Slide 1: 2011 Results
011 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 PIRELLI TYRE APPENDIX 2
Slide 4: Key Messages
KEY MESSAGES 2011: achievement of major targets and establishement of a platform for growth Great success in F1: enhanced brand value and know-how channelled into our new generation of Premium tyres 2012 outlook: tougher scenario where value will drive our greater profitability Russia: well equipped
Slide 5: 2011 FY Results vs Targets
PIRELLI 2011FY RESULTS VS TARGETS FY’11 Targets €/bln (8 Nov.’11) FY’11 Results Δ YoY Revenues <5.8 5.65 +16.6% Tyre ~5.7 5.6 +17.4% Volumes +3% +1.4% Industrial +1% -1.7% Truck: less conventional sales and mkt slowdown in Q4 Consumer +5% +3% Mild winter tyre season Premium +23% +18.2% non Premi
Slide 6: 2012 Market Outlook
2012 MARKET OUTLOOK Volumes: wider performance gap between Premium and the overall market Premium keeps growing at healthy rates in all Regions as confirmed by our sales and order books Inventories: low on Premium summer tyres; winter is higher than the exceptionally low 2010 season. Possibile s
Slide 7: 2012 Targets Update
PIRELLI 2012 TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011E 2011A (Nov 9, 2011) (March 12, 2012) Δ % YoY Δ % YoY Revenues <5.8 ~6.7 +16% 5.65 ~6.6 +17% Russia 0.3 confirmed Revenues ~6.4 +10% ~6.3 +11% net of Russia Volumes +2% 0% / -1% o/w Premium +20% ≥20% Price/mix +8% +11% / +12% EB
Slide 8: 2012 Consumer Targets Update
2012 CONSUMER TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011E 2011A (Nov 9, 2011) (March 12, 2012) Δ % YoY Δ % YoY Revenues 4.0 ~ 4.9 +21% 3.9 ~4.8 +23% Russia 0.3 confirmed Revenues ~4.6 +14% ~4.5 +15% net of Russia Volumes +3% 1% / 0% o/w Premium +20% ≥20% o/w Non Premium -4% -8% / -10
Slide 9: 2012 Industrial Targets Update
2012 INDUSTRIAL TARGETS UPDATE €/bln 2012 Targets 2012 Targets Update 2011E 2011A (Nov 9, 2011) (March 12, 2012) Δ % YoY Δ % YoY Revenues 1.68 1.75 +4% 1.68 ~1.7 +3% / +2% Volumes +1% -2% / -4% o/w Radial +3% +2% / 0% o/w Conventional - 10% -20% Price/mix +3% +5% / +6% EBIT % ~9% 9% / 10% 9.1% ~9% C
Slide 10: Russia: Premium on the upsurge
RUSSIA Premium on the upsurge 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% 37% 37% 47% 26% 28% 29% 31% 36% 37% 53% 52% 49% 45% 30% 26% 27% 26% ’11A ‘12E ’11A ‘12E
Slide 11: Russia: Pirelli approach to value
RUSSIA Pirelli approach to value Product Innovation Production Pirelli as Premium player in winter segment capacity Enhanced product range and improved KIROV performance (hexagonal studs, new compound) Execution on December 14, 2011 Range extension from 40 to 63 sizes focused on Production o
Slide 12: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE APPENDIX 11
Slide 13: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS FY11 FY10* D YoY 4Q11 4Q10* D YoY 4Q results key drivers €/mln Revenues 5,654.8 4,848.4 +16.6% 1,389.0 1,229.7 +13.0% Value leads our performance Organic growth** +18.2% +15.3% Selective volume growth EBITDA before Restr. Costs 834.6 653.7 +27.7% 203.5 173.6 +17.2% (+8
Slide 14: Net Income FY11 vs FY10
PIRELLI NET INCOME FY11 VS FY10 €/mln 128.1 451.6 174.1 (40.7) 325.5 (23.7) (25.1) (6.6) 223.8 245.5 FY11 Alitalia (10.3) RCS (16.8) Others 9.8 FY10 Oclaro sale 18.4 Others 5.0 21.7 Net Income Discontinued Net Income DEBIT D Results D Financial D Taxes D minorities Net Income Deferred Net Income pos
Slide 15: FY11 Net Financial Position
PIRELLI FY11 NET FINANCIAL POSITION €/mln EBIT before restr. costs 148.6 Dep/Am: 54.9 Investments*: (230.0) D NWC & others: 344.0 EBIT before restr. costs 461.1 Dep/Am: 170.0 Russia 55.0 Investments*: (396.2) Others 5.7 D NWC & others: (396.0) 83.5 938.3 202.9 10.4 24.8 60.7 737.1 49.1 6.5 161.1 (31
Slide 16: Debt Structure as of Dec 31, 2011
PIRELLI DEBT STRUCTURE AS OF DEC 31, 2011 Net Financial Position Gross Debt Maturity €/mln 1,778.1 700.3 1,041 Committed Line 200.3 Drawdown 360 500 Bonds 500 482.2 737.1 360 122.2 Other Borrowings 918.1 126.1 100 369.5 20.8% 5.6% 7.1% 27.1% 39.4% Gross Fin. Net Fin. Debt Assets* position 2016 & 201
Slide 17: Dividend Proposal
DIVIDEND PROPOSAL Dividend Proposal to be filed with Pirelli & C. AGM (May 10, 2012) DPS (€) N° of Shares* Dividends (€/mln) 2011 2010 mln 2011 Δ % yoy Ordinary shares 0.270 0.1650 475 128.4 Savings shares 0.340 0.2290 12 4.0 132.4 64 41% of Group Net Income Adjusted ** post minorities (323.5 €/mln
Slide 18: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE APPENDIX 17
Slide 19: Tyre Key Results
PIRELLI TYRE KEY RESULTS €/mln 1Q’11 YoY% 2Q’11 YoY% 3Q’11 YoY% 4Q’11 YoY% FY’11 YoY% Q4 Highlights Revenues 1,384.5 +24.7% 1,376.4 +13.3% 1,464.8 +18.7% 1,375.9 +13.4% 5,601.6 +17.4% EBITDA (before 209.5 +43.1% 218.4 +23.0% 228.4 +32% 219.2 +17.0% 875.5 +27.9% restruct. costs) All time high profi
Slide 20: Solid Performance Across Regions
SOLID PERFORMANCE ACROSS REGIONS Sales by Region Ebit % by Region Actions YoY FY 2011 growth FY 2010 FY 2011 Increasing Premium weight (67% car Europe 41% +18% Mid single digit Double digit revenues) and efficiency gains MEA 9% +8% Double digit Stable Demand affected by crisis in the Region In
Slide 21: Tyre FY11 Operating Performance
PIRELLI TYRE FY11 OPERATING PERFORMANCE €/mln 200.3 (13.1) 38.9 2.9 159.5 (183.6) 118.8 (1.5) 4Q 2011 (3.2) (183.6) Raw materials: (165.0) Labour / energy / other: (18.6) EBIT Q410 Price mix Volume Cost of Efficiencies Restructuring Depreciation/ Exchange EBIT Q411 inputs Costs other costs rate
Slide 22: Tyre FY11 Net Financial Position
PIRELLI TYRE FY11 NET FINANCIAL POSITION €/mln 122.4 227.3 9.1 7.2 Russia: 55.0 F/X & other 7.7 119.1 1,109.9 1,095.0 (500.0) 62.7 962.3 90.8 EBIT before restr. costs 494.3 43.9 4.5 Dep/Am: 162.0 Investments*: (388.6) D NWC & others: (386.8) (334.6) D NFP: D NFP: -14.9 -132.7 EBIT before restr. cost
Slide 23: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS % YoY 4Q10 1Q11 2Q11 3Q11 4Q11 FY11 +7% Europe +5% +3% +3% +0% +1% OE* +7% +7% +6% +1% +3% Replacement** -4% +15% +14% North America +8% +10% +6% +2% OE +7% +1% Replacement -5% -2% -4% -1% +6% +8% +7% +3% Mercosur +2% OE -8% +4% +3% +3% +1% Replacement*** -2% -1%
Slide 24: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE 1Q’11 YoY% 2Q’11 YoY% 3Q’11 YoY% 4Q’11 YoY% FY’11 YoY% Q4 Highlights €/mln Revenues 983.3 +25.9% 958.9 +14.7% 1024.3 +20.9% 959.0 +14.6% 3,925.5 +18.9% Good winter sales in EBITDA (before 160.6 +51.5% 169.7 +38.6% 172.2 +44.8% 166.9 +18.3% 669.4 +37.1% restru
Slide 25: Premium: Value Is What Matters
PREMIUM: VALUE IS WHAT MATTERS 50% of car sales and 80% of car Ebit Premium Revenues 2011 Regional breakdown €/mln YoY 1,844 +27% % Premium Revenue 1,448 on car sales growth (%) by Region Europe 67 25 Mature 83% +25% Nafta 55 25 markets 84% LatAm 14 59 MEA 34 21 Emerging Apac 55 32 markets 16% 17% +
Slide 26: Fitting the World's Most Prestigious Cars
FITTING THE WORLD’S MOST PRESTIGIOUS CARS 2012 premiers at Geneva Motorshow Ferrari F12 Porsche 911 Aston Martin Zagato 2011 main homologations DBS new MP4 – 12C Carrera FF V12 Vantage Boxter, Cayman A4 Allroad 5 – Series S – Class Evoque A6, A7, Q3, RS4 New 1 – Series GLK
Slide 27: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS % YoY 4Q10 1Q11 2Q11 3Q11 4Q11 FY11 +90% +77% +42% +24% +32% Europe* OE +2% +16% +11% Replacement +9% -9% -1% -18% +22% +21% +16% +11% Mercosur OE +2% +4% +22% +10% Replacement** +3% -6% -9% -1% (*)Turkey included and Russia excluded (**)Non-pool members’import
Slide 28: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE 1Q’11 YoY% 2Q’11 YoY% 3Q’11 YoY% 4Q’11 YoY% FY’11 YoY% Q4/FY Highlights €/mln Revenues 401.2 +21.9% 417.5 +10.0% 440.5 +13.9% 416.9 +10.8% 1,676.1 +13.9% FY’11 revenues and profitability on target EBITDA (before 48.9 +21.0% 48.7 -11.6% 56.2 +3.9% 52.3 +13.0
Slide 29: Agenda
AGENDA KEY MESSAGES PIRELLI & C FINANCIAL REVIEW PIRELLI TYRE APPENDIX 28
Slide 30: Group – FY'11 Results
PIRELLI GROUP – FY’11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. FY’11 FY’10 FY’11 FY’10 FY’11 FY’10 Sales 5,601.6 4,772.0 53.2 76.4 5,654.8 4,848.4 ∆% YoY 17.4% 16.6% EBITDA before Restruct Costs 875.5 684.3 (40.9) (30.6) 834.6 653.
Slide 31: Group – 4Q11 Results
PIRELLI GROUP – 4Q11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. 4Q11 4Q10 4Q11 4Q10 4Q11 4Q10 Sales 1,375.9 1,212.9 13.1 16.8 1,389.0 1,229.7 ∆% 13.4% 13.0% EBITDA before Restruct Costs 219.2 187.4 (15.7) (13.8) 203.5 173.6 % on sale
Slide 32: Group – 3Q11 Results
PIRELLI GROUP – 3Q11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. 3Q11 3Q10 3Q11 3Q10 3Q11 3Q10 Sales 1,464.8 1,233.8 11.7 15.9 1,476.5 1,249.7 ∆% 18.7% 18.1% EBITDA before Restruct Costs 228.4 173.0 (8.2) 1.9 220.2 174.9 % on sales 15
Slide 33: Group – 2Q11 Results
PIRELLI GROUP – 2Q11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. 2Q11 2Q10 2Q11 2Q10 2Q11 2Q10 Sales 1,376.4 1,215.3 12.0 18.7 1,388.4 1,234.0 ∆% 13.3% 12.5% EBITDA before Restruct Costs 218.4 177.5 (10.9) (14.2) 207.5 163.3 % on sale
Slide 34: Group – 1Q11 Results
PIRELLI GROUP – 1Q11 RESULTS Profit & Loss and Net Financial Position by Business Unit €/mln Pirelli Tyre Other Pirelli & C. Cons. 1Q11 1Q10 1Q11 1Q10 1Q11 1Q10 Sales 1,384.5 1,110.0 16.4 25.0 1,400.9 1,135.0 ∆% 24.7% 23.4% EBITDA before Restruct Costs 209.5 146.4 (6.1) (4.5) 203.4 141.9 % on sales
Slide 35: Balance Sheet
PIRELLI BALANCE SHEET €/mln FY 11 FY10 Fixed Assets 3,558.1 3,164.1 Net Working Capital 155.2 116.7 % Net Invested Capital Net Invested Capital 3,713.3 3,280.8 Total Net Equity 2,191.6 2,028.0 FY11 FY10 Provisions 784.6 797.2 Pirelli Tyre 85.0% 84.7% Net Financial Position 737.1 455.6 Other 15.0% 15
Slide 36: Group Cash Flow
PIRELLI GROUP CASH FLOW €/mln 1Q’11 2Q’11 3Q’11 4Q’11 FY’11 EBIT before restructuring costs 146.5 151.3 163.3 148.6 609.7 Depreciation 56.9 56.2 56.9 54.9 224.9 Net investments (96.9) (137.2) (162.1) (230.0) (626.2) Working capital/other variations (313.5) 18.1 (100.6) 344.0 (52.0) OPERATING CASH FL
Slide 37: Group: FY11 Net Financial Position by Business
PIRELLI GROUP: FY11 NET FINANCIAL POSITION BY BUSINESS €/mln Tyre Other businesses Corporate Pirelli Group Dec. June Dec. Dec. June Dec. Dec. June Dec. Dec. June Dec. 11 2011 10 11 2011 10 11 2011 10 11 2011 10 Gross Debt 1,798.2 1,391.3 1,613.6 130.7 91.9 83.3 641.3 708.4 123.0 1,778.1 1,400.5 1,14
Slide 38: FY11 Pirelli Tyre Mix
FY11 PIRELLI TYRE MIX SALES BY BUSINESS SALES BY SEGMENT Car Consumer 63% 70% Motorbike 7% Steelcord & others Truck Industrial 30% 2% 28% SALES BY CHANNEL SALES BY REGION Nafta Replacement South 10% Asia Pacific 74% America 6% 34% MEA 9% OE Europe 26% 41% 37
Slide 39: December 2011 Pirelli People
DECEMBER 2011 PIRELLI PEOPLE HEADCOUNT PEOPLE BY REGION Nafta 29,573 34,259 Europe 1% South 42% America 38% Asia Pacific MEA Dec. 2010 Dec. 2011 9% 10% PEOPLE BY CONTRACT PEOPLE BY CLUSTER Permanents Workers 92% 81% Staff 18% Temps & Agency Management 8% 1% 38
Slide 40: 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 41: Raw Materials
RAW MATERIALS RAW MATERIALS PRICE TREND 5,251 4.671 4.565 Brent Oil (in usd/bbl) 4.254 Natural Rubber (in usd/tons) 3.587 123 117 3.380 99 3.096 3.148 118 96 2.513 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 QIV/08 QI