Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2022 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Feb 22, 2023
Slide 1: FY 2022 preliminary unaudited results
FY 2022 preliminary unaudited results February 22nd, 2023 FY 2022 prel. unaudited results
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
Slide 3: Agenda
Agenda 1 FY 2022 KEY MESSAGES 2 PIRELLI & C. – FY 2022 RESULTS 3 FY 2023 OUTLOOK AND TARGETS 4 APPENDIX 2 FY 2022 prel. unaudited results
Slide 4: Key messages
Key messages > FY 2022 performance above targets supported by: • A strong commercial performance (market share gain in High Value, especially in ≥19”, and record price/mix) • Internal levers (price/mix & efficiency) covering ~1.3x external headwinds • Solid cash generation driven by efficient workin
Slide 5: FY 2022 results highlights
FY 2022 results highlights Performance above company targets (upgraded during the year) and Tier 1 peers … € billion Average Tier 1 peers2 2022 2022 A 2022 A (Target 3-Nov-22) Net Sales ~6.5 6.6 Δ YoY +24.1% +17.6% adj. EBIT margin ~15% 14.8% 11.1% Δ YoY -0.5pp -2.1pp CapEx ~0.39 0.40 % of Sales ~6%
Slide 6: Industrial Plan first phase delivery vs. targets and peers
FY 2022 results highlights … ending Ind. Plan 1st phase with a superior delivery vs. targets and peers, despite volatile scenarios € billion Pirelli Industrial Plan (21-22) Pirelli Actual Average Tier 1 peers1 CAGR +10% ’20-’22 +24% 4.8 ~5.2 6.6 +20% 4.3 4.3 5.3 Revenues 2020 A 2021E 2022 E 2020 A 2
Slide 7: FY 2022 sustainability achievements
FY 2022 sustainability achievements Area KPIs 2021A 2022A 2025T 2022 main achievements SAFETY FIRST Accident 0.21 0.20 • Energy: 100% procured renewable electricity in EU & NA Towards zero accidents frequency index -4.5% yoy -4.5% yoy ≤ 0.10 at work • Bio & Circular materials: rice husk silica reach
Slide 8: Agenda
Agenda 1 FY 2022 KEY MESSAGES 2 PIRELLI & C. – FY 2022 RESULTS 3 FY 2023 OUTLOOK AND TARGETS 4 APPENDIX 7 FY 2022 prel. unaudited results
Slide 9: Car tyre market and Pirelli performance in FY/4Q 2022
Car tyre market and Pirelli performance in FY/4Q 2022 Market share gain in High Value, with a strong focus on ≥19’’; lowered exposure on Standard Pirelli TOTAL ≥18” ≤17” Market FY’22 4Q’22 FY’22 4Q’22 FY’22 4Q’22 7.6% 1.9% 5.4% TOTAL 0.7% 0.0% -3.4% -9.1% -1.7% -7.1% -7.1% -9.2% -18.5% 0.8% 8.5% 0.6
Slide 10: Industrial Plan delivery well on track in 2022 despite external headwinds
Industrial Plan delivery well on track in 2022 despite external headwinds impact Δ vs. Main programs 2022 targets FY’22 main achievements Ind. Plan • Focus on H.V. outperforming market in ≥18” • Car ≥18”: +7.6% vs. +5.4% with: Replacement • solid Repl. demand across regions • More selective approach
Slide 11: 2022 Commercial program delivery
2022 Commercial program delivery Overperformance vs. market, driven by ≥19” and Specialties FY’22 A Volume Variance (Car) Key Programs Highlights Volume Trend FY’21 A 45% 55% Market H.V. Repl. Stable weight of H.V. Regions (>90%) PULL ≥18” YoY increase >80% of the increase in EU and USA H.V. Repl. P
Slide 12: 2022 Innovation program delivery on Car
2022 Innovation program delivery on Car Securing future High Value volumes, gaining share in Repl. through our product pipeline … 300 new homologations % of total new homolog. 9 product launches (6 in 2021) Focus on different Customers needs Higher rim sizes ~85% (≥19”) 3 All Season 2 Winter 4 Summe
Slide 13: 2022 Innovation program delivery on Car: focus on sustainability
2022 Innovation program delivery on Car ... with a strong focus on sustainability Eco & Safety performance products Sustainable materials shift to reduce fossil content % of renewable and recycled materials3 > New labelled products strongly focused on A/B1 grade +5 pp 2021 2022 2025E >48% 33% 38% Ro
Slide 14: 2022 Innovation program delivery on two-wheels
2022 Innovation program delivery on two-wheels Enhancing our positioning on both Moto and Cycling business Main achievements • Price leader at Global level • Bollate factory: startup in 2022 • 3 new products launched • 1st product fully realized in Italy (PZERO Race 4S) • World Superbike sole suppli
Slide 15: Competitiveness programs progress
Competitiveness programs progress FY achievements in line with expectations 2021 2022 E FY ACT Focusing on: FY GUI FY ACT Modularity Product Cost Design speed and virtualization Footprint optimization Manufacturing Industrial IOT and flexible factory Logistics network redesign and service
Slide 16: FY 2022 Sales bridge
FY 2022 Sales bridge Solid Price/mix delivery across quarters thanks to price hikes and product mix improvement o/w Organic € million -1.0% +19.7% +5.4% +24.1% +18.7% 6,616 5,331 287 +4.7% (51) -6.3% 1,048 Standard High Value Standard 71% 71% High Value FY’21 Δ Volumes Δ Price/mix Δ Forex FY’22 High
Slide 17: FY/4Q 2022 adjusted EBIT bridge
FY/4Q 2022 adjusted EBIT bridge Profitability supported by price/mix & efficiency covering ~1.3x Raw Mat & Inflation headwinds in FY € million Net impact +239 ▬ R&D/Mkt/Digital -10 ▬ Mgmt inc. 8 Net impact +430 Net impact -191 ▬ Stock -16 (492) ▬ Others -7 891 31 136 (327) 978 816 (30) (25) adj. EBI
Slide 18: FY 2022 Net Income bridge
FY 2022 Net Income bridge Earnings driven by improving operating performance € million 52 2 (57) (45) 436 162 322 Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial income Δ Taxes Net Income FY’21 restr. costs loss from equity / expenses FY’22 participations % of Sales 8.8% 8.0% FY 2021
Slide 19: FY/4Q 2022 Net Financial Position
FY/4Q 2022 Net Financial Position Better yoy cash flow trend driven by the solid operating performance and working capital management € million Net Cash Flow (before dividends): 516 (431 in FY’21) Operating Cash Flow: 1,009 (794 in FY’21) ▬ Div. to minorities 24 2,907 58 ▬ Non-rec. / restr. ▬ FX, ot
Slide 20: Total Gross Debt structure as of December 31st 2022
Total Gross Debt structure as of December 31st 2022 Liquidity margin fully covering debt maturities up to 1Q’25; ESG-financing weight on gross debt at ~50% € million Net Financial Position Gross Debt maturity 4,506 (1,953) Liquidity position 1,486 Loan 1,354 Bond (1,537) 2,918 2,553 797 IFRS 16 (416
Slide 21: Agenda
Agenda 1 FY 2022 KEY MESSAGES 2 PIRELLI & C. – FY 2022 RESULTS 3 FY 2023 OUTLOOK AND TARGETS 4 APPENDIX 20 FY 2022 prel. unaudited results
Slide 22: 2023 global economic outlook
2023 global economic outlook High volatility due to a tough geopolitical scenario; recession risks in EU/US, China expected to rebound Global Real GDP Growth (YoY %)1 Global Consumer Price Inflation (YoY %)1 2022 2023 2022 2023 5.2 8.0 8.4 7.6 3.5 5.3 5.2 3.0 3.0 4.0 2.0 2.1 2.0 2.1 0.7 0.5 Moneta
Slide 23: 2023 global car tyre market outlook
2023 global car tyre market outlook High Value resilience confirmed, expected to outperform the Standard market by 6pp Car Tyre Market (million pcs) 1,540 -2% ~ flat 1,402 1,397 ≥18" 265 +5% ~+4% O.E. ~+7% 295 308 ≥18” Repl. ~+3% 1,275 1,107 1,090 +6pp ≤17" O.E. ~-2% ≤17“ -3% 1,090 ~-2% Repl. ~-1% 2
Slide 24: How Pirelli is navigating this scenario
How Pirelli is navigating this scenario Issues Pirelli’s actions in 2023 Fully seizing HV mkt growth leveraging on: • a rich homologation portfolio (strong focus on EV) Demand trend • a regional tailor-made product offering (6 new launches), strong focus on sustainability Solid pricing disciplin
Slide 25: FY 2023 targets
FY 2023 targets 2022 A 2023 E € billion Net Sales 6.62 ~6.6 ÷ ~6.8 • Vol.: flat / ~+1% • Price/mix: ~+4.5% ÷ ~+5.5% • Forex: ~-4.5% ÷ ~-3.5% adj. EBIT margin 14.8% >14%÷ ~14.5% CapEx 0.40 ~0.40 (% of Sales) (6.0%) (~6%) Net Cash Flow 0.52 ~0.44 ÷ ~0.47 bef. Dividends Net Financial Position 2.55 ~2.3
Slide 26: Agenda
Agenda 1 FY 2022 KEY MESSAGES 2 PIRELLI & C. – FY 2022 RESULTS 3 FY 2023 OUTLOOK AND TARGETS 4 APPENDIX 25 FY 2022 prel. unaudited results
Slide 27: Key car market trends: Europe
Key car market trends: Europe Market trend (∆% YoY) 4Q’21 FY’21 1Q’22 2Q’22 3Q’22 4Q‘22 FY’22 Total 26 11 4 2 O.E. -7 -16 -29 10 8 6 5 Replacement 0 -5 -8 7 4 Total (O.E.+Repl.) 3 0 -2 -1 -5 ≥18” & ≤17” 26 27 14 8 1 2 3 4 4 O.E. ≤17" -11 -17 -15 ≥18” -32 -22 23 24 22 16 9 5 6 11 Replacement 3 3 -2 -
Slide 28: Key car market trends: North America
Key car market trends: North America Market trend (∆% YoY) 4Q’21 FY’21 1Q’22 2Q’22 3Q’22 4Q‘22 FY’22 Total 12 19 7 9 0 O.E. -1 -16 13 6 Replacement1 -5 -5 -5 -8 -9 10 4 Total (O.E.+Repl.) -3 -4 -2 -7 -6 ≥18” & ≤17” 15 19 19 11 7 5 8 7 8 5 O.E. ≤17" -11 -8 -9 ≥18” -22 20 15 6 10 1 2 1 3 Replacement1
Slide 29: Key car market trends: Asia Pacific
Key car market trends: Asia Pacific Market trend (∆% YoY) 4Q’21 FY’21 1Q’22 2Q’22 3Q’22 4Q‘22 FY’22 Total 26 O.E. 3 0 4 -2 -7 -7 3 4 Replacement -1 -6 -7 -14 -13 12 3 Total (O.E.+Repl.) -4 -3 -3 -11 -8 ≥18” & ≤17” 24 32 O.E. 11 5 6 10 ≤17" 0 2 ≥18” -3 -1 -1 -4 -9 -9 12 9 5 3 4 Replacement -2 -7 -5 -
Slide 30: Key car market trends: Russia, Nordics, MEAI / South America
Key car market trends: Russia, Nordics, MEAI / South America Market trend (∆% YoY) 4Q’21 FY’21 1Q’22 2Q’22 3Q’22 4Q‘22 FY’22 Russia, Nordics, MEAI 17 14 O.E. -1 -1 0 -11 -12 12 3 Replacement -1 -1 -3 -6 -10 13 2 3 Total (O.E.+Repl.) -4 -5 -3 -10 South America 30 15 15 O.E. 5 -8 -4 -14 25 Replacement
Slide 31: Economic results summary
Economic results summary € million 4Q 2022 4Q 2021 ∆ YoY FY 2022 FY 2021 ∆ YoY Net Sales 1,582.4 1,352.2 +17.0% 6,615.7 5,331.5 +24.1% Organic variation +14.8% +18.7% adjusted EBITDA1 329.1 316.7 +3.9% 1,408.3 1,210.7 +16.3% % of net sales 20.8% 23.4% -2.6 p.p. 21.3% 22.7% -1.4 p.p. reported EBITDA
Slide 32: Net Cash Flow
Net Cash Flow 4Q 2022 4Q 2021 FY 2022 FY 2021 € million adjusted Operating income (EBIT) 224.3 217.0 977.8 815.8 Amortiz. & depreciations (excl. PPA amortiz.) 104.8 99.7 430.5 394.9 Investments in tangible and intangible assets (Capex) (209.0) (132.3) (397.7) (345.6) Increase in right of use (29.2)
Slide 33: Raw material costs trend and mix
Raw material costs trend and mix Main raw materials price trend 71.5 ; +31% YoY 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 98.9 ; +40% YoY 1.365 ; -17% 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
Slide 34: 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 ▬ Silao – Car Car / Moto ▬ Bollate – ▬ Jiaozuo – Car Cycling ▬ Shenzhou – ▬ Se