Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — 9M 2020 Earnings Presentation
31 slides from Pirelli & C's earnings presentation, Nov 11, 2020
Slide 1: 9M 2020 Results
9M 2020 RESULTS Milan, November 11th, 2020 9M 2020 RESULTS Milan, November 11th, 2020
Slide 2: Disclaimer
DISCLAIMER In General. This document, is referred to herein as the “Presentation”. This document has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company” and, together with its subsidiaries the “Group”). The Presentation is being furnished to you for information purposes only and for use
Slide 3: Agenda
AGENDA 1 KEY MESSAGES AND 2020 OUTLOOK 2 MARKET AND PIRELLI PERFORMANCE 3 9M 2020 FINANCIAL REVIEW 4 APPENDIX 9M 2020 RESULTS 2 Milan, November 11th, 2020
Slide 4: Key Messages
Key Messages > 9M Results in line with the expectations, recovering in 3Q from Covid-19 outbreak • High Value positioning strengthened in 3Q on both O.E. and Repl. • Profitability back to the top of Industry • sound cash profile, supported by lower inventories > Competitiveness Program and “Covid Ac
Slide 5: Pirelli Competitiveness Program and Covid Actions on Track
PIRELLI COMPETITIVENESS PROGRAM AND «COVID ACTIONS» ON TRACK € million FY 2020 9M 2020 COMPETITIVENESS PLAN COVID ACTIONS COMPETITIVENESS PLAN COVID ACTIONS (19-Feb) (11-Nov) (11-Nov) Product Cost Manufacturing ~€20M freeze due to slowdown (as indicated in may) Organization SG&A Total Gross Im
Slide 6: 2020 Targets Update
2020 TARGETS UPDATE € billion 2020 KEY TARGETS @ 5-Aug @ 11-Nov @ 5-Aug @ 11-Nov 2020 E 2020 E 2019 A 2020 E 2020 E Volumes ~ -18% ÷ -20% ~ -17% ÷ -18% Net Sales 5.3 ~4.15 ÷ ~4.25 ~4.18 ÷ ~4.23 • o/w High Value ~ -14% ~ -11% Car ≥18": -13% Car ≥18": -10% • o/w Standard ~ -26% ~ -25% adj. EBIT 0.9 Pr
Slide 7: Preliminary Reflection on the Development of 2021-23/25 Plan
PRELIMINARY REFLECTION ON THE DEVELOPMENT OF 2021-23/25 PLAN HIGH VALUE STRATEGY ON TARGET AND ON TRACK RESILIENCE OF OUR BUSINESS AND MANAGEMENT TEAM CONFIRMED DURING COVID 19 DISCONTINUITY THE PLAN WILL CAPTURE NEW OPPORTUNITIES WITHIN MOBILITY DISCONTINUITIES AND ENSURE PROFITABLE & SUSTAINABLE G
Slide 8: Agenda
AGENDA 1 KEY MESSAGES AND 2020 OUTLOOK 2 MARKET AND PIRELLI PERFORMANCE 3 9M 2020 FINANCIAL REVIEW 4 APPENDIX 9M 2020 RESULTS 7 Milan, November 11th, 2020
Slide 9: 3Q Market Environment and Pirelli Performance
3Q MARKET ENVIRONMENT AND PIRELLI PERFORMANCE MARKET SCENARIO AND PIRELLI VOLUMES 3Q KEY PIRELLI PERFORMANCE TOTAL HIGH VALUE (≥18”) STANDARD (≤17”) 1Q 2Q 3Q 9M 1Q 2Q 3Q 9M 1Q 2Q 3Q 9M H.V.: outpacing market in both channels market 2% •> O.E. Total -6% -8% -21% -21% -12% -15% • APac: strengthened po
Slide 10: FY 2020 Market Outlook
FY 2020 MARKET OUTLOOK GLOBAL TYRE Of which Of which MARKET (OE+REPL) O.E. REPL. KEY TRENDS IN 4Q TYRE MARKET DEMAND Δ YoY % Δ YoY % Δ YoY % Cautious view on EU in light of mobility restrictions -21% -22% -20% Channels •> O.E.: down low-single-digit, in line with 3Q -35% -43% -32% •> Repl.: down mid
Slide 11: Deep Dive on Competitiveness and Covid Actions
DEEP DIVE ON COMPETITIVENESS AND COVID ACTIONS COST COMPETITIVENESS AND COVID ACTIONS 2020 GROSS BENEFITS BY PILLAR € million Competitiveness Covid ▬ Product range management ▬ Specification optimization and virtual prototyping PRODUCT COST ~50 ~10 ~60 ▬ Material portfolio de-complexity ▬ Procuremen
Slide 12: Pirelli Key Programs Deployment
PIRELLI KEY PROGRAMS DEPLOYMENT IMPROVE CUSTOMER SERVICE LEVEL • Best-in class service level in EU and N. America thanks to Business model predictability and flexibility • Commercial policy aimed at keeping low stock levels with distribution partners ONLINE DEVELOPMENT • Partnership with JD.com (ded
Slide 13: 2020 Targets Update
2020 TARGETS UPDATE € billion 2020 MAIN OPERATIONAL DRIVERS @ 5-Aug @ 11-Nov @ 5-Aug @ 11-Nov 2020 E 2020 E 2019 A 2020 E 2020 E Volumes ~ -18% ÷ -20% ~ -17% ÷ -18% Net Sales 5.3 ~4.15 ÷ ~4.25 ~4.18 ÷ ~4.23 • o/w High Value ~ -14% ~ -11% Car ≥18": -13% Car ≥18": -10% • o/w Standard ~ -26% ~ -25% adj
Slide 14: Agenda
AGENDA 1 KEY MESSAGES AND 2020 OUTLOOK 2 MARKET AND PIRELLI PERFORMANCE 3 9M 2020 FINANCIAL REVIEW 4 APPENDIX 9M 2020 RESULTS 13 Milan, November 11th, 2020
Slide 15: 9M 2020 Net Sales Bridge
9M 2020 NET SALES BRIDGE o/w Organic € million -20.7% +1.4% -4.1% -23.4% -19.3% 4,036 Standard -834 58 3,094 -166 -14.9% -26.4% High Value 67% o/w Car ≥18” 71% -14.2% 9M’19 O.E. -15.3% Volumes Price/Mix FX 9M’20 Repl. -13.3% High Value Standard 3Q‘20 +3.9% -3.8% -11.9% +2.3% -6.0% -7.5% -1.5% o/w Ca
Slide 16: 3Q / 9M 2020 Adjusted EBIT Bridge
3Q / 9M 2020 ADJUSTED EBIT BRIDGE € million Net eff. +32 Net impact +20 29 (8) 245 (14) (51) 45 (22) 14 (5) (18) 214 ▬ D&A -8 3Q ▬ other -43 3Q’19 Volume Price/mix Efficiencies Inflation Covid Cost Slowdown D&A and Raw Mat. FX 3Q’20 margin 17.7% cutting Other 16.7% 685 Net eff. +73 Net impact +11 (3
Slide 17: 9M 2020 Cash Flow and Net Financial Position
9M 2020 CASH FLOW AND NET FINANCIAL POSITION € million 4,252 69 Operating Cash Flow: -493 (-252 in 9M’19) 70 113 ▬ Non-rec. / restr. -91 3,507 ▬ FX / other +23 902 (577) 62 106 Net Cash Flow: -745 (-629 in 9M’19) NFP FY’19 EBITDA CapEx Increase in ∆ W.C. Interests Taxes Other NFP 9M’20 adjusted righ
Slide 18: Current Capital Structure (September 2020)
CURRENT CAPITAL STRUCTURE (SEPTEMBER 2020) € million Net Financial Position Gross Debt maturity 5.801 (1,550) Liquidity position 1,760 Loan 1,683 can be (1.150) extended to 2024 Bond (399) 4.252 3.641 242 can be 1,141 IFRS 16 extended to 2022 125 1,014 Fin. receivables 785 1,683 Other & other 637 1.
Slide 19: Agenda
AGENDA 1 KEY MESSAGES AND 2020 OUTLOOK 2 MARKET AND PIRELLI PERFORMANCE 3 9M 2020 FINANCIAL REVIEW 4 APPENDIX 9M 2020 RESULTS 18 Milan, November 11th, 2020
Slide 20: 3Q / 9M 2020 Results Highlights
3Q / 9M 2020 RESULTS HIGHLIGHTS € million 3Q’19 3Q’20 Δ YoY 9M’19 9M’20 Δ YoY Revenues 1,382 1,277 -7.5% 4,036 3,094 -23.4% Organic Growth1 -1.5% -19.3% High Value Revenues 932 918 -1.6% 2,720 2,203 -19.0% % on total Revenues 67.5% 71.8% +4.3pp 67.4% 71.2% +3.8pp EBITDA adjusted2 342 309 -9.6% 979 5
Slide 21: 9M 2020 Pirelli Balance Sheet
9M 2020 PIRELLI BALANCE SHEET € million 30-Sept-2019 31-Dec-2019 30-Sept-2020 Fixed assets related to continuing operations (before IFRS 16) 8,973 9,007 8,465 Right of use IFRS 16 464 463 444 Fixed assets related to continuing operations (incl. IFRS 16) 9,437 9,470 8,909 Inventories 1,104 1,094 825
Slide 22: 3Q / 9M 2020 Pirelli Group Cash Flow
3Q / 9M 2020 PIRELLI GROUP CASH FLOW € million 3Q’19 3Q’20 9M’19 9M‘20 Adjusted EBIT1 245 214 685 280 Depreciation & amortization (excl. PPA amortization) 98 96 294 297 Capital expenditure (75) (25) (242) (106) Rights of use (IFRS 16) (9) (15) (26) (62) Change in working capital / other (137) (173)
Slide 23: 2020 E Raw Material Guidance
2020 E RAW MATERIAL GUIDANCE € million 13% Natural Rubber 10% Steel Reinf. 17% Textiles Breakdown FY 2019 A 26% Synthetic Rubber Raw Materials based on 33% on Sales purch. costs 22% Chemicals 12% Carbon Black COMMODITIES: AVERAGE COST OF GOODS SOLD OLD NEW 2019 A 2020 E 2020 E 2020 E 2020 E Aug-20 g
Slide 24: 2020 E Forex Guidance
2020 E FOREX GUIDANCE € million 13% other 6% GBP 37% EUR 3% RUB Breakdown FY 2019 A 11% BRL based on currency 12% CNY 18% USD + devaluation - revaluation OLD NEW MAIN AVERAGE EXCHANGE RATES 2019 A 2020 E ∆ YoY 2020 E ∆ YoY Aug-20 guid. vs. EUR Nov-20 guid. vs. EUR EUR / USD / 1.12 1.12 -0.4% 1.14 +1
Slide 25: Key Car Market Trends: Europe
KEY CAR MARKET TRENDS: EUROPE Market trend 3Q’19 4Q’19 FY’19 1Q’20 2Q’20 3Q‘20 9M’20 ∆% YoY O.E. -1 -3 -5 -10 -16 -31 Total Car market -63 0 0 Replacement -1 -4 -13 -17 -35 0 Total (O.E.+Repl.) -1 -2 -5 -14 -20 -42 ≤17" 4 2 ≥18” -2 -5 -6 0 -9 -13 O.E. -16 -14 -31 -31 of which ≥18” & ≤17” -63 -64 12
Slide 26: Key Car Market Trends: North America
KEY CAR MARKET TRENDS: NORTH AMERICA Market trend 3Q’19 4Q’19 FY’19 1Q’20 2Q’20 3Q‘20 9M’20 ∆% YoY 0 O.E. -1 -10 -4 -11 -27 Total Car market -68 3 2 Replacement -1 -4 -9 -15 -32 2 1 Total (O.E.+Repl.) -2 -10 -3 -17 -40 ≤17" 5 2 4 ≥18” O.E. -2 -4 -7 -17 -4 of which ≥18” & ≤17” -16 -10 -30 -23 15 12 1
Slide 27: Key Car Market Trends: Asia Pacific
KEY CAR MARKET TRENDS: ASIA PACIFIC Market trend 3Q’19 4Q’19 FY’19 1Q’19 2Q’20 3Q‘20 9M’20 ∆% YoY O.E. -4 -3 -6 -1 Total Car market -15 -16 -32 3 3 Replacement 0 -5 -16 -20 -43 0 Total (O.E.+Repl.) -1 -1 -4 -16 -19 -38 ≤17" 8 10 4 5 ≥18” O.E. of which ≥18” & ≤17” -7 -6 -9 -3 -16 -12 -17 -11 -33 -28
Slide 28: Key Market Trends: Russia & Nordics / South America
KEY MARKET TRENDS: RUSSIA & NORDICS / SOUTH AMERICA Market trend 3Q’19 4Q’19 FY’19 1Q’19 2Q’20 3Q‘20 9M’20 ∆% YoY 3 0 O.E. -9 -11 -7 Russia & Nordics -21 -44 Replacement 0 -8 -5 -7 -25 -26 -47 0 Total (O.E.+Repl.) -8 -4 -7 -23 -25 -46 O.E. -5 -3 -3 -17 -21 -41 South America -82 4 Replacement1 -3 -6
Slide 29: Raw Material Costs Trend and Mix
RAW MATERIAL COSTS TREND AND MIX Main raw materials price trend 54.8 ; +22% YoY 71.5 ; +31% YoY 64.2 ; -10% YoY 1.651 ; +20% YoY 1.365 ; -17% YoY 1.406 ; +3% YoY $ / kg Brent Oil (in $ / barrel) Natural Rubber (in $ / kg) yearly avg. ; Δ YoY $ / barrel 2.25 85 2.00 75 1.75 65 1.50 55 1.25 45 1.00 35
Slide 30: Manufacturing Footprint as of September 30th, 2020
MANUFACTURING FOOTPRINT AS OF SEPTEMBER 30TH, 2020 U.K. Germany Romania Russia U.S. ▬ Burton – Car ▬ Breuberg – ▬ Slatina – Car ▬ Kirov – Car ▬ Carlisle – Car Car / Moto ▬ Rome – Car ▬ Voronezh – Car Mexico ▬ Silao – Car Italy ▬ Bollate – Car China ▬ Settimo – Car ▬ Yanzhou – Car / Moto ▬ Jiaozuo –
Slide 31: 9M 2020 Results
9M 2020 RESULTS Milan, November 11th, 2020