Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — H1 2008 Earnings Presentation
38 slides from Pirelli & C's earnings presentation, Aug 5, 2008
Slide 1: 1H 2008 Group Results
1H 2008 Group Results 5th August 2008
Slide 2: Key Events During 1H 2008 & Until Now
KEY EVENTS DURING 1H 2008 & UNTIL NOW •17thJanuary - Launch of Pirelli Cinturato •22ndFebruary - Launch of a new high-tech hub in Settimo Torinese, promoted by Turin’s Polytechnic University •11thMarch - “Buyback” of 38.9% of Pirelli Tyre for an equity value of €835.5 Mln •19thMarch - Agreement amon
Slide 3: 1H 2008 Global Economic Scenario
1H 2008 GLOBAL ECONOMIC SCENARIO EUROPE Real GDP 2.1% USA Inflation 3.7% Real GDP 2.3% RUSSIA Inflation 4.2% Real GDP 7.8% Inflation 13.9% BRAZIL CHINA Real GDP 5.7% Real GDP 10.5% Inflation 5.1% Inflation 7.9% 2
Slide 4: Market Challenging Drivers
MARKET CHALLENGING DRIVERS ISSUES ACTIONS • Slowing demand in EU & US, • Price increase & cost saving discipline & restructuring still strong in LatAm & Asia • Accelerating business in • Competitiveness Romania, China & Russia • Forward looking business • Real Estate Market restructuring 3
Slide 5: Investments & Efficiencies
INVESTMENTS & EFFICIENCIES EU reorganization of Romania: scheduled 3.5 mln facilities tyre in 2008 and 5.5 mln in 2009 Russia: scheduled a COST SAVING ACCELERATING direct industrial presence DISCIPLINE BUSINESS Efficiencies in the China: scheduled 2 mln structures tyre in 2008 and 4 mln in 2009 (CAR
Slide 6: Joint Venture in Russia
JOINT VENTURE IN RUSSIA • Pirelli & C. SpA, Russian Technologies State Corporation and the Government of the Samara Region announced an agreement in the context of the Pirelli-Russian Technologies negotiations aiming to set-up an industrial JV in Russia. • The joint venture will be jointly controlle
Slide 7: Pirelli RE Evolution in the Organization Structure
PIRELLI RE EVOLUTION IN THE ORGANIZATION STRUCTURE OLD ORGANIZATION NEW ORGANIZATION Investment & Residential Commercial NPLs Integrated Specialised Services Asset Management Investment AM & Facility (51%) AM & AM & & Services Services Technical Services Residential Fund Services Raising Commercial
Slide 8: Pirelli's Particulate Filter Technology
PIRELLI’S PARTICULATE FILTER TECHNOLOGY SiC Filter Foreseen a start up of a new factory in Romania for the filters production by end of 2008 10th July 2008: agreement between the Italian Ministry for the Environment and the Municipality of Beijing to launch a pilot project in Pechino for testing a n
Slide 9: 1H 2008 Pirelli Group Financials
1H 2008 Pirelli Group Financials
Slide 10: Creating Value with Photonics
CREATING VALUE WITH PHOTONICS PGT PHOTONICS CYOPTICS Strategic alliance in Pirelli Group’s photonics A privately-held US integrated photonics, company: silicon based company leader in addressing the future photonics valued at $ 40 optical components needs of mln including available based on Indium t
Slide 11: 1H 2008 Pirelli Group Results
1H 2008 PIRELLI GROUP RESULTS 1H 08 1H 07 IAS/IFRS ∆ 08/07 €/mn IAS/IFRS Net Sales (as reported) 2,685.3 3,192.6 Net Sales (2007 excluding DGAG effect) (*) 2,685.3 2,614.9 +2.7% EBIT before restructuring costs 211.5 221.3 -4.4% Restructuring Costs (21.2) EBIT 190.3 221.3 Result from Equity Participa
Slide 12: 1H 2007 – 1H 2008: Group EBIT incl. Results from Equity Participations
1H 2007 – 1H 2008: GROUP EBIT incl. Results from Equity Participations €/mn 348.8 2.9 (15.3) (4.3) (76.2) 97.9 (21.2) 18.5 (155.3) Group EBIT Tyre EBIT Pirelli RE Group EBIT EBIT at (excluding Other (exclud. T.I. Shares Restructuring Broadband Others EBIT at restructuring business restructuring deva
Slide 13: Group Net Financial Position Variation
GROUP NET FINANCIAL POSITION VARIATION €/mn 17.0 4.0 167.9 823.0 835.5 93,1 PIRELLI & C. 38,3 P.TYRE 36,5 P.REAL ESTATE 95.3 5.4(*) (302.1) Net Cash P&C. Real RCS NFP at Financial SPEED Dividend flow Estate Shares’ NFP at 31.12.2007 Income/ Acquisition distributions Ordinary Shares’ Purchase 30.06.2
Slide 14: 1H 2008 Pirelli Tyre Results
Reco 1H 2008 Pirelli Tyre Results
Slide 15: 1H 2008 Pirelli Tyre Results
1H 2008 PIRELLI TYRE RESULTS €/mn 1H 08 1H 07 Variation IAS/IFRS IAS/IFRS Net ∆Price/mix: +4,3% 2,166.3 2,151.4 +0,7% Sales ∆Volumes: -1,3% ∆Actual Variation: +3,0% EBITDA 286.5 301.7 -5,0% ∆Exch. Rates: -2,3% Before restructuring costs ∆Total: +0,7% EBITDA margin 13.2% 14.0% Before restructuring co
Slide 16: 1H 2008 Pirelli Tyre Results by Business Segment
1H 2008 PIRELLI TYRE RESULTS BY BUSINESS SEGMENT €/mn 1H 08 1H 07 Variation IAS/IFRS IAS/IFRS CONSUMER Sales 1,494.3 1,492.1 +0,1% EBIT 126.8 149.1 -15% Before restructuring costs * ROS 8,5% 10.0% INDUSTRIAL Sales 672 659.3 + 1,9% EBIT 64,2 57.2 +12,2% ROS 9,6% 8,7% * Restructuring costs 5.0 • Consu
Slide 17: 1H 2008 Market Trends
1H 2008 MARKET TRENDS EUROPE NORTH AMERICA Consumer OE +1% Consumer OE -14% REPL -4% REPL -4% Industrial OE +12% REPL -9% CHINA Consumer OE +16% REPL +21% Industrial, (OE+ REPL) +12% MERCOSUR Consumer OE +23% REPL + 2% Industrial OE +18% REPL +9% 16
Slide 18: 1H 2008 Sales by Region
1H 2008 SALES BY REGION EUROPE NORTH AMERICA 47% 7% MEA + ASIA/PACIFIC 15% LATAM 31% 17
Slide 19: Pirelli Tyre: Raw Materials and Energy Cost Trends
PIRELLI TYRE: RAW MATERIALS AND ENERGY COST TRENDS CAGR 04 - 07 Index 2004 = 100 BRENT 34,7% 328,9 300 TSR20 28,9% 257,2 276,2 250 253,4 207,1 200 192,8 194,1 176,4 150 146,3 133,7 9,8% 100 ∆ Raw Material 14,4% 12,9% 2,6% 3,7% 5,6% 100 114 129 133 137 145 Cost Index 50 2004 2005 2006 2007 1st Quarte
Slide 20: Pirelli Tyre Price Announcements to Date
PIRELLI TYRE PRICE ANNOUNCEMENTS TO DATE EUROPE NORTH AMERICA CONSUMER CONSUMER AND INDUSTRIAL +5% +4% TO 6% CHINA CONSUMER AND INDUSTRIAL + 5% EXPORT MARKETS (Dollar area) CONSUMER AND INDUSTRIAL +5% to 7% 19
Slide 21: 1H 2008 Pirelli Tyre Highlights
1H 2008 PIRELLI TYRE HIGHLIGHTS: Winter Sottozero Serie II - 100% aromatic oil free - technologically advanced for road safety and driving pleasure - P Zero UHP technology together with a dual compound tread pattern (W270 only) for excellent winter performance and optimum high speed control -- impro
Slide 22: 1H 2008 Pirelli Real Estate Results
1H 2008 Pirelli Real Estate Results
Slide 23: Pirelli RE 1H2008 Results
PIRELLI RE 1H2008 RESULTS 1) EBIT including Income from Equity Participations before Restructuring costs of 49.2 mln Euro (105.7 mln Euro in first half 2007). Excluding fair value adjustments, it amounts to 43.5 mln euro (56.4 mln Euro in first half 2007) 2) Consolidated Net Income at 9.0 mln Euro,
Slide 24: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT (Values in €/ml) JUNE 2007 JUNE net of 2007 2008 temporary consolidation of DGAG 1. Pro Quota Aggregate Revenues (*) 681,3 745,5 811,9 2. Consolidated Revenues (*) 423,4 355,4 Result before 421,8 fair value adj. 3. EBIT before restructuring costs 29,4 (0,3) 19,4 4. Real
Slide 25: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET ACTUAL JUNE 2007 JUNE DECEMBER JUNE Afetr temporary 2008 2007 2007 consolidation of DGAG 1. Fixed Assets 817,1 886,1 745,2 757 thereof Participations 630,3 601,3 465,1 477 thereof Goodwill 141,7 218,4 215,8 216 2. Net Working Capital 183,2 190,5 1.147,0 246 3. Net Invested
Slide 26: 1H 2008 Group Outlook
Reco 1H 2008 Group Outlook
Slide 27: Pirelli Group Outlook 2008
PIRELLI GROUP OUTLOOK 2008 • Pirelli Tyre: Tyre in light of the current market scenario, and of the persistence of inflationary trends on costs of raw materials and production factors, forecasts for the second half EBIT before restructuring charges substantially in line with the same period in 2007.
Slide 28: 1H 2008 Back Up Slides
Reco 1H 2008 Back Up Slides
Slide 29: Group Mission
GROUP MISSION Skilled management with an international culture Technology, Focus on core innovation and IPR business “Creating value for shareholders & stakeholders” Effective Corporate Governance 28
Slide 30: Pirelli Group Structure at 31.12.2007
PIRELLI GROUP STRUCTURE AT 31.12.2007 Main Shareholders* Camfin 20.3% Mediobanca 4.6% €/ Mln Edizione Holding 4.6% Group Sales: 5,209 Fondiaria SAI 4.4% Pirelli & C. SpA Group Net Invested Capital: 4,113 Allianz 4.4% Assicurazioni Generali 4.4% Pirelli Tech Sales: 189 Venture NIC: 2% (on the whole)
Slide 31: Pirelli 1H 2008 Group Results
PIRELLI 1H 2008 GROUP RESULTS PIRELLI PIRELLI BROADBAND OTHER OTHERS PIRELLI & C. CONS. Euro/Mln TYRE REAL ESTATE ACCESS BUSINESS 30.06.08 30.06.07 30.06.08 30.06.07 30.06.08 30.06.07 30.06.08 30.06.07 30.06.08 30.06.07 30.06.08 30.06.07 Sales 2.166,3 2.151,4 423,4 951,7 63,4 51,7 36,3 35,0 (4,1) 2,
Slide 32: Pirelli Worldwide: A Global Company at 31.12.2007
PIRELLI WORLDWIDE: A GLOBAL COMPANY AT 31.12.2007 24 Plants 12 Countries 30,813 Employees 160 commercial presence Approx. 100 Scientists Enhanced production and presence in Brazil, Romania, China = Manufacturing Plant = Local Subsidiary Sales by Area* * excluding DGAG sales Employees distribution As
Slide 33: 1H 2008 Pirelli Tech Ventures
1H 2008 Pirelli Tech Ventures •Ambiente •Broadband Access & Photonics
Slide 34: 1H 2008 Broadband Access Results
1H 2008 BROADBAND ACCESS RESULTS €/mn 1H 08 1H 07 Variation IAS/IFRS IAS/IFRS Net Sales 63.4 51.7 22.6% EBITDA 3.6 0.8 % on sales 5.6% 1.5% EBIT 3.2 0.3 % on sales 5.0% 0.6% Financial Income/Charges (2.8) (1.0) PBT 0.4 (0.7) Fiscal Charges (0.2) (0.0) Net Income 0.2 (0.7) Net Financial Position 26.7
Slide 35: Broadband Access: Fields of Activity
BROADBAND ACCESS: FIELDS OF ACTIVITY BBA: ENLARGING CLIENTS PORTFOLIO PHOTONICS: AND PRODUCTS BECOMING A REALITY • CWDM City 8TM enhancement to 10 Gbits • ADSL2/2+ deployment on track • DTL and ITLA market sales • SET-TOP-BOX sales and new tenders • Launch of Transponder MSA300 expected Access Dynam
Slide 36: Technological Ventures
TECHNOLOGICAL VENTURES PIRELLI PIRELLI & C. ECO TECHNOLOGY SpA AMBIENTE SpA - GECAM TM - ENERGY RECOVERY FROM SOLID WASTE - ANTIPARTICULATE FILTERS - PHOTO VOLTAIC ENERGY - ENVIRONMENTAL RECLAMATION AND DUE DILIGENCE - Sales reduction of Gecam ™, related to - Sales consolidation of high quality fuel
Slide 37: Statement
STATEMENT The Manager mandated to draft corporate accounting documents of Pirelli & C. S.p.A., Claudio De Conto, attests – as per art.154-bis, comma 2 of the Testo Unico della Finanza (D.Lgs. 58/1998) – that all the accounting information contained in this presentation correspond to the documented r
Slide 38: Disclaimer
DISCLAIMER This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current ex