Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Pirelli & C Spa Azioni — 9M 2023 Earnings Presentation
33 slides from Pirelli & C's earnings presentation, Nov 9, 2023
Slide 1: 9M 2023 Financial Results
9M 2023 Financial Results November 9th, 2023 9M 2023 Financial Results
Slide 2: Disclaimer
Disclaimer In General. This disclaimer applies to this document and any oral comments of any person presenting it. This document, taken together with any such oral comments, is referred to herein as the “Presentation”. This document has been prepared by Pirelli & C. S.p.A. (“Pirelli” or the “Company
Slide 3: Agenda
Agenda 1 9M’23 KEY MESSAGES 2 PIRELLI & C. – 9M’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 2 9M 2023 Financial Results
Slide 4: Key Messages
Key Messages › Solid 9M’23 performance: • Top Price/mix in Industry and High Value positioning confirmed • Profitability improvement driven by internal levers • Positive cash generation in 3Q, thanks to our efficient stock management › FY 2023 market outlook and targets • Better High Value Replaceme
Slide 5: New JV with PIF to establish leading consumer tyre plant in Saudi Arabia
New JV with PIF to establish leading consumer tyre plant in Saudi Arabia Seizing market growth opportunities as first mover among Tier 1 players PIF supporting Saudi Arabia in creating a global Timeline4: automotive manufacturing hub by 2030 • to start production in 2026 75% stake • full capacity to
Slide 6: Agenda: Pirelli & C. – 9M'23 Results
Agenda 1 9M’23 KEY MESSAGES 2 PIRELLI & C. – 9M’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 5 9M 2023 Financial Results
Slide 7: 9M'23 Financial Results highlights
9M’23 Financial Results highlights Operating performance confirming the resilience of our business model € million Net Sales Adjusted EBIT1 2.5% +3.8% 5,033 Organic growth +7.4% 5,160 754 783 STD H.V. 71% 74% 9M’22 9M’23 9M’22 9M’23 margin 15.0% 15.2% Net Income Net Financial Position Net Cash Flow
Slide 8: Pirelli Sustainability achievements in 9M'23
Pirelli Sustainability achievements in 9M’23 Area KPIs 2022A 2025T 9M’23 update SAFETY FIRST Accident 0.20 Towards zero accidents Frequency (-4.5% yoy ) ≤ 0.10 Transparency for consumers Index at work New Pirelli logo identifying tyres with ≥ 50% of bio-based and recycled materials, third party veri
Slide 9: 2023 Strategy implementation: 9M 2023 delivery in line with targets
2023 Strategy implementation: 9M 2023 delivery in line with targets Commercial Innovation ✓• Consolidating High Value positioning: • +4% in Car ≥18’’ in line with market ✓• Widening our OE portfolio: • ~260 new car homologations (88% ≥19’’, ~50% EV) • strong focus on ≥19’’ and EV • EV portfolio reac
Slide 10: Pursuing a selective, value-oriented strategy
9M’23 Car Commercial program Pursuing a selective, value-oriented strategy Pirelli TOTAL ≥18” 3Q Highlights Market 9M 3Q 9M 3Q 4% 4% TOTAL -1% -2% -1% 1% 1% › • Further reduction in Car ≤17’’ (-10% in 3Q vs. -2% Mkt; -10% in 9M vs. -3% Mkt) -4% 3Q’22 PI +12% Mkt +9% 7% › • HV OE reflecting: 5% 6% 4%
Slide 11: 9M'23 Innovation program - Car
9M’23 Innovation program - Car EV Leadership confirmed OE Premium/Prestige positioning reaffirmed at Munich IAA Motorshow: › ~25% of the BEV cars & 30% of the plug-in hybrids equipped by Pirelli › Leading innovation, fitting the BMW iX5 Hydrogen with FSC tyres Enhanced SUV positioning: Scorpion MS ›
Slide 12: Pirelli confirmed as Formula1 Global Tyre Partner until at least 2027
Pirelli confirmed as Formula1® Global Tyre Partner until at least 2027 › Pirelli’s involvement in Formula1® represents: • the ultimate open-air test laboratory for new technical & production solutions, and • the opportunity to innovate and experiment with new processes and technologies › From 2024,
Slide 13: 9M'23 Competitiveness program
9M’23 Competitiveness program Achieved two third of target efficiencies, programs in line with expectations according to their seasonality 2022 2023 E FY ACT Focusing on: FY NOV GUI 9M ACT › Modularity Equally split ~80% Product Cost › Design speed and virtualization in quarters of FY › Industri
Slide 14: 9M/3Q'23 Sales bridge
9M/3Q’23 Sales bridge Solid price/mix mitigates impact of weak demand and high currency volatility € million -3.0% +10.4% +7.4% -4.9% +2.5% 5,033 5,408 5,160 (150) 525 (249) STD H.V. 71% 74% 9M’22 Δ Volumes Δ Price/mix Organic Growth Δ Forex 9M’23 3Q’23 -4.6% +6.8% +2.2% -8.4% -6.2% 2Q’23 -1.1% +10.
Slide 15: 9M'23 adjusted EBIT bridge
9M’23 adjusted EBIT bridge Profitability supported by price/mix and efficiencies covering ~1.4x Raw Mat, FX & Inflation headwinds € million Net impact +138 Net impact +257 Net impact -119 (77) (115) 61 754 449 (180) 783 (26) (19) 9M (65) Commodities -53 FX -23 R&D / mktg. Exp. -16 Stock & Others -3
Slide 16: 9M'23 Net Income bridge
9M’23 Net Income bridge Earnings growth (+14% yoy) supported by improving operating performance and tax benefits € million 411 359 7 6 (5) 15 29 22% tax rate in 9M due to Patent box benefit Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial income Δ Taxes Net Income 9M’22 restr. costs lo
Slide 17: 9M'23 Net Financial Position & NCF (before dividends)
9M’23 Net Financial Position & NCF (before dividends) Net Cash Flow bef. div. 9M’23 at -368M vs -323M in 9M’22 – improving €20 mln yoy excl. LTI impact € million Net Cash Flow (bef. dividends): -368€M 3,138 Operating Cash Flow: -31 M (+87M in 9M’22) 218 105 82 2,553 150 876 (1,116) Incl. ~€67 mln of
Slide 18: Total Gross Debt structure as of September 30th 2023
Total Gross Debt structure as of September 30th 2023 Liquidity margin fully covering debt maturities up to 2025ye. ESG-financing weight on gross debt at ~67% € million Net Financial Position Gross Debt maturity 4,301 (1,163) Liquidity position 1,358 Loan (922) Bond (241) 3,138 2,345 IFRS 16 823 798
Slide 19: Agenda: FY'23 Outlook and Targets
Agenda 1 9M’23 KEY MESSAGES 2 PIRELLI & C. – 9M’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 18 9M 2023 Financial Results
Slide 20: 2023 Global Car Tyre Market Outlook
2023 Global Car Tyre Market Outlook Outlook marginally improved driven by High Value Replacement demand Car tyre market (million pcs) 1,430 ~-2% ~ -1% ≥18" ~+5% (confirmed) O.E. 302 ~+3% ~+4% REPL ~+3% (vs. ~+2% old) ≤17" 1,128 +6pp ~-3% ~-3% +7pp O.E. ~+2% (flat old) REPL ~-4% (vs. -2% old) 2022 A
Slide 21: FY'23: guidance confirmed with profitability and cash flow in the upper side of July target range
FY’23: guidance confirmed with profitability and cash flow in the upper side of July target range € billion 2022 A 2023 E TARGET @27 July ’23 TARGET @09 Nov ’23 Net Sales 6.62 ~6.5 ÷ ~6.7 ~6.6 • Further reduction in Std • In line with ≥18’’ market, however vol. -2% ÷ -1% ~-2% outperforming in ≥18’’
Slide 22: Agenda: Appendix
Agenda 1 9M’23 KEY MESSAGES 2 PIRELLI & C. – 9M’23 RESULTS 3 FY’23 OUTLOOK AND TARGETS 4 APPENDIX 21 9M 2023 Financial Results
Slide 23: 2023 Forex guidance
2023 Forex guidance 25% other 32% EUR Revenues Breakdown FY 2022 A based on 8% BRL currency 11% CNY 24% USD 2022 A 2023 E ∆ YoY 2023 E ∆ YoY Main avg. exchange rates (Nov guid) (vs. EUR) (July guid) (vs. EUR) EUR / USD / 1.05 1.08 ~-3% 1.10 ~-4% EUR / CNY / 7.08 7.69 ~-8% 7.63 ~-7% EUR / BRL / 5.45
Slide 24: A globally acknowledged sustainability leadership
A globally acknowledged sustainability leadership Major ratings Last update Score Positioning in the reference sector 2022 86 Top score ATX Auto Components 2023 TOP 1% ESG Max Score 2022 A Max Score SUPPLIER 2022 ENGAGEMENT Max Score LEADER 2023 4.5 / 5 Top score Auto parts 2023 11.2 Low Risk 2023 A
Slide 25: Key Car Market Trends: Europe
Key Car Market Trends: Europe Market trend (∆% YoY) 1Q’22 2Q’22 3Q’22 4Q‘22 FY22 1Q’23 2Q’23 3Q’23 Total 27 18 11 13 2 4 2 O.E. -16 8 5 Replacement 0 -4 -5 -9 -10 -9 3 4 Total (O.E.+Repl.) 0 -1 -3 -5 -6 -5 ≥18” & ≤17” 38 19 24 8 14 8 9 10 14 11 O.E. 0 2 1 ≤17" -3 ≥18” -20 -10 22 16 11 6 3 7 Replacem
Slide 26: Key Car Market Trends: North America
Key Car Market Trends: North America Market trend (∆% YoY) 1Q’22 2Q’22 3Q’22 4Q‘22 FY22 1Q’23 2Q’23 3Q’23 Total 19 12 9 7 8 7 5 O.E. -1 6 3 Replacement1 -6 -8 -5 -8 -8 -9 4 4 Total (O.E.+Repl.) -3 -4 -2 -5 -5 -7 ≥18” & ≤17” 15 19 19 8 8 11 10 11 O.E. 5 7 5 5 7 2 3 ≤17" ≥18” -9 15 1 1 2 3 2 5 Replace
Slide 27: Key Car Market Trends: Asia Pacific
Key Car Market Trends: Asia Pacific Market trend (∆% YoY) 1Q’22 2Q’22 3Q’22 4Q‘22 FY22 1Q’23 2Q’23 3Q’23 Total 26 16 O.E. 0 4 1 -7 -2 -6 12 4 Replacement 0 -3 -6 -7 -14 -13 12 14 0 Total (O.E.+Repl.) -3 -3 -4 -11 -8 ≥18” & ≤17” 24 32 23 O.E. 10 14 5 6 2 4 ≤17" ≥18” -1 -1 -4 -1 -6 -9 -8 12 16 9 6 4 R
Slide 28: Key Car Market Trends: Russia, MEAI / South America
Key Car Market Trends: Russia, MEAI / South America Market trend (∆% YoY) 1Q’22 2Q’22 3Q’22 4Q‘22 FY22 1Q’23 2Q’23 3Q’23 Russia, MEAI 14 11 7 O.E. -1 0 0 -4 -14 3 1 Replacement 0 -4 -2 -8 -10 -8 2 3 3 Total (O.E.+Repl.) -3 0 -6 -7 -11 South America 30 15 9 O.E. 5 1 2 -4 -14 Replacement1 1 0 -1 -2 -4
Slide 29: Economic results summary
Economic results summary € million 3Q 2023 3Q 2022 ∆ YoY 9M 2023 9M 2022 ∆ YoY Net Sales 1,722.7 1,836.3 -6.2% 5,160.2 5,033.3 +2.5% Organic variation +2.2% +7.4% adjusted EBITDA1 376.7 383.9 -1.9% 1,115.8 1,079.2 +3.4% % of net sales 21.9% 20.9% +1.0 p.p. 21.6% 21.4% +0.2 p.p. reported EBITDA 368.3
Slide 30: Consolidated Balance Sheet
Consolidated Balance Sheet € million 30/09/2023 31/12/2022 30/09/2022 Fixed assets 8,804.7 8,911.1 9,006.6 Inventories 1,376.3 1,457.7 1,464.3 Trade receivables 1,092.7 636.5 1,169.0 Trade payables (1,484.3) (1,973.3) (1,625.3) Operating net working capital 984.7 120.9 1,008.0 % of net sales1 14.6%
Slide 31: Net Cash Flow
Net Cash Flow € million 1Q 2023 2Q 2023 3Q 2023 9M 2023 9M 2022 Adjusted Operating income (EBIT) 248.1 269.3 265.1 782.5 753.5 Amortiz. & depreciations (excl. PPA amortiz.) 111.6 110.1 111.6 333.3 325.7 Investments in tangible and intangible assets (Capex) (53.2) (70.3) (77.7) (201.2) (188.7) Increa
Slide 32: Raw material costs trend and mix
Raw material costs trend and mix Main raw materials price trend yearly avg.; Δ YoY 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 98.9 ; +40% YoY 1.406 ; +3% YoY 1.317 ; -6% YoY 1.678 ; +27% YoY 1.548 ; -8% YoY $ / kg Brent Oil (in $ / barrel) $ / barrel 1.95 Natural Rubber (in $ / kg) 130 115 1.70
Slide 33: Pirelli manufacturing footprint
Pirelli manufacturing footprint U.K. Germany Romania •› Burton – ›• Breuberg – •› Slatina – Car Semi-finished Car / Moto •› Carlisle – Car U.S. •› Rome – Car Russia •› Kirov – Car •› Voronezh – Car China Mexico •› Yanzhou – Italy Car / Moto •› Silao – Car •› Jiaozuo – Car •› Bollate – •› Shenzhou –
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