Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — 9M 2014 Earnings Presentation
34 slides from Pirelli & C's earnings presentation, Nov 6, 2014
Slide 1: Pirelli 9M 2014 Results
PIRELLI 9M 2014 RESULTS MILANO – NOVEMBER 6, 2014
Slide 2: Agenda
AGENDA KEY MESSAGES 9M 2014 RESULTS 2014 OUTLOOK & TARGETS 9M 2014 TYRE OVERVIEW APPENDIX 9M 2014 RESULTS 1
Slide 3: Key Messages
KEY MESSAGES Pirelli 9M snapshot > Premium value and volume outperformance, especially in the ≥ 18" segment > Solid execution of value strategy, profitability confirmed at high levels - Quality top-line growth with best price/mix improvement in the industry - Geared to manage short-term market fluct
Slide 4: Agenda: 9M 2014 Results
AGENDA KEY MESSAGES 9M 2014 RESULTS 2014 OUTLOOK & TARGETS 9M 2014 TYRE OVERVIEW APPENDIX 9M 2014 RESULTS 3
Slide 5: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 9M 13* 9M 14 Δ yoy Q3 13* Q3 14 Δ yoy Q3 2014 Highlights Revenues 4,586.4 4,528.7 -1.3% 1,496.4 1,541.8 +3.0% • Top-line growth continues in Organic growth** +6.5% +6.0% Europe, Nafta while Asia Pacific accelerates EBITDA before Restr. Costs 806.8 867.7 +7.5% 277.5 284.
Slide 6: 9M 2014 Performance by Region
9M 2014 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre Ebit Margin** €/Mln Organic Organic Organic D YoY D YoY D YoY growth* growth* growth* Total 4,520 -1% +7% 3,466 +3% +10% 1,054 -11% -1% 14.6% (+1.2 pp) Europe Mid-teens Europe 35% +8% +7% 41% +8% +8% (improving yoy from do
Slide 7: Premium: Our Growth Engine Across Regions
PREMIUM: OUR GROWTH ENGINE ACROSS REGIONS €/Mln D YoY Organic growth* Total 1,724 1,934 +12% +15% • Preferred partner of Top OEMs: 70 new homologations in Q3 (130 in 9M) • Leadership in Super Premium further enhanced: +11% 21% total mkt share in ≥ 18" segment, +1pp vs. 2013 YE Europe 51% 50% +10% •
Slide 8: Pirelli Net Income 9M 2014 vs 9M 2013
PIRELLI NET INCOME 9M 2014 VS 9M 2013 €/Mln 11.1 1.5 300.0 (9.4) (12.8) 51.5 258.1 Net Income ∆ EBIT ∆ Results from Financial ∆ Taxes Discontinued Net income 9M ‘13 participations Income/ Operations 9M ‘14 charges 9M 2014 RESULTS 7
Slide 9: Debt Structure as of September 30, 2014
DEBT STRUCTURE AS OF SEPTEMBER 30, 2014 Net Financial Position – continuing operations Gross Debt Maturity €/Mln 2,662 696 149.6 Cash & Cash 62.1 Equivalent 173.7 117.3 Committed 614 831.1 42.9 32.3 Line 900 Drawdown 1,966 130.8 Rev. 614.0 82 Cred. Fin. Facility 1,144.6 217.1 Debt Capital 774 Receiv
Slide 10: Pirelli 9M 2014 Net Financial Position
PIRELLI 9M 2014 NET FINANCIAL POSITION €/Mln 57.0 1,935.2 (28.8) 93.1 8.0 (3.6) 2,003.9 160.1 18.8 206.9 170.0 EBIT before restr. costs 208.9 1,322.4 Depreciation / amortization: 76.0 Investments*: (101.1) EBIT before restr. costs 438.9 D NWC & other: (155.0) Depreciation / amortization: 143.9 Inves
Slide 11: Agenda: 2014 Outlook & Targets
AGENDA KEY MESSAGES 9M 2014 RESULTS 2014 OUTLOOK & TARGETS 9M 2014 TYRE OVERVIEW APPENDIX 9M 2014 RESULTS 10
Slide 12: 2014 Pirelli Outlook by Region
2014 PIRELLI OUTLOOK BY REGION Car Tyre Market 2014 Pirelli Tyre Business Target Highlights Highlights Revenues EBIT%* +5% yoy High-teen Asia o/w Premium up = Outperforming Premium Market, due to growth (from Twenties Pacific presence in fast growing Car Park double digit mid-teen) +5% yoy Mid singl
Slide 13: FY 2014 Targets Confirmed
FY 2014 TARGETS CONFIRMED at constant consolidation perimeter* Steel Cord FY 2014 2014 targets 2014 targets Included in discontinued August 2014 Update November 2014 operations** Revenues ~6.2 €/bln >6.1 / <6.2 €/bln ~90 €/mln vs third parties • Volumes ~ +4.5% > +2.5% - o/w Premium > +16% Confirmed
Slide 14: 2014 Consumer & Industrial Targets Update
2014 CONSUMER & INDUSTRIAL TARGETS UPDATE at constant consolidation perimeter* Consumer Business Industrial Business 2014 targets 2014 targets 2014 targets 2014 targets Steel Cord August 2014 Update August 2014 Update business November 2014 November 2014 Discontinued Revenues ~4.7 confirmed Revenues
Slide 15: 2014 Profitability Guidance Confirmed
2014 PROFITABILITY GUIDANCE CONFIRMED 2014 targets 2014 targets August 2014 Update November 2014 ∆ vs August Driver Impact Impact 2014 guidance Volumes ~ +4.5% of sales > +2.5% of sales -45€/mln Ebit Price/Mix +4%/+5% of sales Confirmed -8.5%/-9.5% of sales -7%/-7.5% of sales Forex +15€/mln Ebit -10
Slide 16: Agenda: 9M 2014 Tyre Overview
AGENDA KEY MESSAGES 9M 2014 RESULTS 2014 OUTLOOK & TARGETS 9M 2014 TYRE OVERVIEW APPENDIX 9M 2014 RESULTS 15
Slide 17: Key Tyre Results
KEY TYRE RESULTS Q1‘14 ∆% Q2‘14 ∆% Q3‘14 ∆% 9M‘14 ∆% Revenues 1,469.5 -2.4% 1,511.3 -3.6% 1,539.2 +3.3% 4,520.0 -0.9% o/w Premium 639.9 +12.9% 645.2 +12.6% 648.8 +11.1% 1,933.9 +12.2% EBITDA before restr. costs 280.3 +8.7% 308.7 +9.9% 287.2 +1.7% 876.2 +6.7% Margin 19.1% +2.0pp 20.4% +2.5pp 18.7% -0
Slide 18: Pirelli Tyre Operating Performance
PIRELLI TYRE OPERATING PERFORMANCE 33.8 4.2 (15.3) (37.7) 14.7 22.1 (23.2) 205.7 2.0 206.3 D&A (8) +22.7 Marketing costs (13) Others (2) EBIT Volumes Price/ Raw FX Other Input Efficiencies Depreciation Restructuring EBIT Q3 ’13 Mix Materials Costs (Labour & other costs Q3 ‘14 Energy / other) 127.1 1
Slide 19: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE Q1 ‘14 ∆% Q2‘14 ∆% Q3‘14 ∆% 9M‘14 ∆% Revenues 1,128.7 +1.1% 1,159.6 +1.8% 1,178.0 +4.9% 3,466.3 +2.6% o/w Premium 639.9 +12.9% 645.2 +12.6% 648.8 +11.1% 1,933.9 +12.2% % revenues 56.7% +5.9p.p. 55.6% +5.3p.p 55.1% +4.3p.p 55.8% +6.2p.p. EBITDA before Restr. Cos
Slide 20: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE Q1‘14 ∆% Q2‘14 ∆% Q3 ‘14 ∆% 9M‘14 ∆% Revenues 340.8 -12.2% 351.7 -18.1% 361.2 -1.4% 1,053.7 -11.0% EBITDA before Restr. Costs 60.9 -3.3% 63.6 -17.7% 59.2 -15.9% 183.7 -12.8% Margin 17.9% +1.7pp 18.1% +0.1pp 16.4% -2.8p.p. 17.4% -0.4p.p. EBIT before Restr. cos
Slide 21: 2014 Raw Material Guidance
2014 RAW MATERIAL GUIDANCE Breakdown FY 2013 Guidance 2014 Guidance 2014 (based on purchase cost) (August 2014) (November Average Cost of 2014) Goods Sold €/Mln Synthetic Rubber 2013A 2014E Δ yoy 2014E Δ yoy 29% Natural Rubber 24% Natural Rubber ~2,700 ~ 2,100 +105 ~2,000 +134 TSR20 ($/ton) Brent Oi
Slide 22: Agenda: Appendix
AGENDA KEY MESSAGES 9M 2014 RESULTS 2014 OUTLOOK & TARGETS 9M 2014 TYRE OVERVIEW APPENDIX 9M 2014 RESULTS 21
Slide 23: Pirelli Group – Q3 Results
PIRELLI GROUP – Q3 14 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. Q3’13* Q3’14 Q3’13 Q3’14 Q3’13* Q3’14 SALES 1,489.4 1,539.2 7.0 2.6 1,496.4 1,541.8 EBITDA before Restr. Costs 282.3 287.2 (4.8) (2.3) 277.5 284.9 % of sales 19.0% 18.7% 18.5
Slide 24: Pirelli Group – 9M Results
PIRELLI GROUP – 9M 14 RESULTS Profit & Loss and Net Financial Position by Business Unit Pirelli tyre Other Pirelli & C. Cons. 9M’13* 9M14 9M’13 9M’14 9M’13* 9M’14 SALES 4,562.3 4,520.0 24.1 8.7 4,586.4 4,528.7 EBITDA before Restr. Costs 820.9 876.2 (14.1) (8.5) 806.8 867.7 % of sales 18.0% 19.4% 17.
Slide 25: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 3Q’13* 9M’13* 1Q’14 2Q’14 1H’14 3Q’14 9M’14 EBIT before restructuring costs 207.5 593.4 206.7 232.2 438.9 208.9 647.8 Depreciation / Amortization 70.0 213.4 70.6 73.3 143.9 76.0 219.9 Net investments (74.3) (238.3) (65.3) (78.3) (143.6) (101.1) (244.7) Working capital /
Slide 26: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’13 9M’14 FIXED ASSETS 4,043.0 3,910.1 Inventories 987.3 1,060.7 Trade receivables 666.4 1,075.2 Trade payables (1,244.5) (1,020.4) NET OPERATING WORKING CAPITAL 409.2 1,115.5 Other payables/receivables 3.0 93.0 Net Working Capital 412.2 1,208.5 Net Invested Capital of
Slide 27: Pirelli Group – 2013 Quarterly Results – Restated
PIRELLI GROUP – 2013 QUARTERLY RESULTS – RESTATED* Q1’13 Q2’13 Q3’13 Q4’13 FY’13 Tyre Group Tyre Group Tyre Group Tyre Group Tyre Group SALES 1,505.5 1,514.6 1,567.9 1,575.4 1,489.4 1,496.4 1,468.3 1,474.6 6,030.6 6,061.0 EBITDA before Restr. 257.8 253.0 280.8 276.3 282.3 277.5 299.0 288.2 1,119.9 1
Slide 28: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 3Q’13 4Q’13 FY’13 1Q’14 2Q’14 3Q'14 9M’14 % yoy 9 5 2 3 4 0 1 OE 9 Europe* 5 6 5 2 0 1 REPLACEMENT 5 5 5 4 3 7 5 OE Nafta 0 3 2 5 3 3 REPLACEMENT -1 6 South America 4 OE -10 -11 -25 -19 -19 11 9 4 4 3 4 4 REPLACEMENT** 24 17 China 14 10 12 10 6 OE *
Slide 29: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 3Q’13 4Q’13 FY’13 1Q’14 2Q’14 3Q'14 9M'14 % yoy 24 7 6 7 OE Europe * -4 -5 -1 9 6 7 14 2 4 REPLACEMENT -3 33 34 11 South America OE -1 -28 -29 -20 8 6 10 3 REPLACEMENT** -4 -3 -1 China 24 18 17 13 OE -7 -11 -2 * Turkey included and Russia excluded
Slide 30: 9M 2014 Pirelli Tyre Mix
9M 2014 PIRELLI TYRE MIX Sales by Business Sales by Segment Consumer Car 77% 70% Agro 3% Truck Motorbike Industrial 7% 23% 20% Sales by Channel Sales by Region Replacement South America NAFTA 76% 32% 12% Asia Pacific 9% MEAI 8% Russia OE Europe 4% 24% 35% 9M 2014 RESULTS 29
Slide 31: September 2014 Pirelli People
SEPTEMBER 2014 PIRELLI PEOPLE Headcount People by Region NAFTA 39.491 South America 4% 37.979 37% Asia Pacific 10% MEAI 9% Russia Europe 9% Dec. 2013 Sept. 2014 31% People by Contract People by Cluster Management Temps & Agency 1% 8% Employees Workers 92% Staff 80% 19% 9M 2014 RESULTS 30
Slide 32: Pirelli 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 Figline Valdarno Steel Cord MEXICO ROMANIA Guanajuato Car Slatina Car / Steel Cord VENEZUELA CHINA Guacara Car Yanzhou Car / Moto /
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 3,156 111.0 98.5 111.7 108.9 2,517 2,531 80.2 75.2 1,801 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
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