Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — 9M 2009 Earnings Presentation
58 slides from Pirelli & C's earnings presentation, Nov 5, 2009
Slide 1: Pirelli Group 9M'09 Financial Results
Rew MILAN - November 5, 2009 PIRELLI GROUP 9M’09 FINANCIAL RESULTS
Slide 2: Disclaimer
Disclaimer This presentation contains statements that constitute forward-looking statements and does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned and is directed to professionals of the financial community. These statem
Slide 3: Agenda
Agenda Pirelli 9M’09 Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 2
Slide 4: Pirelli 9M'09 Key Messages
Pirelli 9M’09 Key Messages Improved Pirelli competitiveness: exploiting exposure to emerging markets, incisive marketing strategy, powerful restructuring program started in '08 and continued in '09 Leaner business model enhanced : 200 / mln gross savings expected for 2009 confirmed in Tyre -28% YoY
Slide 5: Pirelli 9M'09 results and 2009 FY targets update
Pirelli 9M’09 results and 2009 FY targets update €/bln 2Q09 9M’09 2009 Targets 2009 revised (Feb.’09) Target (Nov. ’09) Group revenues 3.3 ~4.3 >4.3 EBIT % 5.0% 4.5-5.0% ~4.5% After continuous restructuring NFP 0.7 1.0 ~ 0.7 Green revenues and Capex information will be completed at year end 4
Slide 6: Agenda: Pirelli Financial Review
Agenda Pirelli 9M’09 Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 5
Slide 7: Pirelli Key Financial Results
Pirelli Key Financial Results €/mln 9M’09 YoY % 3Q’09 YoY % 3Q‘09 Results Drivers Revenues (organic*) 3,307.4 -7.7% 1,169.8 -0.7% Pirelli Tyre top line rebound yoy: +1.4% EBITDA before Restructuring Costs 361.2 +7.6% 135.1 +58.8% net of exchange rate Margin 10.9% +0.2pp 11.5% +4.5pp EBIT before Rest
Slide 8: Pirelli EBIT trend
Pirelli EBIT trend €/mln Δ Organic EBIT: 52.6 8 62.7 53.5 0.1 0.2 (0.5) 3Q trend (0.7) 2.1 Eco Real Broadband Other Restruct. 3Q09 3Q08 Tyre Tech Estate access activities Costs €/mln Δ Organic EBIT: -11.2 183.0 9 8 163.8 (2.3) 9M trend (26.1) (0.3) (7.5) Eco Real Broadband Other Restruct. 9M08 Tyre
Slide 9: Pirelli attributable net income 9M'09 vs 9M'08
Pirelli attributable net income 9M’09 vs 9M’08 137.8 41.9 18.2 8.0 (53.4) (8.6) (51.3) (19.2) (37.0) 9M08 ΔEBIT Δ Results Δ Deval./sale ΔOther results Δ financial Δ discontinued Δ minorities 9M09 from equity particip. from particip. charges operations partec. PRE in listed co. and taxes 8
Slide 10: Pirelli 9M'09 net financial position
Pirelli 9M’09 net financial position €/mln EBIT before restr. 82.8 EBIT before restr. 122.3 Dep/Am: 52.3 Dep/Am: 103.8 Capex: (32.0) Capex: (80.3) Δ NWC & others: 84.4 TI Stake Sale 130.0 Δ NWC & others: (166.1) 70.9 PRE Cap. incr. subscribed by minorities 167.4 84.9 1107.6 1,027.7 20.3 (96.2) 49.7
Slide 11: Pirelli Debt Structure as of September 30, 2009
Pirelli Debt Structure as of September 30, 2009 Net Financial Position Gross Debt Maturity €/mln 1,086 1,842 1,151 960 Committed Line 1,075 Drawdown 39 126 233 30 691 9 484 767 Other Borrowing 85 399 Gross Fin. Net Fin. Debt Assets * Position Gross Debt maturity as of Sep. 30, 2009 26% 13% 2% 59% 9M
Slide 12: Agenda: Pirelli Tyre & Parts
Agenda Pirelli 9M’09 Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 11
Slide 13: 3Q'09 Pirelli Tyre performance: Key Messages
3Q’09 Pirelli Tyre performance: Key Messages Top line keeps improving QoQ : +5.5% 3Q revenues vs. 2Q09 thanks to market share increase in all major markets and segments except Russia; 3Q organic growth is also positive yoy (+1.4%) Profitability trend keeps improving QoQ and YoY thanks to: raw materi
Slide 14: Pirelli Tyre quarterly performance
Pirelli Tyre quarterly performance €/mln, Percent Profit & Loss 1Q ‘09 YoY% 2Q ‘09 YoY% 3Q ‘09 YoY% 9M ‘09 YoY% Revenues 926.9 -13.9% 989.0 -9.2% 1,042.7 -1.9% 2,958.6 -8.4% EBITDA (before 107.8 -28.6% 133.0 -1.8% 142.0 +54.7% 382.8 restructuring costs) +1.2% margin 11.6% -2.4 p.p. 13.4% +1.0 p.p. 1
Slide 15: Pirelli Tyre operating performance
Pirelli Tyre operating performance €/mln +16.7 +18.0 (3.1) +39.1 94.3 3Q trend (4.5) 3Q Raw materials price (12.7) index trend -1% on 2Q 40.8 Raw materials: +36.5 ’09 and -22% vs 3Q ’08 Labour / energy / other: (18.5) EBIT 3Q08 Price Volume Cost of inputs Efficiencies Exchange Depreciation/ other EB
Slide 16: Pirelli Tyre 2009 Cost reduction program update
Pirelli Tyre 2009 Cost reduction program update 9M’09 COST REDUCTION PROGRAMS ACHIEVEMENTS 15% rightsizing in high-cost over 90% of the Labour countries; bonus and pay freeze for target management and staff in 2009 360° purchasing contracts renegotiation over 100 mln € yoy 85% of 200 € mln raw mater
Slide 17: Pirelli Tyre NFP evolution
Pirelli Tyre NFP evolution €/mln 3Q’09 EBIT (before restr. costs): 146 EBIT (beforet restr. costs): 94 Invest. & Depreciation: 30 Invest. & Depreciation: 15 Δ NWC & others: (178) Δ NWC & others 109 49 86 2 1,467 8 47 (7) 67 1,267 1,299 9 (11) (218) -168 2008 Exchange Dividends Turkish Restructuring
Slide 18: Consumer Business: market trends in 9M'09
Consumer Business: market trends in 9M‘09 Car tyre shipments, % (yoy) Market trends 1Q’09 2Q‘09 3Q‘09 9M‘09 OE -1% Europe -34% -20% -20% Replacement -5% -8% +1% -4% North America OE -22% -49% -48% +3% -41% Replacement -13% -10% -6% OE Mercosur -8% -18% -10% -12% +11% +3% +2% Replacement -4% Sources:
Slide 19: Consumer Business: Pirelli economics in 9M'09
Consumer Business: Pirelli economics in 9M‘09 €/mln, % Profit & Loss 1Q’09 Δ% 2Q ‘09 Δ% 3Q ‘09 Δ% 9M ‘09 Δ% Highest profitability in 3Q supported by: 2,108.0 -4.5% high product mix in EU Revenues 670.5 -10.4% 701.5 -6.0% 736.0 +3.1% (winter) EBITDA (before strong sales to Replacement 77.4 -28.8% 90.
Slide 20: Industrial Business: market trends in 9M'09
Industrial Business: market trends in 9M‘09 Car tyre shipments, % (yoy) Market trends 1Q’09 2Q’09 3Q’09 9M’09 OE Europe -62% -75% -68% -66% Replacement -33% -25% -14% -24% OE Mercosur -26% -29% -27% -28% Replacement -22% -16% -10% -16% Sources: main external data provider for each region and Pirelli
Slide 21: Industrial Business: Pirelli economics in 9M'09
Industrial Business: Pirelli economics in 9M‘09 €/mln, Percent Profit & Loss 1Q’09 Δ% 2Q‘09 Δ% 3Q ‘09 Δ% 9M ‘09 Δ% Revenues 256.4 -22.0% 287.5 -16.3% 306.7 -12.2% 850.6 -16.7% Natural Rubber rising EBITDA (before restructuring costs) 30.4 -28.1% 42.6 -7.6% 41.7 +2.2% 114.7 -11.2% costs slightly redu
Slide 22: Recent Pirelli Tyre Highlights
Recent Pirelli Tyre Highlights: 3/7/2009 Pirelli celebrates the 80th anniversary of its industrial presence in Brazil, while announcing new investments worth 200 million dollar over a 3 year period. 7/7/2009 Pirelli launches the new FH65 long distance M/H Truck tyre for MEA markets. Superbike World
Slide 23: Pirelli Winter Tyre Test Results
Pirelli Winter Tyre Test Results MAGAZINE PATTERN SIZE FINAL RESULT Strength Chrono Top performance on snow, good on wet; harmonic, easily 225/75R16 C TEST WINNER manageable and is forgiving mistakes. Winter CENTRAL EUROPEAN Winter Sottozero VERY Very balanced driving behaviour and good grip level a
Slide 24: Pirelli Tyre 2009 targets update
Pirelli Tyre 2009 targets update 2009 Targets 2009 revised (Feb.’09) Target (Nov. ’09) Revenues 3.8 /bln ~3.9 €/bln EBIT % 6.5/ 7.0% ≥ 7.0% After continuous restructuring 23
Slide 25: Pirelli Eco Technology: 9M'09 Key Financial Results
Pirelli Eco Technology: 9M’09 Key Financial Results €/mln 1Q‘09 YoY 2Q‘09 YoY 3Q‘09 YoY 9M‘09 YoY Volumes Filters 903 1,045 514 2,462 Gecam (l/mln) 21.5 -12.2% 15.9 -17.6% 10,7 -30,1% 48.1 -18,6% Revenues 14.3 -13.9% 14.0 -16.7% 10.5 -25.5% 38.8 -18.3% of which Filters 3.7 4.3 2,3 10,3 Gecam 10,6 9,
Slide 26: Agenda: Pirelli Real Estate
Agenda Pirelli 9M’09 Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 25
Slide 27: September 2009 Results - Highlights
September 2009 Results - Highlights The service platform(1), which includes the proceeds from the 5% disposal of Pirelli RE Fund management (SGR), improved significantly through continuous focus on efficiency EBIT, including income from equity participations and interest income from participations i
Slide 28: Consolidated profit and loss
Consolidated profit and loss (€/mln) 9M‘09 1H‘09 9M‘08 Revenues 199.2 115.8 296.5 of which services activities 137.4 94.7 172.1 of which other revenues (*) 61.8 21.1 124.4 EBIT ante restr. Costs, writedown/reval. (1.3) (2.0) 21.0 Income from Equity Participations (28.9) (20.9) 1.4 A EBIT inl. Inc. F
Slide 29: Details on service platform and on vehicles & funds
Details on service platform and on vehicles & funds (€/mln) Service Platform & Holding 9M‘09 1H‘09 9M‘08 Consolidated Revenues 137.4 94.7 172.1 Other Revenues (*) 7.9 2.0 17.6 Total Revenues 145.3 96.7 189.7 Result (**) (0.5) (3.2) (5.2) Vehicles & Funds EBIT from vehicles & funds (29.7) (19.8) 27.6
Slide 30: Segment report
Segment report (€/mln) Italy Germany Poland NPL Holding Total 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 (*) (**) Service Platform 19.5 18.9 2.2 (6.4) (1.1) (0.4) (5.2) 0.2 15.4 12.3 (0.5) (5.2) Holding (15.9) (17.5) (15.9) (17.5) A. Vehicles & Funds (21.0) 0.6 (14.9) (4
Slide 31: Real estate sales and NPL recoveries
Real estate sales and NPL recoveries (€/mln) REAL ESTATE SALES NPL RECOVERIES 100% Pro quota 100% Pro quota 714.5 657.6 60.3 207.7 26.3 207.7 173.7 274.9 714.5 527.6 321.3 657.6 480.5 299.9 356.4 243.6 226.7 112.8 68.7 9M‘09 9M‘08 9M‘09 9M‘08 9M‘09 9M‘08 9M‘09 9M‘08 Italy Germany Poland Gross Margin
Slide 32: Update on Headcount and Cost Saving
Update on Headcount and Cost Saving (€/mln) Headcount Reduction from 2,956 in decrease 1,473 2007 to 1,205 as of 1,205 September. New targets 1,110 confirmed FY’08 9M’09 FY09E € 47 mln saving as of 2009 (of which nearly 65 50% related to Cost Saving € mln headcount). Year end target improved vs. 47
Slide 33: NFP excluding shareholders' loans
NFP excluding shareholders’ loans (€/mln) 898.4 861.8 828.5 (399.3) (*) 447.4 4.8 31.9 27.5 (99.2) 19.9 NPL (sale 20% C.S and Equity NFP 2008 NFP NFP Capital refinancing contribution NFP Investment Lay-offs Other Year End 1Q’09 1H’09 Increase Calyon) and to funds and 9M’09 SGR (sale 5%) vehicles (*)
Slide 34: Consolidated balance sheet
Consolidated balance sheet €/mln 9M‘09 FY‘08 9M‘08 Fixed Assets 562.8 589.1 816.3 of which participations 389.0 405.7 632.0 of which goodwill 135.5 137.8 140.0 Net working capital 136.1 133.1 170.9 Net invested capital 698.9 722.2 987.2 Net equity 687.0 366.4 616.7 Of which own net equity 679.9 361.
Slide 35: Back up
FINANCI CIAL F RES SULT TS 4 J
Slide 36: Pirelli Group – 9M'09 Results
Pirelli Group – 9M’09 Results Profit & Loss and Net Financial Position by Business Unit Pirelli Pirelli Tyre Eco Technology Pirelli Real Estate Broadband Access Others Pirelli & C. Cons. €/mln 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 9M’09 9M’08 Sales 2,958.6 3,229.2 38.8 47.5 199
Slide 37: Pirelli Group – 3Q'09 Results
Pirelli Group – 3Q’09 Results Profit & Loss and Net Financial Position by Business Unit Pirelli Pirelli Tyre Eco Technology Pirelli Real Estate Broadband Access Others Pirelli & C. Cons. €/mln 3Q’09 3Q’08 3Q’09 3Q’08 3Q’09 3Q’08 3Q’09 3Q’08 3Q’09 3Q’08 3Q’09 3Q’08 Sales 1,042.7 1,062.9 10.5 14.1 83.
Slide 38: Pirelli Balance Sheet
Pirelli Balance Sheet €/mln % Net Invested Capital 9M’09 2008 Actual 30.09.2009 31.12.2008 P.Tyre 66.9% 62.7% Fixed Assets 3,490.0 3,686.4 P.Eco Tech. 1.2% 0.8% Net Working Capital 511.0 397.4 P.Real Est. 19.4% 18.9% 4,001.0 4,083.8 PBS 0.4% 0.4% Net Invested Capital Others 12.1% 17.2% Equity 2,570.
Slide 39: Pirelli Group Cash Flow
Pirelli Group Cash Flow €/mln 1Q’09 2Q’09 3Q’09 9M’09 9M’08 Operating profit (EBIT) 50.3 72.0 82.8 205.1 232.3 Depreciation 51.4 52.4 52.3 156.1 158.7 Net investments (42.9) (37.4) (32.0) (112.3) (217.3) Working capital/other variations (262.8) 96.7 84.4 (81.7) (328.3) FREE CASH FLOW (204.0) 183.7 1
Slide 40: Pirelli Group: Net financial position 9M'09 by Business
Pirelli Group: Net financial position 9M’09 by Business €/mln TYRE PRE Other Corporate Pirelli Group Business Gross Debt 1,615 502 62 253 1,842 to Corporate 445 69 61 Financial receivables (91) (506) (22) (574) (603) Cash and cash equivalents (225) (40) (4) (279) (548) Net Financial Position 1,299 (
Slide 41: 9M'09 Pirelli Tyre Mix
9M’09 Pirelli Tyre Mix Sales by segment Sales by region Europe Car Latin 43% Moto 9% America 62% 33% Steelcord & others Truck 2% MEA 10% Asia North Pacific 27% America 6% 8% Sales by channel Replacement 79% OE 21% 40
Slide 42: Raw Materials
Raw Materials Pirelli Tyre mix Natural Rubber price trend Synt. Rubber 23% 160.0 Avg 2007 = 100 Carbon black 140.0 Natural 13% Rubber 120.0 23% 100.0 80.0 Chemicals 17% 60.0 Steelcord 10% Textiles 14% 40.0 QI '07 QII '07 QIII '07QIV '07 QI '08 QII '08 QIII '08 QIV '08 QI '09 QII '09QIII '09 QIV '09
Slide 43: 9M'09 Pirelli Tyre People
9M’09 Pirelli Tyre People Headcount People by region 28.601 North America Europe 27.283 1% 38% Latin Asia America Pacific MEA 42% Dec 08 Sept 09 8% 11% People by contract People by cluster Blue Collar workers Permanent 81% 92% Temps & Staff Agency 18% Management 8% 1% 42
Slide 44: 9M'09 Pirelli Tyre factories
9M’09 Pirelli Tyre factories Italy U.K. Germany Bollate (Mi) Car Burton-on-trent Car Settimo Torinese Car Breuberg Car/Motorcycle Carlisle Car Settimo Torinese Truck Merzig Steelcord Figline Valdarno Steelcord Spain Turkey Manresa Car Izmit Car/Truck Izmit Steelcord U.S.A. Romania Rome (GA) Car Slat
Slide 45: Consolidated net cash flow
Consolidated net cash flow €/mln 9M‘09 9M‘08 Ebit before restructuring costs, reval. / deval. (1.3) 21.0 Depreciation 5.4 6.6 Change in investments (36.8) (50.1) Change in other fixed assets 0.1 (14.8) Change in NWC, funds and other (0.9) (12.0) Free cash flow (33.5) (49.3) Impact from Facility Mgm
Slide 46: Rents and sales evolution
Rents and sales evolution €/mln RENTS ACQUISITIONS 100% Pro quota 100% Pro quota 4,967.4 (**) 599.4 527.6 527.6 527.6 464.2 xxx 664.1 148.3 118.3 291.9 51.1 9M‘09 9M‘08 9M‘09 9M‘08 9M’09 (*) 9M‘08 9M’09(*) 9M‘08 (*) No impacts on consolidated NFP since acquisitions are financed by a financial vehicl
Slide 47: Real estate portfolio: sales, rents and acquisitions by country
Real estate portfolio: sales, rents and acquitions by country €/mln SALES RENTS ACQUISITIONS 714.5 599.4 4,967.4 34.4 657.6 0.3 60.3 26.3 207.7 207.7 464.2 173.7 0.3 274.9 4,646.8 369.8 211.8 527.6 527.6 480.5 291.9 356.4 252.1 229.3 291.9 286.3 9M‘09 9M‘08 9M‘09 9M‘08 9M‘09 9M‘08 Italy Germany Pola
Slide 48: Total economic results - total Pirelli RE (1/2)
Total economic results- total Pirelli RE (1/2) €/mln Fund & AM Fee 9M‘09 1H‘09 9M‘08 Consolidated revenues 44.0 29.5 70.1 Other (*) 6.1 0.0 17,0 Total revenues 50.1 29.5 87.1 Result (**) 18.5 8.6 18.0 Agency Consolidated revenues 18.5 12.7 22.4 Other (*) 0.0 0.0 (0.1) Total revenues 18.5 12.7 22.3 R
Slide 49: Total economic results - total Pirelli RE (2/2)
Total economic results- total Pirelli RE (2/2) €/mln 9M‘09 1H‘09 9M‘08 Service platform & Holding Consolidated revenues 137.4 94.7 172.1 Other (*) 7.9 2.0 17.6 Total revenues 145.3 96.7 189.7 Result (**) (0.5) (3.2) (5.2) Vehicles & funds Results from Vehicles & funds (29.7) (19.8) 27.6 Of which Rea
Slide 50: Economic results - Italy
Economic results - Italy €/mln 9M‘09 1H‘09 9M‘08 Service platform Consolidated revenues 73.9 50.1 106.4 Other (*) 6.1 0.0 17.0 Total revenues 80.0 50.1 123.4 Result (**) 19.5 6.7 18.9 Vehicles & funds Results from Vehicles & funds (21.0) (14.6) 0.6 Interest income from participations 5.9 4.3 8.5 Res
Slide 51: Economic results – service platform - Italy
Economic results – service platform - Italy €/mln 9M‘09 1H‘09 9M‘08 Fund & AM Fee Consolidated revenues 32.1 21.4 57.0 Other (*) 6.1 17.0 Total revenues 38.2 21.4 74.0 Result (**) 16.4 6.0 22.4 Agency Consolidated revenues 14.4 10.1 17.9 Other (*) Total revenues 14.4 10.1 17.9 Result (**) (4.5) (3.9
Slide 52: Economic results – Germany
Economic results – Germany €/mln 9M‘09 1H‘09 9M‘08 Service platform Consolidated revenues 44.4 28.5 49.3 Other (*) 0.0 0.0 0.6 Total revenues 44.4 28.5 49.9 Result (**) 2.2 2.7 (6.4) Vehicles & funds Results from Vehicles & funds (14.9) (8.8) (4.9) Interest income from participations 12.3 7.9 7.7 Re
Slide 53: Economic results – service platform – Germany
Economic results – service platform – Germany €/mln 9M‘09 1H‘09 9M‘08 Fund & AM Fee Consolidated revenues 10.3 7.0 11.0 Other (*) Total revenues 10.3 7.0 11.0 Result (**) 3.1 3.1 (2.8) Agency Consolidated revenues 3.4 2.2 3.7 Other (*) (0.1) Total revenues 3.4 2.2 3.7 Result (**) 0.2 0.0 (0.9) Prope
Slide 54: Economic results – Poland
Economic results – Poland €/mln 9M‘09 1H‘09 9M‘08 Service platform Consolidated revenues 4.0 3.1 6.1 Other (*) 0.0 0.0 0.0 Total revenues 4.0 3.1 6.1 Result (**) (1.1) (0.1) (0.4) Vehicles & funds Results from Vehicles & funds 0.3 0.6 17.4 Interest income from participations 1.7 1.1 1.1 Result (**)
Slide 55: Economic results – service platform - Poland
Economic results – service platform - Poland €/mln 9M‘09 1H‘09 9M‘08 Fund & AM Fee Consolidated revenues 1.6 1.1 2.1 Other (*) Total revenues 1.6 1.1 2.1 Result (**) (0.9) (0.5) (1.6) Agency Consolidated revenues 0.7 0.5 0.7 Other (*) Total revenues 0.7 0.5 0.7 Result (**) (0.4) (0.1) (0.1) Facility
Slide 56: Economic results – Npl
Economic results – Npl €/mln 9M‘09 1H‘09 9M‘08 Service platform Consolidated revenues 12.1 8.7 23.3 Other (*) 1.8 2.0 0.0 Total revenues 14.0 10.7 23.3 Result (**) (5.2) (2.4) 0.2 Vehicles & funds Results from Vehicles & funds 6.0 3.0 14.5 Interest income from participations 1.3 0.4 6.3 Result (**)
Slide 57: Partecipated real estate assets under management – 100%
Partecipated real estate assets under management – 100% €/mln (*) The yields related to the real estate funds managed by SGR are based on the assumption pending the approval by SGR Board of the September 2009 financial statements 56
Slide 58: Pro-quota real estate assets under management
Pro-quota real estate assets under management €/mln (*) The yields related to the real estate funds managed by SGR are based on the assumption pending the approval by SGR Board of the September 2009 financial statements 57