Group Presentation Full Year 2003 – Preliminary Results€¦ · · 2017-08-24market share,...

Group PresentationFull Year 2003 – Preliminary Results

Group PresentationFull Year 2003 – Preliminary Results

2

SAFE HARBOUR

This presentation contains statements that constitute forward-looking statements withinthe 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 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 involverisks and uncertainties, and actual results may differ materially from those in the forwardlooking statements as a result of various factors.

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.

3

AGENDA

Group Overview & 2003 Preliminary Results

Industrial Businesses 2003 Preliminary Results

Pirelli & C. Real Estate 2003 Insights

Olimpia

Calendar of Events

4

PIRELLI GROUP STRUCTURE

Main Shareholders (*)

100%100% 100%100% 100%100% 61.1%61.1% 50.4%50.4%

Pirelli EnergyCables & Systems

Pirelli TelecomCables & Systems

Pirelli Tyre Holding N.V. OlimpiaPirelli & C.

Real Estate

(*) An overall 42% stake of the ordinary capital is regrouped in a Shareholders’ Syndicate Pact, confirmed untill 2007

Pirelli & C. SpAPirelli & C. SpA

CamfinCamfin 23.7%23.7%Assicurazioni GeneraliAssicurazioni Generali 4.6%4.6%RCS RCS MediaGroupMediaGroup 4.4%4.4%Fondiaria Fondiaria –– SAI SAI 4.2%4.2%Edizione HoldingEdizione Holding 3.9%3.9%R.A.S. R.A.S. SpASpA 3.9%3.9%MediobancaMediobanca 3.9%3.9%

5

MAIN STEPS TOWARDS AN EFFECTIVE CORPORATE GOVERNANCE

2003: • Convertion into Società per Azioni (Public Limited Company) of Pirelli & C. Sapa• “Group Ethical Code”

2002: • “Code of Conduct in Inside Dealing Issues”• Procedure of compliance with new financial communications ruling (article 150

It.L.D.)

1999: • “Code of Self-discipline Listed Companies”

• Financial Times has included Pirelli among “European Best Practised Corporate Governance Companies”

• Pirelli is included for 2004 in the FTSE4Good and the DJSI

6

2003 PRELIMINARY FINANCIALS RESULTS (m€)

*Ebit including Equity participation : 128 m€(^) Include Settlement Ciena +10m€

IndustrialBusinesses

2003 2002

Pirelli & C. Real Estate

2003 2002

Total(post merger)

2003 2002

Others

2003 2002

5,861

9.5% 7.9%

EBITEBIT margin

Net Sales (as reported)

Net Sales (Organic)

NFP

EBITDAEBITDA margin

6,030 6,346 645 424 4 (52) 6,679 6,718

424 6,233

570 501 79 52 (20)(^) (30) 629 523

9.4% 7.8%

264 162 61* 42 (59) (86) 266 118

1755 2050

4.4% 2.6% 4.0% 1.8%

NOTES:

2003 preliminary results include the effects of Pirelli & C. capital increase and “recesso”, along with the incorporation of Pirelli SpA and Pirelli & C. Luxembourg

Financial and fiscal effects of the merger are retroactive to 1stJanuary 2003

(52)

7

POSITIVE CONSOLIDATED EBIT TREND (m€)

+23+18

+51

+56

00

2020

4040

6060

8080

3Q3Q 4Q4Q1Q 1Q 2Q 2Q

ROS

2003

2002

4.3%

2.5%

4.3%

3.3%

3.3%

0.3%

3.9%

0.8%

3Q 4Q1Q 2Q

2002

2003

∆∆

∆

∆

8

NET FINANCIAL POSITION TREND – YE 2003

Debt Reduction from Operating Activities

2.050 (259)

1.791

(649)

64 38861

9

1.755

NFP YE 2002

Net Opera

ting Cas

h Flow

NFP bef. Extr

aordinary

Items an

d Div.

Net Cap

ital In

creas

e

Dividen

ds

Olimpia

Capita

l Incre

ase

PUT CISCO

Others

NFP YE 2003

48

Net Bala

nceAcq

./

Sale Part

icipati

onsPUT B

Z

43

2.016

NFP before

Capita

l Incre

ase

9

AGENDA




Olimpia

Calendar of Events

10

INDUSTRIAL WORLDWIDE PRESENCE AT A GLANCE

22 CountriesIndustrial Presence

77 FactoriesEnergy 48Telecom 11Tyre 22

(Energy/TLC 4 shared)

33,500 EmployeesEnergy 31%Telecom 7%Tyre 62%

CANADA

USA

AUSTRALIAS.AFRICA (JV)

IVORY C.

ARGENTINA

BRAZIL

VENEZUELA

EGYPT

TURKEY

CHINA

EUROPEEUROPE

INDONESIA

6 Billions €SALES

Energy 2.6Telecom 0.4Tyre 3.0

11

SPARKLE ON INDUSTRIAL ROAD MAP 2002 - 2003

Pirelli Achievements Results

•Resizing of Capacity(12 plant closures: 7 energy, 4 TLC, 1 Tyres)

• Efficiency recovery -Headcount reduced by 12% (M+S by 30%)-Material Consumption reduced by 4%

• Process/Product Innovation: MIRSfully implemented in Rome (USA)

• EBIT increased from 162 m€ to 264 m€

• Gross efficiencies more than 350 m€ in two years

• Operating free cash flow 1 bn€ in two years

… with unchanged R&D commitment (3.5% of sales)

12

INDUSTRIAL CORE BUSINESSES

- Utilities- HV/Submarine- General Market- Special Cables

Pirelli EnergyCables & Systems

-Cables & Fibers- Submarine Systems

- BBA Systems- Photonic Products

Pirelli TelecomCables & Systems

- Car- Moto- Truck+Agro- Steel Cord

Pirelli TyreHolding N.V.

13

PRELIMINARY INDUSTRIAL BUSINESSES RESULTS (m€)

EBITEBIT margin

Net Sales (as reported)

Net Sales (Organic)

Operating Free Cash Flow

EBITDAEBITDA margin

6,030 6,346 - 5.0%6,030 5,861 2.9%

570 501 13.8%

264 162 63.0%4.4% 2.6%

450 538

∆Exchange Rates: -6.0%

Metal Price: -0.3%

Perimeter: -1.6%

Organic Variation: 2.9%

Volume: 3.8%Price/Mix: -0.9%

Total Variation: -5.0%

2003 2002 Var(%)

Strong recovery in profitability

9.5% 7.9%

14

PRELIMINARY ENERGY SECTOR RESULTS (m€)

EBITEBIT margin

Net Sales (as reported) 2,640 3,021 - 12.6%

83 55 50.9%3.1% 1.8%


Metal Price: -0.5%

Perimeter: -3.3%

Organic Variation: -4.3%

Volume: -1.6%Price/Mix: -2.7%


2003 2002 Var(%)

On track with new major high voltage projects worldwide

Net Sales (Organic) 2,640 2,759 - 4.3%

15

INNOVATIVE TECHNOLOGIES MATRIX 0-9

AIR BAGTM

Protection SystemMechanical-Light & Skin

COMPACTTM

Highest specific A.C & D.C. power.

Cable system & installation

OPTO POWERTM

Network managementCables with sensor devices

PIT STOPTM

High Speed InstallationSelf Systems

MOBYSHigh temperature –

Extreme performance for Mobile Systems

ROUNDFLATFlexibility &Versatility

Flame retardant

AFUMEXTM- LSOHTM

Transparent smoke & zero halogens Eco-safety

FIRE FITTM - FPWorking in Fire

Extreme Fire Performance

ZEMZero Electro Magnetic

emission

From oil-field technology to high-tech, eco-friendly, dry solid polimer

16

PIRELLI TELECOM SECTOR (m€)

EBITEBIT margin

Net Sales (as reported) 425 468 - 9.2%

(39) (84) n.m.n.m. n.m.


Organic Variation: -3.6%

Volume: 17.9%Price/Mix: -21.5%


2003 2002 Var(%)

Broadband ADSL equipment sales: 29,5 m€ in 2003 vs.

8,2 m€ in 2002

Net Sales (Organic) 425 441 - 3.6%

17

TELECOM SECTOR: 2003 ACHIEVEMENTS

• New business MODEL :Cable - Fiber - Submarine systems - Access systems - Photonic Components

• Diversify business towards ACCESS Market (Age, ADSL gateway) leveraging on LABS, Pirelli and TI, technical capabilities

• Sustain/repositioning FIBER PRICE

• EBIT strongly bettered but still negative with a clear improvement forecast

18

NEW TELECOMS DEVELOPMENT…

Radio Over Fiber

Sewer Systems

OPGW Cable(Optical Ground Wire )

FiberOptic

FiberOptic

ROF Module

Radio signal

CentralBase Stations

Fiber or Copper

RNC/Radio Network

Controller

ROF Module

ROF Modules

Blown Fiber

Broadband Access Systems

… Leading traditional and high tech businesses

19

PIRELLI TYRES SECTOR (m€)

EBITEBIT margin

Net Sales (as reported) 2,965 2,857 3.8%

220 191 +15.2%7.4% 6.7%


Organic Variation: 11.4%

Volume: 7.3%Price/Mix: 4.1%

Total Variation: 3.8%

2003 2002 Var(%)

All additional capacity will be realized at low cost sites, thus furtherly reducing average production cost per tyre

Net Sales (Organic) 2,965 2,661 11.4%

20

PIRELLI TYRES BRAND POSITIONING

Tyre Sales Consumer Sales

70%70%30%

Consumer

Industrial Performance

Sales Mix Enrichment

2001 2002 2003 2004

MIX INDEX+24%

+15%

100

+10%

+10%

UHP

MOTO

SUV

CAGR

OEM Portfolio

LOW SECTION

(High Mix Truck)

21

THE AMERICAN CHALLENGE

Replacement Coverage

New Factories

RETAIL WHOLESALERS

GEO

RG

IA, U

SB

AH

IA, B

RA

ZIL

Supply Chain

02 03 04

WEEKLY SUPPLY SYSTEM FROM LATAM

“STOCK TARGET” DRIVEN

SHIPMENT TRACKING

PRODUCT RANGE RATIONALISATION

NEWNEW

22

AGENDA




Olimpia

Calendar of Events

23

Most important strategic initiative

Partner of choice in Italy for leading

international investors

AN INNOVATIVE MANAGEMENT COMPANY

Pirelli & C. S.p.A. Public

Fund Management Service ProviderAsset Management

• Corporate offices in Milan, Rome and Naples, more than 1.500 employees• More than 250 Pirelli Franchising Agencies in Italy• 30.1bn**€ of assets under management; (of which 10. 2 bn€ co-investment) • Over 75.000 tenants (over 100.000 lease contracts)

61,1% + 5,6% (*) 33,3%

90% 100% 100%

(*) Treasury stocks owned by Pirelli & C. Real Estate(**) Figures based on market values as of June 30th 2003 as determined by

CB Richard Ellis and including the Fonsai portfolio at BV

Leadership in a full range of real estate

services

1.1 bn€ Market Cap.

24

PIRELLI & C. REAL ESTATE BUSINESS RESULTS (m€)

Net Aggregate Production value (Euro m)

1.525* 1.297* 18%

Profit and loss2003 2002 Var(%)

EBIT including Resultsfrom Equity Participations (Euro m)

128 102 25%

• Asset Management: sales reached 2 bn€ (BV 1.6 bn€) and acquisitions 1.6 bn€• Services: production value reached 322 m€ (+61% YoY)

• Net Financial Position 2003 9 m€ (-12 m€ in 2002)

• Net Financial Position not including shareholders loans 224 m€ (167 m€ in 2002)

* 645 m€ sales in 2003 vs 424m€ sales in 2002

25

CONSOLIDATED 3 YEARS TARGET: EBIT INCL. EQUITY PARTICIPATION

1999 2002

102

2005E

SPAM Fees

AM

20

SP

AM Fees

AM

3 year CAGR 20 - 25%

3 year CAGR 20 - 25%

2003E

SP

AM Fees

AM

2004E

SP

AM Fees

AM

SP

AM Fees

AM

3 year CAGR 72%

3 year CAGR 72%

128

26

FUND MANAGEMENT

• Public Office FundTECLA: 808 m€

• Private InstitutionalOffice FundCLOE: 800 m€ (c.a)

• Retail Fund500/700 m€

• Industrial Fund500/600 m€

• Hotel Fund500/600 m€

• Offices Fund900/1000 m€

H1-2004H1-2004 H2-2004EQ1-2005E H2-2004EQ1-2005E 2005E2005E

Other Project Under Study: Residential Fund

27

AGENDA




Olimpia

Calendar of Events

28

OLIMPIA CAPITAL INCREASE MAIN FEATURES

Total amount 770 m€

First tranche proceeds (700 m€) used to purchase roughly295 m TI ordinary shares at an average price of 2.37 € per share

Second tranche (70 m€) used to subscribe Holinvest capital increase

New shares issued: 770 m at nominal value (1€)

29

OLIMPIA CAPITAL INCREASE MAIN EFFECTS

Olimpia Capital Increase will grant:

•Substantial strengthening of Olimpia P&L and balance sheet

•Increase in TI stake to 17% (1,752 m ord. shares)

•Reduction of the TI book value in Olimpia (5.2 € per share vs previous 5.8 €)

30

AGENDA




Olimpia

Calendar of Events

31

CALENDAR OF NEXT EVENTS

25th March: Full year 2003 results & conference call Pirelli & C.

11th May: Annual general shareholder Meeting

22nd March: Full year 2003 results & conference call Pirelli RE

Group PresentationLondon, 24th-25th February 2004

Group PresentationLondon, 24th-25th February 2004

Group Presentation Full Year 2003 – Preliminary Results€¦ · · 2017-08-24market share,...

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