Slide 1: Pirelli 1Q 2012 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 PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 2
Slide 4: Key Messages
KEY MESSAGES 1Q’12 Results Reaping the benefits of our focus on Premium New Organization To effectively become Global Premium Leader 2012 Outlook Update Premium globally resilient. Widening demand gap between emerging and mature markets. Pirelli shifting gears along markets, clients and product segm
Slide 5: The Organization of the Global Premium Leader
THE ORGANIZATION OF THE GLOBAL PREMIUM LEADER CEO* Central Functions Small business SUPPLY PLANNING & CTO OPERATIONS CHAIN CONTROLLING CCO PRODUCT MARKETING SALES RETAIL PROCESSES QUALITY BUSINESS OE MOTORSPORT Central Europe South Europe North West Europe Russia & Nordics Regions* NAFTA LATAM APAC
Slide 6: Tyre Industry in 2012
TYRE INDUSTRY IN 2012 Current dynamics Pirelli view Increasing evidence of diverging regional trends The advantage of flexibility: surfing among Regions, segments and products to generate Demand slowdown in Europe particularly in the South quality growth moderate growth in LaTAM Nafta, Apac an
Slide 7: 2012 Consumer Volumes Guidance: ~0.5% / -1.5%
2012 CONSUMER VOLUMES GUIDANCE: ~0.5% / -1.5% Europe Double – digit reduction Premium Mid-single digit growth with mixed trends (Southern Europe down double digit) Non Premium ~ -20% / -25% (due to recession and Pirelli selective approach) Nafta Mid-single digit growth Premium +20% Non
Slide 8: Russia
RUSSIA Premium on the upsurge, trend confirmed Car Market Tyre Replacement Market New Registration Car Park Volume Value mln pcs mln pcs mln pcs €/mln 40.4 42.8 35.6 36.7 +3% yoy 1,714 1,934 +13% yoy 2.65 2.8 48% 25% 27% 41% 43% 34% 47% 37% 26% 28% 29% 31% 36% 43% 53% 52% 49% 45% 30% 26% 27% 23% ’11
Slide 9: Russia
RUSSIA Pirelli approach to value Product Innovation Production Pirelli as Premium player capacity KIROV VORONEZH In winter Execution Dec, 14 2011 Mar, 1th 2012 Enhanced product range and improved performance (hexagonal studs, new compound) Employees 2,682 1,296 Range extension from 40 to 63 size
Slide 10: Pirelli 2012 Targets Update
PIRELLI 2012 TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (March 12, 2011) (May 10, 2012) Δ % YoY Δ % YoY Revenues 5.65 ~6.6 +17% ~6.45 +14% Russia JV ~0.3 ~ 0.25 Revenues ~6.3 +11% ~6.2 +10% net of Russia Volumes 0% / -1% -1% / -2% o/w Premium ≥20% ~+20% Price/mix +11% / +12% +11% /
Slide 11: 2012 Consumer Targets Update
2012 CONSUMER TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (March 12, 2011) (May 10, 2012) Δ % YoY Δ % YoY Revenues 3.9 ~ 4.8 +23% ~4.7 +20% Russia JV 0.3 ~ 0,25 Revenues ~4.5 +15% ~4.45 +13% net of Russia Volumes 1% / 0% -0,5% / -1,5% o/w Premium ≥20% ~+20% o/w Non Premium -8% / -10%
Slide 12: 2012 Industrial Targets Update
2012 INDUSTRIAL TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011A (March 12, 2011) (May 10, 2012) Δ % YoY Revenues 1.68 ~1.7 +3% / +2% confirmed Volumes -2% / -4% confirmed o/w Radial +2% / 0% confirmed o/w Conventional -20% confirmed Price/mix +5% / +6% confirmed EBIT % 9,1% ~9% ~10% 11
Slide 13: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 12
Slide 14: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 1Q 11 1Q 12 D YoY Results key drivers €/mln Our strengths: Resilience & Profitability Revenues 1,400.9 1,556.5 +11.1% Organic growth* +11.0% Robust growth in Premium worldwide 203.4 275.8 (revenues +29,2% yoy) EBITDA before Restr. Costs +35.6% Margin 14.5% 17.7% Tru
Slide 15: Performance by Region
PERFORMANCE BY REGION Sales by Region Ebit % by Region Highlights YoY 1Q’2012 growth 1Q’2011 1Q’2012 Steadfast Premium Segment growth (+22%) coupled with market share increase (>15%, +1pp yoy) Europe 38% +3% Mid single digit Double digit Performance impacted by Truck and Southern European countr
Slide 16: Pirelli Net Income 1Q12 vs 1Q11
PIRELLI NET INCOME 1Q12 VS 1Q11 €/mln 66.1 (0.3) (3.9) 125.3 (18.0) 81.4 Net Income DEBIT D Results D Financial D Taxes Net Income 1Q11 from particip. income/ 1Q12 charges 15
Slide 17: Pirelli 1Q12 Net Financial Position
PIRELLI 1Q12 NET FINANCIAL POSITION €/mln EBIT before restr. costs 211,4 Dep/Am: 64.4 Investments*: (80.1) D NWC & others: (512,8) 154.5 7.5 1,305.0 84.6 4.2 317.1 737.1 567.9 FY11 Operating Fin. Cash out Russia Others 1Q12 Cash Flow Inc./Expen. Restr. Costs investment & taxes (*)Tangible and intang
Slide 18: Pirelli Debt Structure as of March 31, 2012
PIRELLI DEBT STRUCTURE AS OF MARCH 31, 2012 Net Financial Position Gross Debt Maturity €/mln 2,043.5 738.5 Committed Line 649 85.2 Drawdown 675 149 500 Bond 500 1,305.0 801.7 675 Other Borrowings 868.5 126.7 128.5 117.2 261.9 12.8% 5.7% 6.3% 39.2% 31.8% 4.2% Gross Fin. Net Fin. Debt Assets* position
Slide 19: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 18
Slide 20: Key Tyre Results
KEY TYRE RESULTS €/mln 1Q’11 YoY% 1Q’12 YoY% Revenues 1,384.5 +24.7% 1,542.6 +11.4% 1Q Highlights o/w Premium 452.3 +33.5% 584.4 +29.2% Strong premium revenues EBITDA (before 209.5 +43.1% 280.3 +33.8% (+29%) drive topline restruct. costs) growth margin 15.1% +1.9p.p. 18.2% +3.1p.p. Sequential Eb
Slide 21: Tyre 1Q12 Operating Performance
TYRE 1Q12 OPERATING PERFORMANCE €/mln 159.2 (30.2) 16.7 215.2 25.5 (1.3) 152.4 (107.1) Raw materials: (85.1) Labour / energy / other: (22.0) EBIT 1Q11 Price Volume Cost of Efficiencies Depreciation Exchange EBIT 1Q12 mix inputs / other costs rate 20
Slide 22: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 1Q11 2Q11 3Q11 4Q11 1Q12 +7% Europe +0% +3% +1% OE* -6% +7% +6% +1% Replacement** -4% -12% +15% +8% +14% +16% America +2% North OE +7% Replacement -5% -2% -4% -8% +8% +7% +3% Mercosur OE +13% -8% -7% +6% +4% +4% +4% Replacement*** +8% +0% +5% +1% OE China -
Slide 23: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’11 YoY% 1Q’12 YoY% Revenues 983.3 +25.9% 1,151.8 +17.1% 1Q Highlights o/w Premium +33.5% 584.4 +29.2% Strong premium revenues EBITDA (before 232.1 +44.5% in all regions (+29%) drive restruct. costs) 160.6 +51.5% topline growth margin 16.3% +2.7p.p. 2
Slide 24: Premium: Speaks for Itself
PREMIUM: SPEAKS FOR ITSELF Premium Revenues Q1 2012 Regional breakdown €/mln YoY 584 +29% % Premium Revenue 452 on Car sales growth (%) by Region Europe 73 22 80% +24% Nafta 59 47 Mature markets 83% LatAm 15 45 MEA 43 59 Apac 61 63 Emerging 20% +57% Russia* 26 90 markets 17% Q1 2011 Q1 2012 * Import
Slide 25: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 1Q11 2Q11 3Q11 4Q11 1Q12 +77% +42% +24% OE Europe* +2% -6% +16% +11% Replacement -9% -18% -30% +21% +4% +16% OE +2% Mercosur +18% -30% Replacement** +6% -6% -7% -13% OE +5% China -22% -15% -27% -24% Replacement +1% +4% (*)Turkey included and Russia exclud
Slide 26: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’11 YoY% 1Q’12 YoY% Revenues 401.2 +21.9% 390.8 -2.6% EBITDA (before 48.9 +21.0% 48.2 -1.4% Ongoing demand restruct. costs) weakness affected the margin topline 12.2% -0.1p.p. 12.3% +0.1p.p. EBIT (before restruct.costs) 35.9 +25.5% 33.2 -7.5% Doub
Slide 27: Raw Materials
RAW MATERIALS BREAKDOWN FY 2011 (based on purchasing cost) Guidance Nov 2011 Update May 2012 Synthetic Rubber Average Cost of Goods Sold 2011 2012 Headwind 2012 Headwind 27% €/mln (2012 vs 2011) (2012 vs 2011) Natural Rubber Natural Rubber 4,600 4,300 +50 3,800 +120 35% Carbon TSR20 ($/ton) Black 11
Slide 28: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW TYRE BUSINESS APPENDIX 27
Slide 29: Pirelli Group – 1Q12 Results
PIRELLI GROUP – 1Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. 1Q12 1Q11 1Q12 1Q11 1Q12 1Q11 Sales 1,542.6 1,384.5 13.9 16.4 1,556.5 1,400.9 ∆% EBITDA before Restruct Costs 280.3 209.5 (4.5) (6.1) 275.8 203.4 % on sales 18.2% 15.1%
Slide 30: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/mln 1Q 12 FY 11 Fixed Assets 3,679.1 3,558.1 Net Working Capital 722.3 155.2 % Net Invested Capital Net Invested Capital 4,401.4 3,713.3 Total Net Equity 2,320.1 2,191.6 1Q12 FY11 Provisions 776.3 784.6 Tyre 92.2% 85.0% Business Net Financial Position 1305.0 737.1 Other 7.8%
Slide 31: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 1Q’11 2Q’11 3Q’11 4Q’11 1Q’12 EBIT before restructuring costs 146.5 151.3 163.3 148.6 211.4 Depreciation 56.9 56.2 56.9 54.9 64.4 Net investments (96.9) (137.2) (162.1) (230.0) (80.1) Working capital/other variations (313.5) 18.1 (100.6) 344.0 (512.8) OPERATING CASH FLO
Slide 32: 1Q12 Pirelli Tyre Mix
1Q12 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 66% 75% Motorbike 9% Steelcord & others Truck Industrial 25% 2% 23% SALES BY CHANNEL SALES BY REGION Nafta Replacement South 12% Asia Pacific 76% America 6% MEA 31% 9% Russia 4% OE Europe 24% 38% 31
Slide 33: March 2012 Pirelli People
MARCH 2012 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION Russia Nafta 36,068 Europe 11% 1% 34,259 32% South America 37% Asia Pacific MEA Dec. 2011 Mar. 2012 9% 9% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 93% 80% Staff 19% Temps & Agency Management 7% 1% 32
Slide 34: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD MEXICO Italy Germany NEW Russia U.K. Bollate (MI) Car Breuberg Car/Moto Settimo Torinese Car/Truck Merzig Steelcord Kirov Car Burton Car Figline Valdamo Steelcord Voronezh Car Carlisle Car (Production starts in 2012) Turkey U.S.A Car/Truck Izmit Rome Car Steelcord NEW Mex
Slide 35: Raw Materials
RAW MATERIALS RAW MATERIALS PRICE TREND 5,251 4.671 4.565 Brent Oil (in usd/bbl) 4.254 3.587 3.687 Natural Rubber (in usd/tons) 123 117 3.380 118 118 99 2.513 3.096 3.148 96 3.022 112 109 2.943 2.973 87 105 2.653 80 2.531 1.837 1.523 76 77 80 77 57 1.330 69 63 1.553 60 1.801 45 QI/08 QII/0 8 QIII/08