Slide 1: 1Q 2016 Financial Results
1Q 2016 Financial Results May 12, 2016
Slide 2: Key Messages
KEY MESSAGES 1 Sound 1Q 2016 results despite difficult scenario in South America and Russia - Premium outperformance, now accounting for 67% of Consumer revenues - Best price/mix improvement in the industry - Profitability confirmed at high level: yoy Ebit improvement by internal levers (price/mix a
Slide 3: Agenda
AGENDA 1 1Q 2016 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 3 APPENDIX 1Q 2016 RESULTS 2
Slide 4: Pirelli Key Financial Results
PIRELLI KEY FINANCIAL RESULTS 1Q 15 1Q 15 1Q 16 Δ vs. 1Q 15 1Q Highlights €/Mln Reported Excl. Venezuela (excl. Venezuela) Revenues 1,568.4 1,498.6 1,436.0 -4.2% Sound organic growth sustained by: Organic Growth1 +2.4% n.a. +5.1% • Premium outperformance (+11.7% EBITDA before non recurring items and
Slide 5: 1Q 2016 Performance by Region
1Q 2016 PERFORMANCE BY REGION Tyre Sales Consumer Sales Industrial Sales Tyre EBIT Margin3 €/Mln Organic Organic Organic Δ YoY Δ YoY Δ YoY growth1 growth2 growth2 Total 1,435.1 -4.0% +5.3% 1,165.7 -1.0% +6.9% 269.4 -15.3% -1.0% 15.1% (+1.1 pp yoy) Europe 38% 35% +1.2% +1.7% 44% +2.0% Europe Mid-teen
Slide 6: 1Q 2016 Premium Performance by Region
1Q 2016 PREMIUM PERFORMANCE BY REGION Organic Δ YoY growth1 €/Mln Total 721.0 781.9 +8.4% +10.5% • Strong performance backed by: − Volume outperformance in the ≥18” replacement channel Europe 50% 51% +12.4% +13.1% − Mix improvement due to reinforced leadership in technological niches, such as RunFla
Slide 7: Introducing the New P Zero Generation
INTRODUCING THE NEW P ZEROTM GENERATION Leveraging a rich heritage and F1. .. …while confirming our leadership on OE-marked items P ZEROTM 2016 > 30 years of history, being the reference for Supercars 60 new marked items at launch 700 and Motorsport, resulting in a portfolio of >800 600 homologation
Slide 8: Pirelli Group Operating Performance
PIRELLI GROUP OPERATING PERFORMANCE €/Mln 30.5 (1.6) (5.6) 35.8 (6.4) (22.0) 1.4 (23.5) 206.9 215.5 EBIT 1Q ’15 Price / Mix Efficiencies Volume D&A & Raw Materials FX Other Input Other EBIT 1Q ’16 Before restr. other costs Costs (Labour Business Before restr. and non rec. / Energy / and non rec. ite
Slide 9: Pirelli Net Income 1Q 2016 vs 1Q 2015
PIRELLI NET INCOME 1Q 2016 VS 1Q 2015 €/Mln (9.9) (40.0) USD Private Placement (25.4) early repayment Other (5.2) 84.6 16.8 Value adjustments: Fenice (20.0) 40.4 (30.6) Prelios (13.1) Others (6.9) 19.5 Net Income 1Q ’15 Δ Ebit Δ Results from Δ Financial Δ Taxes Disc. Net Income 1Q ’16 part
Slide 10: 1Q 2016 Net Financial Position
1Q 2016 NET FINANCIAL POSITION €/Mln 67,9 1.903,7 117,3 19,5 499,9 1.199,1 EBIT before restr. costs 215.5 Depreciation/Amortisation 74.5 Investments1 (74.0) NWC & other (715.9) FY ’15 Operating Fin. Inc./ Cash-out FX/ 1Q ’16 Cash Flow Expen. non rec. items Others & Taxes and restr. costs 1 Tangibl
Slide 11: New Debt Structure after Marco Polo Merger into Pirelli
NEW DEBT STRUCTURE AFTER MARCO POLO MERGER INTO PIRELLI > Merger approved by the Pirelli Shareholders meeting on Feb.15 and finalized on May 6, will be effective from June 1st 2016 Pirelli YE 1Q2016 Gross Debt pro-forma Breakdown of Gross Debt €/Mln 4,251.0 6,891.6 1,501.2 € 5,390.4 mln 4,251.0 Comm
Slide 12: Rating and Refinancing Plan
RATING AND REFINANCING PLAN > RATING: A public credit rating of Pirelli debt will be issued by at least 2 major agencies, applicable to new notes > 2016 RE-FINANCING PLAN UP TO 7 € BLN (approved by Pirelli Board of Directors on February 16th) Refinancing 5.4€ bln of Debt in 2016 and accommodating
Slide 13: Agenda
AGENDA 1 2015 RESULTS 2 CONSUMER AND INDUSTRIAL PERFORMANCE 4 APPENDIX 1Q 2016 RESULTS 12
Slide 14: Key Tyre Results
KEY TYRE RESULTS €/Mln Q1’15 ∆ YoY% Q1’15 Q1’16 ∆ % vs. Q1’15 Reported Venezuela excl. Venezuela excl. Revenues 1,565.3 +6.5% 1,495.5 1,435.1 -4.0% o/w Premium 726.9 +13.6% 721.0 781.9 +8.4% EBITDA before non recur. 293.5 +4.7% 284.5 290.2 +2.0% items and restr. costs Margin 18.8% -0.3 p.p. 19.0% 20
Slide 15: Consumer Business: Pirelli Performance
CONSUMER BUSINESS: PIRELLI PERFORMANCE €/Mln Q1’15 ∆ YoY% Q1’15 Q1’16 ∆ % vs. Q1’15 Reported Venezuela excl. Venezuela excl. Revenues 1,237.4 +9.6% 1,177.6 1,165.7 -1.0% o/w Premium 726.9 +13.6% 721.0 781.9 +8.4% % revenues 58.7% +2.0 p.p. 61.2% 67.1% +5.9 p.p. EBITDA before non recur. 246.3 +12.3%
Slide 16: Consumer Business: Key Market Trends
CONSUMER BUSINESS: KEY MARKET TRENDS Market trend 1Q’15 2Q’15 3Q’15 4Q’15 FY’15 1Q’16 % YoY 10 7 7 6 7 4 OE Europe1 11 3 3 4 3 REPLACEMENT -1 3 4 5 2 2 2 OE NAFTA 5 1 4 2 6 REPLACEMENT 2 -4 South America OE -15 -16 -21 -20 -29 -30 2 2 5 2 3 REPLACEMENT 3 -6 16 China 10 7 9 4 OE -6 1Russia excluded,
Slide 17: Industrial Business: Pirelli Performance
INDUSTRIAL BUSINESS: PIRELLI PERFORMANCE €/Mln Q1’15 ∆ YoY% Q1’15 Q1’16 ∆ % vs. Q1’15 Reported Venezuela excl. Venezuela excl. Revenues 327.9 -3.8% 317.9 269.4 -15.3% EBITDA before non recur. 47.2 -22.5% 45.0 26.9 -40.2% items and restr. Costs Margin 14.4% -3.5 p.p. 14.2% 10.0% -4.2 p.p. EBIT before
Slide 18: Industrial Business: Key Market Trends
INDUSTRIAL BUSINESS: KEY MARKET TRENDS Market trend 1Q’15 2Q’15 3Q’15 4Q’15 FY’15 1Q’16 % YoY 13 10 17 11 5 7 OE Europe1 6 9 4 5 6 REPLACEMENT -1 South America OE -39 -42 -48 -43 -53 -58 REPLACEMENT 2 -8 -12 -7 -14 -10 -8 China 2 OE -6 -29 -23 -23 -31 1Russia excluded, Turkey excluded in 2016 (inclu
Slide 19: Agenda
AGENDA 1 2015 RESULTS 3 CONSUMER AND INDUSTRIAL PERFORMANCE 4 APPENDIX 1Q 2016 RESULTS 18
Slide 20: Pirelli Balance Sheet
PIRELLI BALANCE SHEET €/Mln FY’15 1Q’16 FIXED ASSETS 3,780.5 3,674.9 Inventories 1,053.9 1,068.2 Trade receivables 676.2 1,006.7 Trade payables (1,313.1) (945.8) NET OPERATING WORKING CAPITAL 417.0 1,129.1 Other payables/receivables (107.6) (85.0) Net Working Capital 309.4 1,044.1 NET INVESTED CAPIT
Slide 21: Pirelli Group Cash Flow
PIRELLI GROUP CASH FLOW €/Mln 1Q’15 2Q’15 3Q‘15 4Q‘15 FY’15 1Q’16 EBIT before non rec. items and restr. costs 213.4 238.0 205.8 261.3 918.5 215.5 Depreciation / Amortisation 78.5 79.7 78.0 88.0 324.2 74.5 Capex (85.6) (103.2) (73.0) (129.6) (391.4) (74.0) Working capital / other variations (895.2) 1
Slide 22: Pirelli Debt Structure as of March 31, 2016
PIRELLI DEBT STRUCTURE AS OF MARCH 31, 2016 Net Financial Position Gross Debt Maturity €/Mln €/Mln 2,640.6 736.9 878.8 0.3 Committed Line Cash & Cash Drawdown Equivalents 668.9 870.6 870.6 1,903.7 68.0 612.0 Debt Capital 8.2 Market Fin. 768.8 600.0 Receivables 66.8 46.6 1,036.1 12.0 168.8 Other 1,00
Slide 23: Net Financial Debt
NET FINANCIAL DEBT Net Financial Position trend €/Mln Leverage ratio (Net Financial Debt / LTM2 EBITDA) 1,966 2,004 1,935 1,9471 1,904 1,733 1,686 1,664 1,8x 1,199 1,7x 1,7x 1,6x 980 1,5x 1,4x 1,4x 9211 1,0x 0,8x 0.8x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 Gross Debt 2.468 2.471 2.662 2.317 2.676
Slide 24: Operating Net Working Capital and Capex Seasonality Trend
OPERATING NET WORKING CAPITAL AND CAPEX SEASONALITY TREND Operating Net Working Capital Capex €/Mln €/Mln 391 €/Mln 6.2% on FY sales Δ = 640 €/Mln 130 1.134 1.130 1.057 970 103 86 73 74 417 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2015 2016 2015 2016 Capex / Sales 5.5% 6.4% 4.8% 8.1% 5.2% NWC definition: inven
Slide 25: 1Q 2016 Pirelli Tyre Mix
1Q 2016 PIRELLI TYRE MIX Sales by Business Sales by Segment Industrial Car 19% 73% Consumer 81% Agro 2% Motorbike Truck 17% 8% Sales by Channel Sales by Region NAFTA South America* OE 15% 23% Asia Pacific 22% 11% MEAI Replacement 11% 78% Russia Europe 2% 38% *Excluding Venezuela 1Q 2016 RESULTS 24
Slide 26: March 2016 Pirelli People
MARCH 2016 PIRELLI PEOPLE Headcount People by Region NAFTA 36,753 South America * 5% 35,899* 32% Asia Pacific 11% MEAI 9% Russia Europe 10% 32% Dec ’15 Mar ’16 People by Contract People by Cluster Temps & Agency Management 5% 1% Employees Workers 95% Staff 80% 19% * Without Venezuela headcount (897
Slide 27: Pirelli Plants in the World
PIRELLI PLANTS IN THE WORLD* U.S.A. U.K. ITALY 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 BRAZIL CHINA Campinas Car Yanzhou Car / Moto / Feira de Santana Car/Truck Truck Santo And
Slide 28: Raw Materials
RAW MATERIALS Raw Material Price Trend Brent Oil (in USD/bbl) Natural Rubber (in USD/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 4Q13
Slide 29: 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