Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — H1 2015 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Aug 6, 2015
Slide 1: Pirelli 1H 2015 Results
PIRELLI 1H 2015 RESULTS MILANO – AUGUST 06, 2015
Slide 2: Agenda
AGENDA KEY MESSAGES 1H 2015 RESULTS 2015 OUTLOOK & TARGETS 1H 2015 TYRE OVERVIEW APPENDIX 1H 2015 RESULTS 1
Slide 3: Key Messages
KEY MESSAGES > Solid H1 2015 results despite market volatility in South America and Russia - Quality top-line growth: Premium outperformance and best price/mix improvement in the industry - Profitability confirmed at high level: yoy Ebit improvement by internal levers (price/mix and efficiencies) >
Slide 4: Agenda: 1H 2015 Results
AGENDA KEY MESSAGES 1H 2015 RESULTS 2015 OUTLOOK & TARGETS 1H 15 TYRE OVERVIEW APPENDIX 1H 2015 RESULTS 3
Slide 5: Key Financial Results
PIRELLI KEY FINANCIAL RESULTS €/Mln 1H 14 1H 15 Δ yoy 2Q 14 2Q 15 Δ yoy Q2 highlights Revenues 2,986.9 3,178.5 +6.4% 1,513.7 1,610.1 +6.4% Progressive improvement in organic Organic Growth* +3.2% +4.0% growth driven by Premium EBITDA before Restr. Costs 582.8 609.6 +4.6% 305.5 317.7 +4.0% outperform
Slide 6: 1H 2015 Performance by Region
1H 2015 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin €/Mln Δ YoY Organic Δ YoY Organic Δ YoY Organic growth* growth* growth* Total 3,173.7 +6.5% +3.2% 2,521.7 +10.2% +5.7% 652.1 -5.8% -5.0% 14.2% (-0,4 pp) Europe 35% +3.9% +2.4% 40% +4.9% Europe Low teens (stable
Slide 7: Premium Performance by Region
PREMIUM PERFORMANCE BY REGION €/Mln Organic Δ YoY growth* Total 1,285.1 1,497.4 +17% +8% • Strong QoQ improvement in revenue growth: – Volume outperformance in the ≥18 replacement channel, improving sell- out market share – Continued mix growth and pricing in line with Q1 trend Europe 52% 47% +5% •
Slide 8: Net Income 1H 2015 vs 1H 2014
PIRELLI NET INCOME 1H 2015 VS 1H 2014 €/Mln One-off impact of FX losses mainly related to the Turkish Steelcord 23.2 operations sold in Feb. ‘15 20.4 211.4 193.8 192.1 (21.3) (3.0) 196.5 (1.7) (14.9) +10% yoy Net Disc. Net Income Δ EBIT Δ Results Δ Financial Δ Taxes Net Income Disc. Net Income Opera
Slide 9: Debt Structure as of June 30, 2015
PIRELLI DEBT STRUCTURE AS OF JUNE 30, 2015 Net Financial Position Gross Debt Maturity €/Mln 2,672 1,008 565.7 Committed Line 0.7 93.9 Drawdown 471 Cash & Cash 934 Equivalent 639.9 13.1 471.1 1,664 626.8 Debt Capital 74 Market 1,277 47.9 127.3 Fin. 671.0 20.4 Receivables 106.9 536.0 Other 620.7 135.0
Slide 10: 1H 2015 Net Financial Position
PIRELLI 1H 2015 NET FINANCIAL POSITION €/Mln Net cash flow +212 €/mln 106.2 6.4 1,732.9 688.9 1,664.4 (23.8) (24.4) 125.0 2.6 26.1 179.5 (35.6) (366.1) 979.6 EBIT before restr. costs 238.0 EBIT before restr. costs 213.4 Depreciation/amortization: 79.7 Depreciation/amortization: 78.5 Investments*: (1
Slide 11: Agenda: 2015 Outlook & Targets
AGENDA KEY MESSAGES 1H 2015 RESULTS 2015 OUTLOOK & TARGETS 1H 2015 TYRE OVERVIEW APPENDIX 1H 2015 RESULTS 10
Slide 12: 2015 Regional Targets Update: Better NAFTA Offsets Latam
2015 REGIONAL TARGETS UPDATE: BETTER NAFTA OFFSETS LATAM Tyre Market ( yoy) 2015 Pirelli Tyre Business Target What has changed vs. the previous guidance Revenues EBIT Margin** • Supportive ForEx, mix improvement and NAFTA Car ~ +1% Mid single-digit Low twenties o/w Premium >+5% = organic growth = i
Slide 13: FY 2015 Guidance
FY 2015 GUIDANCE 2015 targets 2015 targets May 2015 August 2015 Revenues ~ 6.4 € bln > 6.35 € bln Lower Industrial volumes (Latam and APac) and • Volumes ~+2% +0.5% ÷ +1% weaker Car OE demand in - o/w Premium ≥+10% confirmed Latam and Russia • Price/mix ~+4% confirmed • Foreign Exchange ~+1% confirm
Slide 14: 2015 Consumer & Industrial Guidance
2015 CONSUMER & INDUSTRIAL GUIDANCE Consumer Business Industrial Business 2015 targets 2015 Targets 2015 targets 2015 Targets May 2015 August 2015 May 2015 August 2015 Revenues ~ 5.0 € bln > 5.0 € bln Revenues ~1.4 € bln ~1.35 € bln • Volumes >+2% +1.5% ÷ +2% • Volumes ~ +1% ~ -3% - o/w Premium ≥+10
Slide 15: Agenda: 1H 2015 Tyre Overview
AGENDA KEY MESSAGES 1H 2015 RESULTS 2015 OUTLOOK & TARGETS 1H 2015 TYRE OVERVIEW APPENDIX 1H 2015 RESULTS 14
Slide 16: Key Tyre Results
KEY TYRE RESULTS €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 1H‘15 ∆% Revenues 1,565.3 +6.5% 1,608.4 +6.4% 3,173.7 +6.5% o/w Premium 726.9 +13.6% 770.5 +19.4% 1,497.4 +16.5% EBITDA before restr. costs 293.5 +4.7% 319.1 +3.4% 612.6 +4.0% Margin 18.8% -0.3 p.p. 19.8% -0.6 p.p. 19.3% -0.5 p.p. EBIT before restr. costs 215
Slide 17: Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE €/Mln 24.7 3.1 8.5 4.8 25.2 (7.0) 5.5 238.2 229.1 (21.4) (34.3) Marketing & other expenses (12.7) Steelcord sourcing (7.0) Latam lower plant saturation (1.7) EBIT Price/ Efficien- Volume D&A Other Raw FX Other Input Restr. EBIT 2Q ‘ 14 Mix cies costs Materials Cost
Slide 18: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 1H‘15 ∆% Revenues 1,237.4 +9.6% 1,284.3 +10.8% 2,521.7 +10.2% o/w Premium 726.9 +13.6% 770.5 +19.4% 1,497.4 +16.5% % revenues 58.7% +2.0 p.p. 60.0% +4.4 p.p. 59.4% +3.2 p.p. EBITDA before restr. costs 246.3 +12.3% 276.8 +12.9% 523.1 +12.
Slide 19: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/Mln 1Q‘15 ∆% 2Q‘15 ∆% 1H‘15 ∆% Revenues 327.9 -3.8% 324.1 -7.8% 652.0 -5.8% EBITDA before restr. costs 47.2 -22.5% 42.3 -33.5% 89.5 -28.1% Margin 14.4% -3.5 p.p. 13.1% -5.0 p.p. 13.7% -4.3 p.p. EBIT before restr. costs 33.3 -30.0% 29.7 -39.8% 63.0 -35.0% Ma
Slide 20: 2015 Profitability Guidance
2015 PROFITABILITY GUIDANCE Driver 2015 targets 2015 targets vs. previous guidance May 2015 Aug 2015 Impact Impact Volumes +2% of sales +0.5% ÷ +1% of sales -20 € mln on Ebit (lower volumes with below-average profitability) Price/Mix ~ +4% of sales Confirmed Forex +1% of sales confirmed Δ YoY on E
Slide 21: 2015 Raw Material Guidance
2015 RAW MATERIAL GUIDANCE Raw material breakdown 1H 2015 Textile Natural Rubber 2015 Old Guidance 2015 New Guidance 12% 19% Average cost of Steel goods sold 13% (€/Mln) 2014A 2015E Δ YOY 2015E Δ YOY Synthetic Rubber Natural Rubber ~1.950 ~1.550 +105 ~1.500 +111 25% TSR20 ($/ton) Chemicals 20% Brent
Slide 22: Agenda: Appendix
AGENDA KEY MESSAGES 1H 2015 RESULTS 2015 OUTLOOK & TARGETS 1H 2015 TYRE OVERVIEW APPENDIX 1H 2015 RESULTS 21
Slide 23: Group – 2Q 2015 Results
PIRELLI GROUP – 2Q 2015 RESULTS Profit & Loss Statement and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. €/Mln 2Q’14 2Q’15 2Q’14 2Q’15 2Q’14 2Q’15 SALES 1,511.3 1,608.4 2.4 1.7 1,513.7 1,610.1 EBITDA before Restr. Costs 308.7 319.1 (3.2) (1.4) 305.5 317.7 % of sales
Slide 24: Group – 1H 2015 Results
PIRELLI GROUP – 1H 2015 RESULTS Profit & Loss Statement and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. €/Mln 1H’14 1H’15 1H’14 1H’15 1H’14 1H’15 SALES 2,980.8 3,173.7 6.1 4.8 2,986.9 3,178.5 EBITDA before Restr. Costs 589.0 612.6 (6.2) (3.0) 582.8 609.6 % of sales
Slide 25: Group – 2014 Quarterly Results
PIRELLI GROUP – 2014 QUARTERLY RESULTS Q1’14 Q2’14 Q3’14 Q4’14 FY’14 €/Mln Tyre Group Tyre Group Tyre Group Tyre Group Tyre Group SALES 1,469.5 1,473.2 1,511.3 1,513.7 1,539.2 1,541.8 1,487.5 1,489.4 6,007.5 6,018.1 EBITDA before Restr. Costs 280.3 277.3 308.7 305.5 287.2 284.9 300.7 300.3 1,176.9 1
Slide 26: Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 1Q’14 2Q’14 1H’14 1Q’15 2Q‘15 1H’15 EBIT before restructuring costs 206.7 232.2 438.9 213.4 238.0 451.4 Depreciation / Amortization 70.6 73.3 143.9 78.5 79.7 158.2 Net investments (65.3) (78.3) (143.6) (85.6) (103.2) (188.8) Working capital / other variations (686.6) 77
Slide 27: Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’14 1H’15 FIXED ASSETS 3,874.0 4,012.6 Inventories 1,055.0 1,131.8 Trade receivables 673.8 1,002.0 Trade payables (1,394.4) (1,163.5) NET OPERATING WORKING CAPITAL 334.4 970.3 Other payables/receivables 33.9 119.2 Net Working Capital 368.3 1,089.5 Net Invested Capital h
Slide 28: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 1Q’14 2Q’14 3Q’14 4Q’14 FY'14 1Q’15 2Q’15 1H’15 % YoY 9 3 2 2 4 5 2 4 OE Europe* 9 6 4 1 2 3 3 REPLACEMENT -8 5 8 5 5 4 2 3 2 OE NAFTA 7 5 4 3 5 6 1 REPLACEMENT** -6 South America OE -11 -9 -15 -15 -19 -17 -16 -25 4 3 4 7 5 2 2 2 REPLACEMENT*** China
Slide 29: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 1Q’14 2Q’14 3Q’14 4Q’14 FY'14 1Q’15 2Q’15 1H’15 % YoY 7 5 13 9 OE Europe * -4 -5 -12 -4 14 6 2 2 3 REPLACEMENT -3 -1 -1 South America OE -1 -28 -29 -33 -23 -39 -47 -43 3 REPLACEMENT** -4 -3 -3 -8 -10 -12 -10 China 13 OE -7 -11 -5 -16 -29 -31 -30 *
Slide 30: 1H 2015 Pirelli Tyre Mix
1H 2015 PIRELLI TYRE MIX Sales by Business Sales by Segment Consumer Car 79% 73% Agro 2% Motorbike Industrial Truck 7% 21% 18% Sales by Channel Sales by Region Replacement South America NAFTA 77% 29% 13% Asia Pacific 11% MEAI 9% Russia OE Europe 3% 23% 35% 1H 2015 RESULTS 29
Slide 31: June 2015 Pirelli People
JUNE 2015 PIRELLI PEOPLE Headcount People by Region NAFTA 37,561* 37,832 South America 4% 37% Asia Pacific 10% MEAI 10% Russia Europe 9% 30% Dec ’14 June ’15 * Without Steelcord headcount People by Contract People by Cluster Management Temps & Agency 1% 7% Employees Workers 93% Staff 80% 19% 1H 2015
Slide 32: Plants in the World
PIRELLI PLANTS IN THE WORLD U.S.A. U.K. ITALIA GERMANY RUSSIA Rome Car Burton Car Bollate Car Breuberg Car/Moto Kirov Car Carlisle Car Settimo Torinese Car Voronezh Car MEXICO ROMANIA Guanajuato Car Slatina Car VENEZUELA CHINA Guacara Car Yanzhou Car / Moto / Truck BRAZIL ARGENTINA EGYPT TURKEY INDO
Slide 33: Raw Materials
RAW MATERIALS Raw Material Price Trend Brent Oil (in USD/bbl) Natural Rubber: Sicom Natural Rubber (in USD/tons) Brent: www.oilnergy.com Yearly Average 4,519 3,380 3,156 108.9 111.0 111.7 99.5 2,517 80.2 62.7 1,711 1,801 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Slide 34: 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