the heart o
Slide 59: Context & Sustainability macro-trends in our industry
CONTEXT Context & Sustainability macro-trends in our industry Mobility demand growing and evolving Social factors Key ESG Regulation impacting towards sustainable models rising in prominence plan horizon Global demand for Mobility growing Greater Focus on Human Rights European Deforestation Regulati
Slide 60: Our commitment
CONTEXT Our commitment Lead a value chain creating a positive impact on People, Planet and Mobility, with ambitious Plans supported by Technology, Innovation and data driven Actions, setting challenging Targets fully embedded in day-to-day management and constantly checked for progress. REDUCING -51
Slide 61: Reducing Climate Impact
Reducing Climate Impact The most ambitious decarbonization plan of the industry PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 62: Fast forwarding our Transition: commitments to reach Net Zero by 2040
CLIMATE Fast forwarding our Transition: commitments to reach Net Zero by 2040 New Targets submitted to SBTI1, after having reached previous ones 2 years in advance2 2030 Carbon Neutrality on SCOPE 3 scope 1+2 emissions; strong SUPPLIER EMISSIONS emission abatement managed in alignment with ISO 14068
Slide 63: Meeting our climate goals: How and When
CLIMATE Meeting our climate goals: How and When Increasing availability of primary data on total emissions (already >90% in 2024) SUPPLIER DECARBONIZATION PROGRAM >90% Scope 3 upstream emissions > 40% Bio-based > 80% Bio-based with available primary data and 100% and Recycled and Recycled SCOPE 3 re
Slide 64: Focus on Scope 3: supply chain decarbonization strategy
CLIMATE Focus on Scope 3: supply chain decarbonization strategy Pirelli total absolute emissions @2023 Action on raw material suppliers (GHG Protocol and SBTi aligned) (Responsible for 90% of scope 31) ~3,478 Increasing availability of primary data on total Suppliers engagement in targets: ktCO2e em
Slide 65: Creating Sustainable Products
Creating Sustainable Products Designed for EV mobility, towards 100% materials of non-fossil origin, enabling our customers’ decarbonization journey PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 66: New PZERO E: our lighthouse on the market
PRODUCT New PZERO E: our lighthouse on the market Pioneering sustainability of the High Value segment: pushing the limits of sustainable design key drivers Less fossil materials Reduced vehicle CO2 emission >55% Bio-based and Recycled AAA2 European Label materials1 Validated by third party3 Designed
Slide 67: Materials | Towards 100% of non-fossil origin, third-party certified
PRODUCT Materials | Towards 100% of non-fossil origin, third-party certified Targets % of bio-based and recycled materials in weight TOWARDS 100% NON-FOSSIL ORIGIN We push innovation to >80% increase bio-based and recycled materials while >70% decreasing fossil ones BEST PRODUCT1 >55% Old 2025 targe
Slide 68: Circularity along our product life-cycle
PRODUCT Circularity along our product life-cycle Embedding the 5R in product life-cycle Eco-Safety design Re-think Natural • Digital Virtualization 5R Refuse rubber Reduce • Life-Cycle Assessment Reuse • Sustainable sourcing certified Recycle • R&D for biodegradability 1 End-of-life Non fossil • Mat
Slide 69: Eco-Safety performance: enabling our customers decarbonization journey
PRODUCT Eco-Safety performance: enabling our customers decarbonization journey Expanding offer of low Rolling Resistance tyres, never compromising on safety Targets New IPCodes1 2023A 2025 Tyre rolling resistance plays a key role in reducing fuel Rolling Resistance A+B=55% A+B>70% and energy consump
Slide 70: Wear Rate: our reduction roadmap
PRODUCT Wear Rate: our reduction roadmap Paving the way to anticipate EURO 7 compliance, addressing the higher weight of Electric Vehicles while improving mileage and consumers’ satisfaction Targets Full readiness vs upcoming regulations New lines 2023A 2025 20301 EURO 7 Wear Rate -22% -23% -30% red
Slide 71: Nature
Nature Redefining business interactions with Natural Capital PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 72: Our Global Biodiversity Strategy along value chain
NATURE Our Global Biodiversity Strategy along value chain Redefining business interactions with Nature In line with new Global Standards, towards Science Based Targets for Nature (SBTN) All Life Cycle Assessments (LCAs) for new product lines 100% BIODIVERSITY ACTION PLANS deal with the five IPBES2 i
Slide 73: Freshwater: reducing dependency and preserving quality
NATURE Freshwater: reducing dependency and preserving quality Our Model and Targets according to Excellence in Water Management Program 1 2 3 4 5 Water risks Minimize water Ensure safe water Clean water back Digitalization assessment demand and its quality to ecosystems Assessment of Reduction of wa
Slide 74: Forest: Towards 100% of FSC Natural Rubber in European plants by 2026
NATURE Forest: Towards 100% of FSC™ Natural Rubber in European plants by 2026 We promote the development of a Sustainable Natural Rubber Economy based on traced and certified supply chains, engaging our major partners to be part of this journey Pirelli unique FSC™ strategy Full readiness vs upcoming
Slide 75: Tyre Road Wear Particles: facing the challenge
NATURE Tyre Road Wear Particles: facing the challenge Context What is TRWP? Where does it go2? How is industry moving? Mixture of tyre tread Soil & Sediments Potential adverse Tire Industry Project (TIP) fragments and road surface ~ 74-77% effects under CEO-led initiative, proactively working to ide
Slide 76: People
People At the heart of our growth PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 77: Our strategy for an engaged, diverse and talented global workforce
PEOPLE Our strategy for an engaged, diverse and talented global workforce We are acting on 5 main pillars 2023 2024 - 2030 SAFETY Towards Zero Accident Frequency Index 1.71 ~11 @2025 FIRST at work -65% vs 2015 <11 @2030 CARING & New Pirelli Global Welfare Localized offer - New global offer covering
Slide 78: Strengthening our Global Value Chain
Strengthening our Global Value Chain PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 79: Partnering with our suppliers: managing risks while creating capacity
STRENGTHENING OUR GLOBAL VALUE CHAIN Partnering with our suppliers: managing risks while creating capacity Scope 2023 2025 2027 Suppliers assessed - % on Total Spending from Suppliers selected as potentially High and Mid ESG Risk (3) High ESG Risk4 90% 96% 100% Risk Assessment & Mitigation Mid ESG R
Slide 80: Engaging with our customers on sustainability journey
STRENGTHENING OUR GLOBAL VALUE CHAIN Engaging with our customers on sustainability journey EUROPEAN SUSTAINABILITY SUSTAINABLE LINKING THE BRAND WITH SUSTAINABILITY NARRATIVE ON RETAIL NETWORK SUSTAINABILITY VALUES MEETING B2B CHANNEL Conveying the value of September 2023: 2023 Campaign on Pirelli E
Slide 81: An ESG shaped finance
AN ESG SHAPED FINANCE An ESG shaped finance 2021 Industrial Plan Today with a strong ambition HQ1 Debt – ESG Linked HQ1 Debt – 9% 14% 9% Conventional 8% 6% Local Debt March 18% December IFRS 16 2021 2023 Working on 100% HQ 67% 2 Funding in Sustainability 69% Linked Format by 2025 Vs Top 5 peers aver
Slide 82: ESG Indices: a globally acknowledged sustainability leadership
ESG INDEXES & RATINGS ESG Indices: a globally acknowledged sustainability leadership As @ 06 March 2024 Major rankings Last update Score Positioning in the reference sector Top score ATX Auto Components 2023 84 and automotive 2024 TOP 1% ESG Max Score 2023 A Max Score 2024 A Max Score Prime status a
Slide 83: Copertina chiusura
Copertina chiusura PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE 82 Wednesday, 6 March 2024
Slide 84: Financial Appendix
Financial Appendix 6th March, 2024 PIRELLI 2023 RESULTS AND 2024-25 INDUSTRIAL PLAN UPDATE Wednesday, 6 March 2024
Slide 85: Economic results summary
Economic results summary € million 1Q 2023 1Q 2022 ∆ YoY 2Q 2023 2Q 2022 ∆ YoY 3Q 2023 3Q 2022 ∆ YoY 4Q 2023 4Q 2022 ∆ YoY FY 2023 FY 2022 ∆ YoY Net Sales 1,700 1,521 11.7% 1,738 1,676 3.7% 1,723 1,836 -6.2% 1,490 1,582 -5.8% 6,650 6,616 0.5% Organic variation 12.0% 9.0% 2.2% 4.8% 6.8% adjusted EBIT
Slide 86: Consolidated Balance Sheet
Consolidated Balance Sheet 31/12/2023 31/12/2022 € million Fixed assets 8,812.1 8,911.1 Inventories 1,371.4 1,457.7 Trade receivables 649.4 636.5 Trade payables (1,999.4) (1,973.3) Operating net working capital 21.4 120.9 % of net sales 0.3% 1.8% Other receivables / payables 45.8 42.3 Net working ca
Slide 87: Net Cash Flow
Net Cash Flow 1Q 2023 2Q 2023 3Q 2023 4Q 2023 4Q 2022 FY 2023 FY 2022 Adjusted Operating income (EBIT) 248.1 269.3 265.1 219.3 224.3 1.001.8 977.8 Amortiz. & depreciations (excl. PPA amortiz.) 111.6 110.1 111.6 111.0 104.8 444.3 430.5 Investments in tangible and intangible assets (Capex) (53.2) (70.
Slide 88: 2023 Strategic programs implementation: delivery in line with targets
2023 Strategic programs implementation: delivery in line with targets Commercial Innovation Consolidating High Value positioning: Widening our OE portfolio: • +5% in Car ≥18’’ in line with market and • ~340 new car homologations (84% ≥19’’, ~50% EV) overperformance in Repl. (+4% PI vs +3% mkt) • EV
Slide 89: FY 2023 Commercial Program: Pursuing a selective, value-oriented strategy
FY 2023 Commercial Program: Pursuing a selective, value-oriented strategy Market TOTAL ≥18” 4Q Highlights Pirelli FY 4Q FY 4Q Further reduction in Car ≤17’’ (flat in 4Q vs. 4% 7% 3% +2% Mkt; -8% in FY vs. -1% Mkt) TOTAL 5% 5% 5% 0% -1% HV OE reflecting a selective approach 6% 8% 8% (mainly in EU) wi
Slide 90: FY 2023 Competitiveness program
FY 2023 Competitiveness program: Achieved efficiencies for ~92M€, in line with expectations Focusing on: FY 2022 ACT FY 2023 ACT 4Q 2023 ACT Modularity Product Cost ~34% of FY Design speed and virtualization Industrial IoT and flexible factory Manufacturing ~50% of FY Energy consumption Logistics ne
Slide 91: FY 2023 Innovation program
FY 2023 Innovation program Secure future HV volumes through homologations, targeting share gain in Repl. with our product pipeline ~ 340 New Homologations 6 new High Value products launched 4 Global lines with focus on EV, SUV & racing Higher rim sizes (≥19”) ~87% 2 All-Season dedicated to North Ame
Slide 92: FY 2023 Sales bridge
FY 2023 Sales bridge Strong price/mix mitigates impact of weak demand and high currency volatility € million -1.8% +8.6% +6.8% -6.3% +0.5% 6,616 7,066 6,650 568 STD (117) (416) H.V. 71% 75% FY’22 Δ Volumes Δ Price/mix Organic Growth Δ Forex FY’23 4Q’23 +2.1% +2.7% +4.8% -10.6% -5.8% 3Q’23 -4.6% +6.8
Slide 93: FY 2023 adjusted EBIT bridge
FY 2023 adjusted EBIT bridge Profitability supported by price/mix and efficiency covering ~1.3x Raw Mat, FX & Inflation headwinds € million Net impact +139 Net impact +277 Net impact -138 (16) (194) 92 978 486 (230) 1.002 (32) (31) (51) Commodities +28 FY FX -44 R&D / mktg. Exp. -24 Stock & Others -
Slide 94: Raw material costs trend and mix
Raw material costs trend and mix Main raw materials price trend yearly avg.; Δ YoY 70.8 ; +64% YoY 98.9 ; +40% YoY 82.3 ; -17% YoY 1.678 ; +27% YoY 1.548 ; -8% YoY 1.378 ; -11% YoY $ / kg Brent Oil (in $ / barrel) $ / barrel 1,95 Natural Rubber (in $ / kg) 130 115 1,70 100 85 1,45 70 1,20 55 40 0,95
Slide 95: Pirelli manufacturing footprint
Pirelli manufacturing footprint U.S. U.K. Germany Romania Rome – Car Burton – Semi-finished Breuberg – Car/Moto Slatina – Car Carlisle – Car Mexico Russia Silao – Car Kirov – Car Voronezh – Car Italy Bollate – Cycling Settimo – Car Brazil China Campinas – Car/Moto Yanzhou – Car/Moto Feira de Santana
Slide 96: Disclaimer (1/2)
Disclaimer (1/2) 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 “C
Slide 97: Disclaimer (2/2)
Disclaimer (2/2) Rounding. Due to rounding, numbers presented throughout this Presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Miscellanea. This Presentation has been prepared on a voluntary basis. Pirelli is therefore not b