H1 2 0 0 2 Results Milan, September 9 th , 2002 0
Presentation Agenda • Group Overview - Business Environment and Strategies - Pirelli H1 2002 Group Results • Sector Overview • Questions and Answers 1
Business Environm ent and Strategies ➤ Recessive economy; slow recovery ➤ Recessive economy; slow recovery ➤ Cut of Telecom Carriers’ capex ➤ Cut of Telecom Carriers’ capex ➤ Investments of Energy utilities still lagging ➤ Investments of Energy utilities still lagging ➤ Tyre industry still driven by high-end products ➤ Tyre industry still driven by high-end products ➤ Continuous effort in cost reduction: ➤ Continuous effort in cost reduction: ➥ 87 ml gross efficiencies ➥ 87 ml gross efficiencies ➥ five factories closed in the last 12 months ➥ five factories closed in the last 12 months ➥ 6.4% headcount reduced vs. H1 2001 ➥ 6.4% headcount reduced vs. H1 2001 ➤ Group investments focused and rationalised: capex/depreciation ratio reduced from 1.9x to 0.9x ➤ Group investments focused and rationalised: capex/depreciation ratio reduced from 1.9x to 0.9x ➤ Focus on innovation: R&D expenditure from 2.8% to 3.4% of total sales ➤ Focus on innovation: R&D expenditure from 2.8% to 3.4% of total sales 2
Pirelli Group Shareholder Structure Camfin 29.80% Camfin 29.80% Serfis 9.48% Serfis 9.48% Stakes are expressed as a percentage of voting Generali Group 6.21% Generali Group 6.21% PIRELLI & C. rights, according to the latest information HDP 5.94% HDP 5.94% available to the company SAI 5.61% SAI 5.61% Ed. Holding 5.28% Ed. Holding 5.28% Mediobanca 5.08% Mediobanca 5.08% RAS 5.07% RAS 5.07% E-Biscom 4.79% E-Biscom 4.79% 59.7% 59.7% 39.1% 39.1% BZ Group Holding Limited BZ Group Holding Limited Treasury shares at June 2002: ≅ 1.95 ml (4.8% of voting capital). 7.7% (* ) 7.7% (* ) Treasury shares at June 2002: ≅ 163ml (8.5% of voting capital). 100% 100% 100% 100% 100% 100% 60% 60% Pirelli Cavi e Pirelli Cavi e Pirelli Tyre OLIMPIA (**) Sistemi Energia Sistemi Telecom Holding N.V. (*) A 2.5% stake of voting rights is exercised according to the will of Mr. Tronchetti Provera. On the same 2.5% stake BZ Group holds a put option and Pirelli & Co. holds a call option, which can both be exercised on March, 2003 at the average price of the ninety previous stock market sessions. (**) Equity Investment. 3
Pirelli H1 2 0 0 2 Group Results Consolidated Sales at June 30th, 2002: Euro 3,352 ml (-15% YoY) Products Geographical Breakdow n Telecom Cables 43% 8% & Systems Rest of Europe 18% Italy 44% Tyres Australia, 14% Africa, Asia Energy Cables Latin & Systems 48% 13% America 12% North America 4
Pirelli H1 2 0 0 2 Group Results Olimpia - H1 2002 P&L H1 02 H1 01 var. Costs for services (1) 3,352 -15% 3,946 Sales Financial interest (87) 93 -62% EBIT 243 Net loss (88) Balance sheet 2.8% 6.2% EBIT Margin Total assets 8,676 2 Net profit (w/o Olimpia) 200 Equity 5,169 Net result (88) (52) 200 Net profit Net financial position 3,595 60% 60% 1,618 (2,225) Net debt Total liabilities 8,676 Book Value of Olivetti shares 3.14 Euro p.s. Fully diluted book value 2.79 Euro p.s. PIRELLI PIRELLI PIRELLI PIRELLI PIRELLI PIRELLI Energy Cables Telecom Cables Energy Cables Telecom Cables Tyres Tyres & Systems & Systems & Systems & Systems H1 02 H1 01 var. H1 02 H1 01 var. H1 02 H1 01 var. 284 812 -65% Sales 1,614 1,691 - 4.6% Sales Sales 1,488 1,477 +0.7% (20) 82 n.m. EBIT EBIT EBIT 111 111 - 26 20 + 30% -7.1% 10.1% EBIT Margin 1.6% 1.2% EBIT Margin EBIT Margin 7.5% 7.5% (33) (*) Net profit Net profit Net profit 55 51 (1) (*) 409 (*) Net debt Net debt Net debt 607 709 521 (*) (*) In H1 2001 the whole Cables and Systems division accounted a Euro 117 ml net profit and Euro 729 ml net debt. 5
Pirelli Group Profit and Loss ( Euro m l) H1 2002 H1 2001 Var. % Q2 2002 Q2 2001 Q1 2002 Var. % Var. % Net Sales 3,352 3,946 -15% 1,664 2,013 -17% 1,688 -1% EBITDA 278 432 -36% 141 137 -3% 204 -31% Ebitda Margin 8.3% 10.9% 8.5% 8.1% 10.1% EBIT 93 243 -62% 51 42 +21% 109 -53% Ebit Margin 2.8% 6.2% 3.1% 2.5% 5.4% Financial income (charges) (*) (82) 33 n.m (47) (35) n.m. 13 n.m. Equity participation results (54) - n.m. (27) (27) n.m. - n.m. Extraordinary items 24 52 -54% 24 - n.m. (13) n.m. Fiscal charges (33) (128) -74% (14) (19) -26% (57) -75% Net Result (52) 200 n.m. (13) (39) n.m. 52 n.m. Net Debt 1,618 (2,225) 1,618 (1,406) (2,225) Equity 5,207 5,870 5,207 5,629 5,870 (*) Including Euro 21 ml of trading securities devaluation. 6
Pirelli Group Profit and Loss - Ebit variations ( Euro m l) Labor cost gross reduction = 67 Labor cost gross reduction = 67 Material efficiencies/other fixed costs = 20 Material efficiencies/other fixed costs = 20 Total gross efficiencies = 87 Total gross efficiencies = 87 Volume effect on variable costs = (21) 243 Volume effect on variable costs = (21) = 66 = 66 EN = + 5 EN = + 5 (8) TLC = + 25 TLC = + 25 TYRE = - 9 TYRE = - 9 + 66 + 21 + 10 93 (118) (39) (23) (59) EN = - 14 EN = - 14 TLC = - 130 TLC = - 130 TYRE = + 26 EN = - 6 TYRE = + 26 EN = - 6 TLC = - 65 TLC = - 65 TYRE = + 32 TYRE = + 32 Labor Supply Prices Exchange Volume Materials Unitary labor Other H1 2001 efficiencies/ H1 2002 agreement (excl. metal)/ cost Materials/ with Cisco Mix Other fixed costs 7
Main I ndustrial Achievem ents - Focus on R&D • Launch of CCM, the new fully automatic mixing room • First homologation for MIRS ™ motorcycle tyres on the Aprilia RSV 1000 • Operational opening of the new state-of-the-art MIRS plant in Georgia (USA) • Agreement for optical nanotech research with MIT • Introduction of a new family of products for fibre-to-the-business, premises and LAN and FTTx applications, creating a distinctive new family of products (FineLight™ Giga fibre and FineLight™ Base fibre) CCM + MI RS Bicocca CCM + MI RS Bicocca CCM + MI RS Bicocca Overall cumulative investment • ~ Eur 50 ml • ~ Eur 30 ml up to 30/6/02 • ~ 120 R&D Headcount • ~ 73 R&D Headcount R&D Headcount • 13.000 (of which 2.500 clean rooms) • 9.200 (of which 2.600 CCM Research Area) sqm facilities 8
Presentation Agenda • Group Overview • Sector Overview - Energy Cables - Telecom Cables - Pirelli Tyres • Questions and Answers 9
Pirelli Energy Sector BUSINESS ENVIRONMENT PIRELLI ACTIONS - Significant progress in cost reduction (fixed costs - Negative economic trend: delay in the reduced 5% vs. H1 ‘01); three plants closed in H1 ‘02; recovery of utility investments until end-2002 headcount reduced by 7%YoY - Restructuring efforts needed for all major - Focus on new technologies and product innovation competitors - Strong commitment on supply of fully integrated - Still limited volumes and price pressure in systems General Market segment - Investments more focused on speciality and high - Stronger sales in Pacific Asia hedged margin products (capex/depreciation from 1.3x to 0.6x ) decline in Europe and LatAm Margins recovering in 2Q 2002 10
Energy cables and system s:business structure % sales Energy C&S Energy C&S 1200 3.50% 3.00% 1000 2.50% Utilities 46% 800 2.00% Sales 600 ROS (%) 1.50% 400 1.00% General 33% 200 Market 0.50% 0 0.00% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 Industrial 21% 31/12/2001 30/06/2002 -5.1% Employees 14,135 13,421 Factories 50 47 11
Energy Cables: Profit And Loss ( Euro m l) H1 2002 H1 2001 Var. % Q2 2002 Q1 2002 Var. % Q2 2001 Var. % Net Sales 1,614 1,691 -4.6% 818 796 +2.8% 876 -6.7% EBITDA 77 69 +11.6% 49 28 +75% 32 +53% Ebitda margin 4.8% 4.1% 6.2% 3.5% 3.7% EBIT (*) 26 20 +30% (*) 25 1 n.m. 8 +213% Ebit margin 1.6% 1.2% 3.1% 0.1% 0.9% Currency - 2.3% Volume - 1.8% Net efficiencies offset the negative contribution of Metal prices - 2.8% volume/mix effect Prices/Mix + 2.3% TOTAL - 4.6% (*) Including 10 ml Euro related to a settlement with a major customer. 12
Pirelli Telecom Sector BUSINESS ENVIRONMENT PIRELLI ACTIONS ➤ Timely restructuring and cost cutting led to leaner ➤ Collapse of Terrestrial and Submarine Long and more flexible capacity installed; one plant closed in H1 2002, headcount reduced by 35% YoY Haul market suffering ➤ Limited exposure to vendor financing and ➤ Very limited visibility to forecast sales diversified client base volumes in near terms ➤ Significant cut of Capex (from Euro 206 ml in FY ‘01 ➤ Continue price pressure to 52 ml in H1 ‘02); focus on R&D and product ➤ New businesses (FTTX and Access Network) innovation / new technologies, through research growing but not enough to offset decline in unit Pirelli Labs fibre volumes ➤ Focus on sales of innovative higher value products Mkt share gained on direct competitors in EU and NAFTA Cables Performance above market average 13
Recommend
More recommend
