Download - Pirelli Industrial Plan 2009-11
MOVING TOWARDS “GREEN PERFORMANCE”
Marco Tronchetti ProveraChairman and CEO Pirelli Group
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Disclaimer This presentation contains statements that constitute forward-looking statements and does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned and is directed to professionals of the financial community.
These statements appear in a number of places in this presentation and include statements regarding the intent, belief or current expectations of the customer base, estimates regarding future growth in the different business lines and the global business, market share, financial results and other aspects of the activities and situation relating to the Company.
Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward looking statements as a result of various factors. Consequently it is recommended that they be viewed as indicative only.
Analysts are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation.
Pirelli & C. SpA undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Pirelli & C. SpA business or acquisition strategy or to reflect the occurrence of unanticipated events.
Statement The Manager mandated to draft corporate accounting documents of Pirelli & C. SpA, 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 results, books and accounting of the Company.
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In the next three years we are going to use the
discontinuityof the external scenario to
transformPirelli Group
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Agenda
Global economic scenario
Pirelli Group transformation
Pirelli Group targets
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Not all fundamentals are negative
Less investmentsLess employment
Less consumption
Low inflationLow interest rates
Low cost of raw materials
WORLD GDP INTEREST RATESEurozone USA
INFLATION
Source: Global insight, Monthly Update, Jan. ‘09
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A global industrial company can better capture opportunities
BRASIL GDP
CHINA GDP
RUSSIA GDP
EUROZONE GDP
USA GDP
08 09 10 11
Source: Global insight, Monthly Forecast Update, Jan. ‘09
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Governmental institutions are massively financing publicly-funded recovery plans, towards a Green Economy
Consumer Subsidies
>700 USD/bn financial system bail-out to keep credit alive
17 USD/bn package to rescue Detroit – big 3
Strong claims by new US Administration:
1 million electric cars on the road by 2015goal to double production of clean energy to >10% by 2012
Government support to Car purchases in Italy (~2 €/bn)
~ 6 €/bn support of public loans to french carmakers
“20/20/20” Energy Plan
US EUROPE
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GREEN ECONOMYfinally taking off, thanks to concurring factors
pulling in the same direction
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Agenda
Global economic scenario
Pirelli Group transformation
Pirelli Group targets
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Pirelli strengths
Capacity of matching innovation, technology and industrial management
Quick success in green-field start-ups
Global brand
Rooted multinational player, also present in emerging markets
Financial strength
Sales in 160 countries, operations in 12
Examples
Among the best 10 Global Italian brands*Estimated brand value* 1.5€/bn (the highest in the industry)
1 €/bn NFP ‘08YE 0.8 €/bn committed credit lines,not drawn* “Best Global Brands 2008" by Interbrand ranking
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5 transformation levers
CompetitivenessBroad geographical coverageOpen collaborationLeadership team
Portfolio reshaping
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Adjust to global recession
Develop distinctive customer value propositions
Leaner business models
“Green Performance” Tyres at LOWER COST
Green auto-parts (emission reduction systems) at LOWER COST
All our companies are currently undergoing competitivenessprograms
>140 €/mln Group restructuring costs,
already generating benefits from 2009
Real Estate: -25% ’09 YoY fixed costsTyre Break Even Point: -200 €/mln vs.
’08YE*
* At sales level
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Broad Geographical Coverage
EUROPE
MIDDLE EAST
ASIA PACIFIC
NORTH AMERICA
LATIN AMERICA
Group RevenuesContribution
‘08
51%
10%
4%2%Of which China
6%
29%
CAGR ’09-‘11
stable
stable
+9.9%+22%
+6.3%
+2%
Revenues
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Creating scale in assets
Pirelli-Brembo-Magneti Marelli in Intelligent Tyre SystemsCo-development with STM, Comau, Sinteco, Evotek and many other industrial players
Joint Research programs with ENEA, all leading Italian, European, Russian, Chinese, US universities (e.g. Berkeley)
Key innovation areas: biomaterials, nanocomposites, new fibers, FEA
JV Ambiente / Cleantech fund
Open collaboration
Examples
Integrated customer solutions
Accelerated innovation
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Leadership team
43Dynamic leadership (avg. age of manager)
Our managers international exposure(with significant experience abroad)
Young talent pool(high-potential under 30)
International career pathof management/staff (in Pirelli)
Leading edge technical capability (R&D people)
GROUP TYRE 09-11 KEY PROJECTS
50%
>250; 3% of total
3% p.y.
>1,100
>140 managers
>200 managers
>20%
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50%
>220; 4% of total
4% p.y.
>1,000
√
√
√
√
√
√
√
√
New reward scheme for 3YP
Leadership team(managers involved to beat crisis)
Equal opportunities(% women managers)
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’09-’11 Transformation Path
100 Pirelli Tyre51 Pirelli Eco technology
100 Pirelli Labs51 Pirelli Ambiente
56 Pirelli Real Estate100 Pirelli Broadband Solutions
1.3 Telecom Italia34.5 CY Optics
5 Alcatel Submarine
~2 CAI32.7 Eurostazioni
1.8 Mediobanca5.3 RCS
Portfolio reshapingIN
DU
STR
IAL
FIN
AN
CIA
L
% Company
- Photovoltaic Energy
- CDR (Waste-to-Energy)
Core Business
Start-up engines
Towards consolidation play
Cash
Hold Shares
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a success story…
Superior technology, universally acknowledged
Fast, Focused, Flexible business model (1,500 headcounts reduction in West Europe already identified in 2H 08)
Dynamic and skilled Management Team
219
276
329 342 358
250 (*)
* before restructuring costs
Tyre strategic guidelines
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Tyre strategic guidelines
a strong rebound story, breaking new frontiers in “Green
products”
a success story, keeping best value
in high-growth markets
Preferred partner of premium and prestige OE brands
Redesign of the industrial footprint to increase competitiveness
Establishing itself into the Green Performance segment
CONSUMERINDUSTRIAL
Exploiting a unique cost-competitiveplatform
Leveraging a favorable balance in markets/mix in emerging countries
Leader in market share & performance (mileage, retreading, weight) in our core markets
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Eco technology strategic guidelines
What:
Why:
Where to:
Ready-to-use retrofit technology for Particulate Matter reduction with large IP (Industrial Property) portfolio
Pirelli “common vision” on Green Transportation (beyond Tyres)High intrinsic profitability (CM>30%) in a new fast-growing marketStrong synergies:
worldwide sales and customer support network of Pirelli tyrebrand identity
In 3-5yrs, a leader in emission control technology in Europe / low emission zones, also for major Vehicles-OEMs
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Labs & Ambiente strategic guidelines
Continuous search for distinctive innovation technologies
First-step incubator for all Group businesses
Strong research capabilities make Pirelli a leader in innovative product & process patents
3.000 patents (~60 family patents in 2008)Patents plan 2009-2011 is 2x the average of the last 10 years
Portfolio reshaping:Opportunity on PV* Energy (technology-driven business)Site Remediation: tactical upsideCDR (Waste-to-Energy): STOP LOSS
PV* business with very good perspectives:
Solid partnership / lower riskSubsidies ensure long-term profitabilityStrong pipeline / generation contracts (~50 MW)
LABS AMBIENTE
Photovoltaic
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Solid Proprietary Technology in a growing market (Broadband Communication / Access / Networking)
High loyalty of existing customers,track record in acquiring new customers
Profitable operations, start-up phase concluded
Open to aggregations / partnerships to address diversification into new applications & industry domains
CURRENT POSITION THE WAY FORWARD
Broadband Solutions strategic guidelines
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Real Estate repositioning
A TOUGH SCENARIO PIRELLI RE’S REPOSITIONING
FROM… … TOOngoing impact of the “credit crunch” and capital market liquidity crisis
A difficult deal-makingenvironment:
Decline in RE investments and transactionsHigher average times for disposals
Investors interests back to resilient markets and only on reliable players
Extensive use of
structured financeDeleverage through
asset disposal and
portfolio optimization
Portfolios oriented towards
trading strategiesComplex business model
Portfolios progressively
oriented to mid-long termRightsizing
Organization by product
with Pan-Europeanapproach
Country-based organization with presence in areas less exposed to real estate volatility (Italy and Germany)
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Real Estate roadmap towards an optimized portfolio and structure
PERSONNEL EVOLUTION (FTE)
Ongoing portfolio rationalizationSelective growthFocus on core products / markets:Italy, Germany/Poland
**
**
** Excluding Non Performing loans
11.3
14.4
2007A 2008A 2009E 2010E
~ stable
2011E
AUM EVOLUTION (€/bn)***
Extensive cost-cutting
Focus on key services and activities
Productivity and result traceability
NPL
Disposals
RE
2,956
1,168
248
1,540
1,473237
1,236800*
800
2007 2008A 2009E
***Book value* Including 230 of outsourcing
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A sounder equity structure
400 €/mln capital increase
Rationale
P&C does believe in Pirelli RE asset quality
P&C provides a solid basis to allow Pirelli RE to change its model from trade to hold
Conditions
Issue price with reference to theoretical ex-rights price (“TERP”) of Pirelli RE ordinary shares with a discount in line with international best practices for similar transactions
P&C underwrites its pro-quota and will underwrite any shares which, at the end of the offer procedure, are not underwritten.
P&C converts part of its financial credit into Pirelli RE equity. The transaction may be completed within 1H09
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Real Estate strategic guidelines
BACK TO BRICKS
Reshaping the business model:Core Italian and GermanReal Estate assetsLean organizational structureSound financial structure
Generating value leveraging on the good quality of the real estate assets& on the company know how
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Agenda
Global economic scenario
Pirelli Group transformation
Pirelli Group targets
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Group targets
€/bln
2008yeunaudited figures
4.6
19%
2009 2011
Group Revenues
Of Which “Green Performance”
4.7–4.8
40%
~4.3
25%
EBIT %
After continuous restructuring 1%* ~ 8%4.5-5.0%
CAPEX 0.3 ~0.7 in 3y plan
NFP 1.0 1.0 <0.8 before
dividends* 4,1% before restructuring costs (144 € /mln)
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