Slide 1: 9M 2016 Financial Results
9M 2016 Financial Results November 16, 2016
Slide 2: Key Messages
KEY MESSAGES > Sound 9M 2016 results, with an acceleration in 3Q, backed by: › Premium outperformance across markets, now representing 65% of Consumer sales › volume growth in Mature Markets, APac and MEAI, compensating for a weaker S. America and Russia › top industry price/mix improvement Solid pr
Slide 3: Agenda
AGENDA 1 9M 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 9M 2016 RESULTS 2
Slide 4: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS* 9M’15 9M’15 Δ YoY vs 9M’15 € million 9M’16 9M highlights Reported adj. excl. Venezuela excl. Venezuela Revenues 4,711.9 4,539.1 4,533.1 -0.1% Sound organic growth supported by Organic Growth** +6.6% Premium and strong price/mix EBITDA before non recurring items & T
Slide 5: 9M 2016 Performance by Region
9M 2016 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin adjusted*** € million Organic Organic Organic Δ YoY Δ YoY Δ YoY growth* growth** growth** Total 4,530.9 0.0% +6.7% 3,784.0 +4.8% +8.2% 746.9 -19.0% +0.3% 14.5% (+0.3 pp YoY) Europe 35% 38% +4.9% +6.2% 43% +7.0%
Slide 6: 9M 2016 Premium Performance by Region
9M 2016 PREMIUM PERFORMANCE BY REGION Organic Δ YoY growth* € million Total 2,244.7 2,443.1 +8.8% +11.7% Good performance backed by: • Strong Premium and SuperPremium volumes increase Europe 47% 48% +12.4% +14.1% • Positive mix in line with previous quarters Progress in selected distribution cha
Slide 7: Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million 68.1 (51.5) (10.4) (52.3) 105.1 638.2 (73.8) 655.0 27.4 4.2 EBIT 9M’15 Volume Price / Mix Efficiencies D&A & other Raw FX Other input Other EBIT 9M’16 adjusted* costs Materials costs Business adjusted* (labour / energy / other) Note: 9M 2015 EBIT net of
Slide 8: Net Income 9M 2016 vs 9M 2015
PIRELLI NET INCOME 9M 2016 VS 9M 2015 € million Δ EBIT adjusted 16.8 PPA impact (74.7) Restructuring costs & non-recurring (26.1) Venezuela de-consolidation (23.6) (107.6) 276.6 (46.5) Value adjustments: Fenice (20.7) Prelios (18.2) Other (7.6) (202.9) 14.6 22.7 88.5 Net Income Δ EBIT Δ Result
Slide 9: 9M 2016 Net Financial Position
9M 2016 NET FINANCIAL POSITION € million Financial charges (383.4) Taxes (81.7) 5,972.4 104.1 39.7 465.1 Financial changes incl. in the 122.2 Debt acquisition 5,331.0 Variation of Bidco NFP (134.3) 32.5 Exchange rate differentials / (92.0) other EBIT adjusted* 655.0 Amortization (excl. amort. Of 217
Slide 10: Debt Structure as of September 30, 2016
PIRELLI DEBT STRUCTURE* AS OF SEPTEMBER 30, 2016 Net Financial Position Gross Debt Maturity € million 6,820 847 Cash & Cash 718 1,601 Equivalents Committed Line 355 5,381 Drawdown 5,972 1,935 129 5 349 Receivables 1,323 & other assets Debt Capital 2,091 600 605 Market 12 1,932 Other 834 251 Borrowin
Slide 11: Pirelli / Marco Polo Merger: Purchase Price Allocation Impact
PIRELLI / MARCO POLO MERGER: PURCHASE PRICE ALLOCATION IMPACT Following the merger of Marco Polo into Pirelli, the acquisition price excess amounting to €6 billion (€7.3 billion acquisition price minus Pirelli net > equity adjusted at the acquisition date) has been allocated through the Purchase Pri
Slide 12: Balance Sheet
PIRELLI BALANCE SHEET € million FY’15 (reported) FY’15 (restated*) 9M’16 FIXED ASSETS 3,780.5 10,361.4 10,193.8 Brand (mostly indefinite useful life) - 2.335.9 2,333.4 Technology - 1,414.8 1,364.7 of which assets identified as part of - 466.2 439.6 Customer relationships the PPA (Pirelli acquisition
Slide 13: Agenda
AGENDA 1 9M 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 9M 2016 RESULTS 12
Slide 14: Key Tyre Results
KEY TYRE RESULTS € million 1Q‘16 ∆ YoY* 2Q‘16 ∆ YoY* 3Q‘16 ∆ YoY* 9M‘16 ∆ YoY* Revenues 1,435.1 -4.0% 1,531.8 -1.6% 1,564.0 +5.7% 4,530.9 0.0% o/w Premium 781.9 +8.4% 825.3 +7.7% 835.9 +10.3% 2,443.1 +8.8% EBITDA before non recurring 290.2 +2.0% 289.1 -5.7% 293.5 +6.5% 872.8 +0.7% items & restr. Cos
Slide 15: Consumer Business: Pirelli Performance
CONSUMER BUSINESS*: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY** 2Q‘16 ∆ YoY** 3Q‘16 ∆ YoY** 9M‘16 ∆ YoY** Revenues 1,165.7 -1.0% 1,303.9 +5.0% 1,314.4 +10.4% 3,784.0 +4.8% o/w Premium 781.9 +8.4% 825.3 +7.7% 835.9 +10.3% 2,443.1 +8.8% % revenues 67.1% +5.9 p.p. 63.3% +1.6 p.p. 63.6% 0.0 p.p. 64.6% +
Slide 16: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 3Q’15 4Q’15 FY’15 1Q’16 2Q’16 3Q’16 9M’16 % YoY 10 7 8 6 4 4 O.E. (2) Europe* 11 4 3 REPLACEMENT 1 1 (1) (1) 4 2 2 4 2 2 1 O.E. NAFTA 1 3 2 7 2 1 REPLACEMENT** (4) South America O.E. (15) (13) (19) (21) (20) (29) (29) 5 2 3 REPLACEMENT*** (7) (2) (4)
Slide 17: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS*: PIRELLI PERFORMANCE € million 1Q‘16 ∆ YoY** 2Q‘16 ∆ YoY** 3Q‘16 ∆ YoY** 9M‘16 ∆ YoY** Revenues 269.4 -15.3% 227.9 -27.8% 249.6 -13.5% 746.9 -19.0% EBITDA before non recurring items & restr. Costs 26.9 -40.2% 18.9 -52.6% 20.5 -26.5% 66.3 -41.2% Margin 10.0% -4.2 p.p. 8.3% -4.3 p
Slide 18: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 3Q’15 4Q’15 FY’15 1Q’16 2Q’16 3Q’16 9M’16 % YoY 10 17 11 7 5 4 O.E. Europe* (1) 9 4 5 6 2 1 REPLACEMENT (3) South America O.E. (20) (17) (28) (48) (43) (53) (58) 2 REPLACEMENT** (7) (10) (8) (4) (4) (14) China 28 30 19 2 O.E. (6) (23) (23) * Russia
Slide 19: Agenda
AGENDA 1 9M 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 9M 2016 RESULTS 18
Slide 20: Key Financial Results (3Q)
PIRELLI KEY FINANCIAL RESULTS 3Q’15 3Q’15 Δ YoY vs 3Q’15 € million 3Q’16 Reported adj. excl. Venezuela excl. Venezuela Revenues 1,533.4 1,481.6 1,564.5 +5.6% Organic Growth* +7.9% EBITDA before non recurring items & Restr. Costs 283.8 273.9 293.4 +7.1% Margin 18.5% 18.5% 18.8% +0.3pp EBIT adjusted**
Slide 21: Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE € million 16.8 (24.7) (0.2) (8.2) 31.3 (22.5) 222.8 1.7 200.3 28.3 EBIT 3Q’15 Volume Price / Mix Efficiencies D&A & other Raw FX Other input Other EBIT 3Q’16 adjusted* costs Materials costs Business adjusted* (labour / energy / other) Note: 3Q 2015 EBIT net of Ven
Slide 22: Group Cash Flow
PIRELLI GROUP CASH FLOW 1Q’16 2Q’16 € million 1Q’15** 2Q’15** 3Q’15** 9M’15** 3Q’16 9M’16 restated restated EBIT adjusted* 215.0 239.5 207.3 661.8 217.1 215.1 222.8 655.0 Amortization (excl. amortization PPA) 76.9 78.2 76.5 231.6 72.9 73.6 70.6 217.1 Capex (85.6) (103.2) (73.0) (261.8) (74.0) (82.0)
Slide 23: Operating Net Working Capital and Capex Seasonality Trend
OPERATING NET WORKING CAPITAL AND CAPEX SEASONALITY TREND Operating Net Working Capital* CapEx € million € million €391 million Δ = €640 million 6.2% on FY sales 130 1.134 1.129 1.057 103 970 967 922 86 82 82 73 74 417 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2015 2016 2015 2016 CapEx / Sales 5.5%
Slide 24: 9M 2016 Pirelli Tyre Mix
9M 2016 PIRELLI TYRE MIX Sales by Business Sales by Segment Industrial Car 16% 77% Consumer 84% Agro 2% Motorbike Truck 15% 6% Sales by Channel Sales by Region NAFTA 16% O.E. South America Asia Pacific 23% 22% 12% MEAI 9% Replacement 77% Russia Europe 3% 38% 9M 2016 RESULTS 23
Slide 25: September 2016 Pirelli People
SEPTEMBER 2016 PIRELLI PEOPLE Headcount People by Region NAFTA 36,753 36,763 South America 5% 33% Asia Pacific 11% MEAI 10% Russia Europe 9% 32% Dec '15* Sept '16* People by Contract People by Cluster Temps & Agency Management 7% 1% Employees 93% Staff 19% Workers 80% * Without Venezuela headcount (
Slide 26: Plants in the World
PIRELLI PLANTS IN THE WORLD* ITALY GERMANY Low cost countries U.K. Bollate – Car U.S. Breuberg – Car / Settimo Torinese Burton – Car Moto – Car Rome – Car Carlisle – Car RUSSIA Kirov – Car Voronezh – Car MEXICO ROMANIA Silao – Car TURKEY Slatina – Car Izmit – Car / Truck BRAZIL
Slide 27: Raw Materials
RAW MATERIALS Raw Material Price Trend Brent Oil (in $ / barrel) Natural Rubber (in $ / tons) Natural Rubber: Sicom Yearly Average Brent: www.oilnergy.com 4,519 3,380 3,156 108.9 111.0 111.7 2,517 99.5 80.2 1,711 56.6 1,370 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4
Slide 28: Disclaimer
DISCLAIMER This presentation is not and does not constitute an offer to sell or the solicitation, invitation or recommendation to purchase any securities in the United States or any other jurisdiction. The information included in this presentation is not intended to constitute or form part of, and s