Slide 1: 1H 2022 Financial Results
1H 2022 Financial Results August 4th, 2022 1H 2022 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 KEY MESSAGES 2 PIRELLI & C. – 1H’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 2 1H 2022 Financial Results
Slide 4: Key Messages
Key Messages > Strong 1H 2022 Result supported by • High value outperformance (market share gains across all channels; strengthening of ≥19’’ and EV) • Record high price/mix fully covering raw mat. & inflation headwinds • Better yoy cash flow trend due to efficient working capital management > Volat
Slide 5: Update on China and Russia
Update on China and Russia Key issues Pirelli’s actions Easing mobility restrictions but Zero Covid policy Fully back to Shanghai office; plants saturation confirmed progressively increasing Strong impact on GDP (+0.4% in 2Q’22; +2.5% in 1H’22) Leadership position confirmed in 2Q in Car ≥18’’ bu
Slide 6: Europe - Pirelli mitigation actions on Potential Russian gas shortage
Europe - Pirelli mitigation actions on Potential Russian gas shortage Key issue Pirelli’s mitigation actions Risk mainly concentrated to Germany and Italy Energy Risk Containment Committee established to closely monitor the situation and implement actions: Natural Gas Annual Consumption (2021 figur
Slide 7: 1H 2022 Results highlights
1H 2022 Results highlights Solid delivery in a challenging environment € million Net Sales adjusted EBIT1 +25% +28% 3,197 482 2,565 377 Standard High Value 72% 72% 1H’21 1H’22 1H’21 1H’22 margin 14.7% 15.1% Net Income Net Financial Position +209 2Q Net Cash Flow before dividends +673 -49 +77% 3,580
Slide 8: Sustainability: 1H update on our journey
Sustainability: 1H update on our journey Area KPIs 2021A 2025E 1H’22 update SAFETY FIRST Accident • “Excellence in Safety” Program & continuous improvement Towards zero accidents frequency index 0.21 <0.10 at work in all plants PRODUCT ECO Rolling Res. = A/B 49% >70% • Labelling: Pirelli Scorpion Su
Slide 9: Agenda
Agenda 1 KEY MESSAGES 2 PIRELLI & C. – 1H’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 8 1H 2022 Financial Results
Slide 10: Pirelli vs. market – outperforming on High Value and on Std. Repl.
Pirelli vs. market – outperforming on High Value and on Std. Repl. confirmed in 2Q ► H.V.: share gain across channels, seizing O.E. rebound across regions and a solid Repl. demand in EU & N.A. ► Std. : more selective approach on O.E. while gaining share especially in South America Pirelli Car Tyre T
Slide 11: 2022 Strategy implementation: 1H 2022 delivery in line with targets
2022 Strategy implementation: 1H 2022 delivery in line with targets Main programs 2022 targets 1H’22 main achievements • Focus on H.V. outperforming the market in ≥18” • Car ≥18”: +8% vs. +5% of the mkt seizing: Replacement • Repl. solid demand trend in EU and North America • More selective approach
Slide 12: Commercial Program delivery in 1H 2022
Commercial Program delivery in 1H 2022 Strong over-performance driven by ≥19” & Specialties 1H 2022A volume variance (Car) Key programs highlights Volume trend Market 1H’21 A 46% 54% Car ≥18" +5% +8% H.V. Repl. Massive weight of H.V. Regions (>90%), PULL first Elect volumes sales (~2% of Repl. o/w R
Slide 13: Innovation Program: Ready for the new winter season
Innovation Program: Ready for the new winter season focusing on higher mileage, top safety and performance The new Scorpion Winter 2 completes the Winter tyres replacement range expanded renewed range of Scorpion tyres Winter tyre for SUVs focused on safety in all winter conditions Designed for Car/
Slide 14: Innovation Program: update on EVs
Innovation Program: update on EVs Pirelli EV homologation portfolio further enhanced >280 EV homologations worldwide, with the following main partners1: Tesla Rivian Among 2Q new homologations Pirelli EV: 2022 expectations Elect Replacement product portfolio enriched Market share O.E. high-end Summe
Slide 15: Competitiveness program progress
Competitiveness program progress 1H achievements in line with expectations and consistent with programs quarterly targets 2021 2022 E FY ACT Focusing on: FY GUI 1H’22 ACT Modularity Product Cost ~40% in 1H Design speed and virtualization Footprint optimization mostly in 2H Manufacturing Indu
Slide 16: 1H 2022 Net Sales bridge
1H 2022 Net Sales bridge: Record price/mix confirmed for the second quarter in a row; solid High Value performance € million 3,197 135 2,565 523 (25) Standard 72% High Value 72% 1H’21 Δ Volumes Δ Price/mix Δ Forex 1H’22 High Value Standard o/w Organic 1H’22 5.8% -1.0% -8.8% +20.4% +5.2% +24.6% +19.4
Slide 17: 1H 2022 adjusted EBIT bridge
1H 2022 adjusted EBIT bridge Profitability supported by price/mix and efficiency covering 1.3x Raw Mat & Inflation headwinds € million Net impact +125 Net impact +214 Net impact -89 (236) 435 15 52 (141) 482 377 (9) (1) adj. EBIT (11) ▬ Commodities -217 margin 14.7% ▬ FX -18 15.1% 1H’21 Volume Price
Slide 18: 1H 2022 Net Income bridge
1H 2022 Net Income bridge Earnings driven mainly by improving operating performance and lower non-rec. / rest. costs € million 0 (18) 52 (38) 233 104 132 Net Income Δ adj. EBIT Δ non rec. / Δ Net income / Δ Financial Δ Taxes Net Income 1H’21 restr. costs loss from equity income / charges 1H’22 parti
Slide 19: 1H 2022 Cash Flow and Net Financial Position
1H 2022 Cash Flow and Net Financial Position Better yoy cash flow trend driven by solid operating performance € million Net Cash Flow (before dividends): -464 (-481 in 1H’21) 3,531 160 Operating Cash Flow: -165 (-273 in 1H’21) 105 104 90 2,907 ▬ Divid. to minorities -24 ▬ Non recurring -36 ▬ FX -45
Slide 20: €2 bn of ESG financing raised in 1H2022
Total Gross Debt structure as of June 30th 2022 € 2 bn of ESG financing raised in 1H2022 confirming our commitment to Sustainability Sound liquidity margin covering maturities until 2H 2024 € million Net Financial Position Gross Debt maturity 4,967 (1,436) 1,335 Liquidity position Loan (1,028) 1,035
Slide 21: Agenda
Agenda 1 KEY MESSAGES 2 PIRELLI & C. – 1H’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 20 1H 2022 Financial Results
Slide 22: 2022 external scenario update: volatility expected to persist
2022 external scenario update: volatility expected to persist 2022 Global GDP Growth 2022 Global Inflation OECD Consumer Confidence +3.2pp Consumer Confidence Index (CCI) -1.7pp 4.4% 7.3% Start of Covid 6.6% pandemic 3.2% 2.7% 4.1% Start of Russia-Ukraine war Feb’22 Apr’22 July’22 Feb’22 Apr’22 July
Slide 23: 2022 Car Tyre market: High Value trend confirmed
2022 Car Tyre market: High Value trend confirmed, strongly outperforming the Standard High Value: O.E. improved trend supported by China and EU; more cautious view on China Repl. (million pcs) WORLD Car tyre market China Car tyre market 1,540 255 247 1,425 1,432 1,426 ≥18" 265 35 233 232 279 299 299
Slide 24: How Pirelli is navigating this scenario
HOW PIRELLI IS NAVIGATING THIS SCENARIO Issues Pirelli’s actions in 2H Fully seizing HV mkt growth leveraging on: • a rich homologation portfolio (strong focus on EV) Demand trend • a regional tailor-made product offering (6 new launches in 2H) • a high service level through 5 dedicated supply cha
Slide 25: Pirelli FY 2022 targets update
Pirelli FY 2022 targets update Price/Mix and FX are driving guidance upgrade € billion 2021 A 2022 E Target @ 10-May-22 Target @ 4-Aug-22 • Vol. ~+0.5%÷~+1.5% Net Sales 5.33 ~5.9 ÷ ~6.0 ~6.2 ÷ ~6.3 Confirmed • Price/mix ~+13.5%÷~+14.5% (old: +10%/+11%) adj. EBIT margin 15.3% ~15% confirmed • Forex +
Slide 26: Agenda
Agenda 1 1Q’22 KEY MESSAGES 2 PIRELLI & C. – 1Q’22 RESULTS 3 FY 2022 OUTLOOK AND TARGETS 4 APPENDIX 25 1H 2022 Financial Results
Slide 27: A globally acknowledged sustainability leadership
A GLOBALLY ACKNOWLEDGED SUSTAINABILITY LEADERSHIP Major ratings (May-22) Last update Score Positioning in the reference sector & 2021 & 2022 77 – GOLD CLASS Top ranking ATX Auto Components 2021 A Max score 2021 Inclusion Max score 2021 AA 6% of the Auto components in AA 2021 4.5 / 5 Top score Automo
Slide 28: Key Car Market Trends: Europe
Key Car Market Trends: Europe Market trend (∆% YoY) 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 2Q’22 Total 91 O.E. 2 -5 -7 -16 -32 -29 42 Replacement 8 6 10 8 5 49 -3 Total (O.E.+Repl.) 5 7 3 4 -7 -2 ≥18” & ≤17” 114 80 O.E. 5 ≥18” 0 3 2 ≤17” -10 -26 -25 -11 -15 -17 -35 -31 52 40 21 23 24 22 16 Replacement
Slide 29: Key Car Market Trends: North America
Key Car Market Trends: North America Market trend (∆% YoY) 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 2Q’22 Total 132 O.E. 0 12 -4 -16 -1 -25 64 Replacement1 11 13 6 0 -5 -5 72 Total (O.E.+Repl.) 7 10 4 3 -5 -7 ≥18” & ≤17” 146 118 O.E. 15 ≥18” 2 7 5 8 ≤17” -11 -18 -11 -22 -8 -9 -34 62 65 Replacement1 15 9
Slide 30: Key Car Market Trends: Asia Pacific
Key Car Market Trends: Asia Pacific Market trend (∆% YoY) 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 2Q’22 Total 36 12 O.E. 3 0 -7 -7 -17 27 4 3 Replacement -7 -1 -6 -14 31 7 3 Total (O.E.+Repl.) -4 -3 -10 -11 ≥18” & ≤17” 53 31 22 O.E. 9 11 0 5 ≥18” -3 -1 -1 -9 ≤17” -9 -19 -9 68 24 Replacement 8 4 5 12 3 -
Slide 31: Key Car Market Trends: Russia, Nordics, MEAI / South America
Key Car Market Trends: Russia, Nordics, MEAI / South America Market trend (∆% YoY) 1Q’21 2Q’21 3Q’21 4Q’21 FY’21 1Q’22 2Q’22 Russia, Nordics, MEAI 144 O.E. 16 17 0 -11 0 -10 51 Replacement 15 12 3 -4 -1 -6 66 Total (O.E.+Repl.) 11 13 2 0 -4 -7 South America 290 O.E. 7 15 15 -13 -8 -14 118 Replacemen
Slide 32: Pirelli financial results highlights
Pirelli financial results highlights € million 1Q 2021 1Q 2022 Δ YoY 2Q 2021 2Q 2022 Δ YoY 1H 2021 1H 2022 Δ YoY Revenues 1,245 1,521 +22.2% 1,320 1,676 +26.9% 2,565 3,197 24.6% Organic Growth1 +19.0% +19.8% 19.4% High Value Revenues (% on total) 72.6% 73.7% 71.2% 70.9% 71.9% 72.2% adj. EBITDA2 267
Slide 33: Pirelli Balance Sheet
Pirelli Balance Sheet € million 30-Jun-2021 31-Dec-2021 30-Jun-2022 Fixed assets 8,888 8,912 9,017 Inventories 957 1,092 1,397 Trade receivables 803 659 936 Trade payables (1,047) (1,626) (1,454) Operating net working capital 712 125 879 % of net sales1 14.1% 2.3% 14.7% Other receivables / payables
Slide 34: Pirelli Cash Flow
Pirelli Cash Flow € million 2Q 2021 2Q 2022 1H 2021 1H 2022 Adjusted Operating income (EBIT1) 209 253 377 482 Amortiz. & depreciations (excl. PPA amortiz.) 99 109 197 214 Investments in tangible and intangible assets (Capex) (63) (67) (153) (116) Increase in right of use (23) (33) (50) (41) Change i
Slide 35: Raw Material costs trend and mix
Raw Material costs trend and mix Main raw materials price trend 71.5 ; +31% YoY 64.2 ; -10% YoY 43.2 ; -33% YoY 70.8 ; +64% YoY 1.365 ; -17% YoY 1.406 ; +3% YoY 1.317 ; -6% YoY 1.678 ; +27% YoY $ / kg Brent Oil (in $ / barrel) Natural Rubber (in $ / kg) yearly avg.; Δ YoY $ / barrel 1.90 115 100 1.6
Slide 36: 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 ▬ Silao – Car Car / Moto ▬ Bollate – ▬ Jiaozuo – Car Cycling ▬ Shenzhou – ▬ Se