Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — FY2012 Earnings Presentation
44 slides from Pirelli & C's earnings presentation, Mar 11, 2013
Slide 1: Pirelli FY 2012 Results
PIRELLI FY 2012 RESULTS MARCH 11, 2013 FY 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 2012 FULL YEAR RESULTS 2012 TYRE BUSINESS OVERVIEW 2013 OUTLOOK AND GUIDANCE APPENDIX FY 2012 RESULTS 2
Slide 4: Key Messages
KEY MESSAGES 2012 The global Tyre market shrank, with Europe loosing the biggest share against all expectations. In these times of hardship and market downsizing, we worked up our value ladder: 19% ROI and Top Profitability, ~13% 2013 Outlook The global Tyre market is expected to pick up at low si
Slide 5: 2012 FY Results vs Targets
PIRELLI 2012 FY RESULTS VS TARGETS €/bln FY’12 Targets (Nov.’12) FY’12 Results Δ YoY Total Revenues ~ 6.15 6.07 +7.4% Russia JV ~ 0.2 172 €/mln Däckia ~ 50 €/mln 55 €/mln Foreign Exchange -1% -1% Organic Revenues ~ 5.9 5.84 +3.4% Volumes -5% / -5.5% -5.6% o/w Premium +17% / +18% +12.6% Price/mix >+1
Slide 6: Agenda
AGENDA KEY MESSAGES 2012 FULL YEAR RESULTS 2012 TYRE BUSINESS OVERVIEW 2013 OUTLOOK AND GUIDANCE APPENDIX FY 2012 RESULTS 5
Slide 7: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS €/mln FY12 FY11 D YoY 4Q12 4Q11 D YoY 4Q result key drivers Revenues 6,071.5 5,654.8 7.4% 1,497.4 1,389.0 7.8% Sale trend sustained by Organic growth* 8.4% 9.8% emerging markets and Premium sales EBITDA before Restr. Costs 1,091.2 834.6 30.7% 281.3 203.5 38.2% Appro
Slide 8: 2012 Regional Tyre Profitability Drivers
2012 REGIONAL TYRE PROFITABILITY DRIVERS Premium & RDE exposure drive the race Sales Premium Sales Ebit Margin €/mln 6,031.3 +7.7% yoy 2,075.4 +20.9% yoy 809.1 +25.7% yoy 13.4% (+1.9pp) 78% 46% 38% Mature Markets +35% Mid-teen NAFTA 12% +23% (from low 1-digit) -1% +12% +5.7% Double digit 34% (slight
Slide 9: An Update on Russian JV
AN UPDATE ON RUSSIAN JV Premium robusteness confirmed Car Market Tyre Replacement Market New Car Registrations Car Park Volume Value (mln cars) (mln cars) (mln pcs) (€/mln) 37.4 +5% 1,960 +14% 2.94 +11% 40.6 26% +9% A Brand 42% +2% +17% Imported Brands 34% Foreign brands 50% B Brand 29% +17% Foreign
Slide 10: Net Income FY12 vs FY11
PIRELLI NET INCOME FY12 VS FY11 €/mln 198.9 (34.9) 398.2 (40.0) Of which (38.4) RCS (20.1) 312.6 Mediobanca (16.8) Adj. Net DEBIT D Results D Financial D Taxes Net Income Income* from particip. income/ FY 12 FY 11 charges * Before deferred tax assets (positive impact) FY 2012 RESULTS 9
Slide 11: Dividend Proposal
DIVIDEND PROPOSAL Dividend Proposal to be filed with Pirelli & C. AGM (May 13th, 2013) DPS (€) N° of Shares* Dividends (€/mln) 2012 2011 Δ % yoy mln 2012 Δ % yoy Ordinary shares 0.320 0.270 18.5 475 152.1 Savings shares 0.390 0.340 14.7 12 4.6 156.7 18 40% of Group Net Income post minorities Divid
Slide 12: Debt Structure as of Dec 31, 2012
PIRELLI DEBT STRUCTURE AS OF DEC 31, 2012 Net Financial Position Gross Debt Maturity 160.3 €/mln 2,455.5 1250.3 48.3 112.0 199 Committed Line 575 Cash & Cash 904.5 157.0 Drawdown Equivalent 739.8 42.0 125.8 768 345.8 Fin. Receivables Debt Capital 614 Market 1,205.2 705.4 575 575 Other 1,112.5 130.4
Slide 13: FY12 Net Financial Position
PIRELLI FY12 NET FINANCIAL POSITION EBIT before restr. costs 208.9 Dep/Am: 72.4 Investments*: (143.5) €/mln D NWC & other: 593.0 EBIT before restr. costs 611.0 Dep/Am: 198.9 Investments*: (327.4) 1,868.8 D NWC & other: (950.6) Property divestment 20.5 132.3 (730.8) Other (3) 106.2 (15) 170.9 11.1 25
Slide 14: Agenda
AGENDA KEY MESSAGES 2012 FULL YEAR RESULTS 2012 TYRE BUSINESS OVERVIEW 2013 OUTLOOK AND GUIDANCE APPENDIX FY 2012 RESULTS 13
Slide 15: Key Tyre Results
KEY TYRE RESULTS €/mln 1Q’12 YoY% 2Q’12 YoY% 3Q’12 YoY% Q4’12 YoY% FY ‘12 YoY% 4Q highlights Revenues 1,542.6 +11.4% 1,457.7 +5.9% 1,542.6 5.3% 1,488.4 8.2% 6,031.3 7.7% o/w Premium 584.4 +29.2 % 502.5 +22.3% 525.4 18.9% 463.1 12.8% 2,075.4 20.9% Strong Top Line thanks to EBITDA (before 280.3 +33.
Slide 16: Tyre FY12 Operating Performance
PIRELLI TYRE FY12 OPERATING PERFORMANCE €/mln 48.2 19.6 (0.6) 6.2 196.8 (18.7) (13.0) (1.1) (3.3) 159.5 4Q 2012 Raw materials: +37.2 Labour / energy / other: (31.0) EBIT 4Q11 Price mix Volume Cost of inputs Efficiencies Slowdown Restructuring Depreciation/ Exchange EBIT 4Q12 Costs other costs rate
Slide 17: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’12 YoY% 2Q’12 YoY% YoY% 3Q’12 YoY% 4Q’12 YoY% FY’12 YoY% Revenues 1,151.8 +17.1% 1,078.3 +12.5% 1,116.8 +9.0% 1,072.9 11.9% 4,419.8 12.6% o/w Premium +29.2% +22.3% +18.9% 12.8% 20.9% EBITDA (before restruct. costs) 232.1 +44.5% 213.4 +25.8% 206.7 +20.0
Slide 18: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/mln 1Q’12 YoY% 2Q’12 YoY% YoY% 3Q’12 YoY% 4Q’12 YoY% FY’12 YoY% Revenues 390.8 -2.6% 379.4 -9.1% 425.8 -3.3% 415.5 -0.3% 1,611.5 -3.9% EBITDA (before restruct. costs) 48.2 -1.4% 62.5 +28.3% 62.8 +11.7% 82.0 +56.8% 255.5 +24.0% margin 12.3% +0.1p.p. 16.5% +4
Slide 19: Agenda
AGENDA KEY MESSAGES 2012 FULL YEAR RESULTS 2012 TYRE BUSINESS OVERVIEW 2013 OUTLOOK AND GUIDANCE APPENDIX FY 2012 RESULTS 18
Slide 20: Macroeconomic Scenario
MACROECONOMIC SCENARIO GDP* (trillion USD) What has changed versus ‘12-’14 Industrial Plan MATURE RDEs EUROPE LATAM CHINA 17.6 18 +7.8% +8.2% 17.5 17.5 17.5 stagnating +2.3% +3.3% 8.5 8.4 7.8 7.8 4.6 4.5 7.2 4.3 4.4 4.4 2011A 2012 2013 2011A 2012 2013 2011A 2012 2013 USA MENA RUSSIA & CIS +2.2% +1.9
Slide 21: Car Tyre Market Scenario
CAR TYRE MARKET SCENARIO Positive growth trend in 2013 Mln pcs Growth gap in 2012 estimate Current growth expectations 1,347 +33 +2.5% 1,314 Woldwide 13.3% +12 12.7% +7.1% 2012A 2013 New Plan +1.0% 667 +7 660 Mature 17.7% +3.8% 18.2% +5 2012A 2013 New Plan +4.1% 680 +26 654 Emerging 8.5% +7 7.7% +14
Slide 22: Truck Radial Tyre Market Scenario
TRUCK RADIAL TYRE MARKET SCENARIO Growth picking up in 2013 Mln pcs Growth gap in 2012 estimate Current growth expectations 136 +7 +4.8% Woldwide 129 2012A 2013 New Plan +2 Mature 37 +5.3% 35 2012A 2013 New Plan 99 +5 Emerging +4.6% 94 2012A 2013 New Plan Weaker Asian Truck market in 2012, no impa
Slide 23: 2013 Outlook by Region (Car)
2013 OUTLOOK BY REGION (CAR) Pirelli Plan Region Tyre market Actions Revenues trend EBIT% (Total Car market in Mln pcs) Europe Stable volumes with improving Market share growth in top Basically stable Double-digit Total: 337 mix (Premium +3%) and Premium segments supported by Premium % weigh
Slide 24: 2013 Capex
2013 CAPEX Accelerating conversion to premium ’11-’15 €/bln ‘11A-’12A ‘13E 2013 Main Projects Ind. Plan. TOTAL CAPEX (Russia included) <2.4 1.1 ~0,4 CAPEX by Destination New Premium capacity: Mexico, China, Romania, Settimo Torinese Capacity 53% 54% 36% Start-up Indonesia (Moto) Mix & Quality (m
Slide 25: 2013 Targets
PIRELLI 2013 TARGETS €/bln 2012 Actual 2013 Targets Δ YoY Revenues 6.07 ~ 6.3 / <6.4 +4% / +5% Volumes -5.6% ~ +3% / ~ +4% Emerging markets +0.5% High single-digit Mature markets -11.8% ~ flat o/w Premium +12.6% ~13% / ~14% Price/mix +10.2% +4% / +5% Foreign Exchange -1% ~ -4% EBIT * 780.8 €/mln ~81
Slide 26: 2013 Consumer & Industrial Targets
2013 CONSUMER & INDUSTRIAL TARGETS €/bln CONSUMER BUSINESS INDUSTRIAL BUSINESS 2012 Actual 2013 Targets 2012 Actual 2013 Targets Revenues 4.42 ~ 4.6 Revenues 1.61 ~ 1.7 Volumes -5.2% +3% / +4% Volumes -6.5% +3.5% / +4.5% o/w Premium +12.6% ~ +13% / ~ +14% Price/mix +12.0% +4.5% / +5.5% Price/mix +6.
Slide 27: 2013 Main Profitability Drivers
2013 MAIN PROFITABILITY DRIVERS Driver Impact Highlights Volumes +3% / +4% revenue growth Growth to come from Emerging Markets Price/Mix +4% / +5% revenue growth Price ~ flat, mix improvement our internal lever Forex translation -40 €/mln impact on Ebit Weaker South American currencies , Egypt
Slide 28: 2013 Efficiencies
2013 EFFICIENCIES €/mln ‘12-’14 Ind. Plan. 250 228 158 130 120 16% Raw Weight and waste reduction Materials Use of alternative Raw Materials 25% 37% Sourcing cost rationalization 8% Labour Optimization of production process 70 Productivity Benefits from high mix and yield 9% & Scale machin
Slide 29: 2013 Raw Materials Guidance
2013 RAW MATERIALS GUIDANCE BREAKDOWN FY 2012 Guidance (based on purchasing cost) 2013 Synthetic Rubber Average Cost of 2012A Δ yoy 2013 Δ yoy Goods Sold (2012 vs 2011) (2013 vs 2012) €/mln Natural 31% Rubber 26% Natural Rubber 3,450 +143 TSR20 ($/ton) ~3,000 ~+100 Carbon Black Brent Oil 111 (28) ~1
Slide 30: 2013 Cash Flow Generation
2013 CASH FLOW GENERATION Starting to reap the benefits of our past investments Net Cash Flow Before dividends 2012 2013 -59 €/mln > 200 €/mln before Russia, Däckia before Prelios and Campneus impact acquisitions MAIN DRIVERS EBITDA* YoY IMPROVEMENTS: +70 ÷ 110 €/mln CAPEX ~400 €/mln OPERATING
Slide 31: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE APPENDIX FY 2012 RESULTS 30
Slide 32: Group – FY'12 Results
PIRELLI GROUP – FY’12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. FY’12 FY’11 FY’12 FY’11 FY’12 FY’11 €/mln Sales 6,031.3 5,601.6 40.2 53.2 6,071.5 5,654.8 EBITDA before Restruct. Costs 1,114.8 875.5 (23.6) (40.9) 1,091.2 834.6 % on sales 1
Slide 33: Group – 4Q12 Results
PIRELLI GROUP – 4Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. 4Q12 4Q11 4Q12 4Q11 4Q12 4Q11 €/mln Sales 1,488.4 1,375.9 9.0 13.1 1,497.4 1,389.0 EBITDA before Restruct. Costs 289.1 219.2 (7.8) (15.7) 281.3 203.5 % on sales 19.4% 15.9% 18
Slide 34: Group – 3Q12 Results
PIRELLI GROUP – 3Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. 3Q12 3Q11 3Q12 3Q11 3Q12 3Q11 €/mln Sales 1,542.6 1,464.8 9.7 11.7 1,552.3 1,476.5 EBITDA before Restruct. Costs 269.5 228.4 (5.3) (8.2) 264.2 220.2 % on sales 17.5% 15.6% 17.
Slide 35: Group – 2Q12 Results
PIRELLI GROUP – 2Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. 2Q12 2Q11 2Q12 2Q11 2Q12 2Q11 €/mln Sales 1,457.7 1,376.4 7.6 12.0 1,465.3 1.388.4 EBITDA before Restruct. Costs 275.9 218.4 (6.0) (10.9) 269.9 207.5 % on sales 18.9% 15.9% 18
Slide 36: Group – 1Q12 Results
PIRELLI GROUP – 1Q12 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Other Pirelli & C. Cons. 1Q12 1Q11 1Q12 1Q11 1Q12 1Q11 €/mln 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% 17
Slide 37: Balance Sheet
PIRELLI BALANCE SHEET €/mln FY12 FY 11* Fixed Assets 3,877.2 3,576.4 Inventories 1,102.6 1,036.7 Commercial receivables 704.6 745.2 % Net Invested Capital Commercial payables (1,268.7) (1,382.8) Net Operating Working Capital 538.5 399.1 FY12 FY11 Other receivables/payables 11.0 (248.3) Pirelli Tyre
Slide 38: Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 1Q’12 2Q’12 3Q’12 4Q’12 FY’12 EBIT before restructuring costs 211.4 203.8 195.8 208.9 819.9 Depreciation 64.4 66.1 68.4 72.4 271.3 (80.1) (114.8) (132.5) (143.5) (470.9) Net investments Working capital/other variations (512.8) (238.8) (199.0) 593.0 (357.6) OPERATING CAS
Slide 39: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 4Q11 1Q12 2Q12 3Q12 4Q12 FY12 +1% Europe OE* -6% -8% -9% -9% -11% Replacement** -4% -12% -13% -11% -13% -12% +27% +14% +16% +16% +17% +10% America North OE Replacement -4% -1% -7% -3% -8% -5% +14% +3% +0% OE Mercosur -8% -7% -9% +5% +4% +4% +1% 0% Replaceme
Slide 40: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 4Q11 1Q12 2Q12 3Q12 4Q12 FY12 OE Europe* +2% -6% -7% -8% -8% -10% Replacement -1% -18% -10% -17% -26% -30% +21% OE Mercosur -27% -28% -29% -30% -31% Replacement** +3% -7% -13% -7% +0% -4% OE China -7% -24% -24% -19% -19% -27% Replacement +4% na na -3% -10
Slide 41: FY12 Pirelli Tyre Mix
FY12 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 67% 73% Motorbike 7% Steelcord & other Truck Industrial 27% 1% 25% SALES BY CHANNEL SALES BY REGION Nafta Replacement South 12% Asia Pacific 76% America 7% MEA 34% 9% Russia 4% OE Europe 24% 34% FY 2012 RESULTS 40
Slide 42: December 2012 Pirelli People
DECEMBER 2012 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION Nafta 34,259 37,338 Europe 3% 42% South America 37% Asia Pacific MEA Dec. 2011 Dec. 2012 9% 9% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 93% 80% Staff 19% Temps & Agency Management 7% 1% FY 2012 RESULTS 41
Slide 43: Plants in the World
PIRELLI PLANTS IN THE WORLD MEXICO Italy Germany Russia U.K. Bollate (MI) Car Breuberg Car/Moto Settimo Torinese Car Merzig Steelcord Kirov Car Burton Car Figline Valdamo Steelcord Voronezh Car Carlisle Car Turkey U.S.A Car/Truck Izmit Rome Car Steelcord Mexico Romania Guanajuato Car Slatina Car/Ste
Slide 44: Raw Materials
RAW MATERIALS RAW MATERIAL PRICE TREND 5,251 5.251 Brent Oil (in usd/bbl) 4.671 Natural Rubber (in usd/tons) 4.565 4.254 3.587 3.687 3.380 123 3.301 117 3.096 118 118 110 3.022 111 110 99 3.148 112 2.513 112 109 3.156 109 96 2.943 2.973 2.531 105 2.750 2.884 2.653 80 69 87 63 80 77 57 1.801 60 76 77