Disclaimer. Statement

Transcription

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2 Disclaimer This presentation contains statements that constitute forward-looking statements based on Pirelli & C SpA s current expectations and projections about future events 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 expressed in or implied by these forward looking statements as a result of various factors, many of which are beyond the ability of Pirelli & C SpA to control or estimate precisely. Consequently it is recommended that they be viewed as indicative only. Analysts arecautioned not to place undue reliance on those forward looking statements. t t which h speak only asof 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. Francesco Tanzi, 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. 1

3 Agenda Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 2

4 Pirelli 1H 2010 Key Messages Pirelli Real Estate Separation Plan fully on track. Shares assignment within October 2010; Marked Operating Management improvement in the Real Estate and above all in the Tyre business; More expeditious Tyre Investment Plan to optimize market opportunities and further strenghten position in emerging markets and high-end products; Good debt exposure & fully exploitable financial potentialities; Second Target Upgrade in the last six months. 3

5 Pirelli back to F1: fuelling intangible value creation BACK TO WHY: After 20 years, Business Model changed WHY: Top TV event of the year. In 2011, an estimated global audience of 2 bln people, 50% from emerging markets WHY: F1 and PIRELLI values match perfectly: technological innovation, performance, premium-products and International standing OUTLINE BUSINESS MODEL EXPECTED RETURN Product and logistic costs and overheads: F1 teams contribution worth over 16mln/euro per year Advertising costs: sponsored by PIRELLI through transfer of existing budget No impact on P&L Communication, approximately 25 times the cost (average sponsorship return to Pirelli + 5 times) Strong partnerships with high-end end makers ORGANIZATION Brand new F1 Business Unit. International Team with top skills Production in Turkey (Izmit plant) 4

6 Agenda Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 5

7 Pirelli Key Financial Results Revenues Organic growth (**) EBITDA before Restruct. Costs Margin 1H 10 YoY 2Q 10 2Q 09 YoY 2Q RESULTS KEY DRIVERS 2, H 09 restated* % 11.3% 2, % +16.8% 1,264.0 restated* +34.3% % 12.2% 1, % +17.0% Core business value performance is driving +30.3% Pirelli & C top line growth EBIT before Restruct. Costs Margin Restructuring Costs EBIT Margin % 6.3% (7.9) (9.7) % 5.9% +56.7% +62.8% +2.1 p.p % 7.3% (5.3) (6.2) % 6.7% +45.9% +51.3% +1.7 p.p. Profitability y back to precrisis level despite negative raw materials impact Income before discontinued operations (Adj. Income) Income from discontinued operations (256.4) (42.7) (257.4) (26.1) Pirelli Re Net Income (20.4) (42.7) (21.4) (26.1) PRE Fair Value adjustment (202.9) - (202.9) - Goodwill write off PRE*** (32.9) - (32.9) - Direct Separation costs (0.2) - (0.2) - Net Income post minorities Net Debt (165.5) , vs 09 y.e. (204.7) (3.2) vs March 10 Pirelli Re adjustment to market value ( / share vs 0.75 /share) is a non-cash item affecting Net Income NetDebtalmoststable stable QoQ despite increasing Capex and Dividend payment (*) Pirelli RE has discontinued d operations since June 30, 2010, 2009 figures have been restated t for the purpose of data homogeneity (**) Homogeneous terms variations, excluding exchange rate effects (***) Write off of Goodwill related to 2.6 mln of Pirelli RE shares bought on the market in 2007 and

8 Pirelli EBIT trend Organic EBIT: Q (0.0) 0) (7.8) 2Q 09 Tyre Eco Tech Broadband access Other activities Restruct. Costs 2Q 10 Organic EBIT: (1.2) (6.7) 1H H 09 Tyre Eco Tech Broadband access Other activities Restruct. Costs 1H 10 7

9 Pirelli Net Income from continuing operations 1H 10 vs 1H (27.5) H 09 EBIT Results from particip. financial income/charges taxes 1H 10 8

10 Pirelli 1H 10 Net Financial Position EBIT before restr. costs Dep/Am: Capex: NWC & others: (50.1) (156.7) (10.0) (120.2) (24.9) Net of Pirelli RE EBIT before restr. costs Dep/Am: 54.0 Capex: (85.4) NWC & others: 40.7 FY 09 Operating Fin. Inc./Expen. Cash out Net cash flow Others 1Q 10 Operating Fin. Inc./Expen. Cash out Cash Flow & taxes Restr. Costs PRE Cash Flow & taxes Restr. Costs Net cash flow PRE Dividends Others 1H 10 9

11 Pirelli Debt Structure as of June 30, 2010* Net Financial Position Gross Debt Maturity 1, Committed Line Drawdown Other Borrowings Gross Debt Fin. Assets** Net Fin. position Gross Debt maturity as of Jun. 30, % 5.5% 44.2% 29.1% Total Committed Lines Not Drawn 1H & beyond Total 1, *Data related to Continuous Operations **Financial receivables, cash and cash equivalents 10

12 Pirelli &C 2010 FY targets update /bln 1H 2010 (restated exc. PRE) 2010 targets excl. PRE (March 10, 2010) st Targets upgrade (May 5, 2010) nd Targets upgrade (July 29, 2010) Group Revenues EBIT % post restructuring 8.0% 6.5-7% 6.5% ~7% Capex 0.14 >0.3 confirmed >0.35 NFP * confirmed confirmed (*) Including 81.1 cash out for dividends 11

13 Agenda Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 12

14 Pirelli Tyre performance 1Q 10 YoY% 2Q 10 YoY% 1H 10 YoY% Revenues EBITDA (before restruct. costs) margin EBIT (before restruct.costs) margin EBIT (after restruct.costs) margin 1, % % 13.2% % 8% +1.6 p.p % pp p.p % 8.6% Net Income 50.1 Revenue drivers Price/Mix Volume +2.4 p.p. 1, % % +22.9% +33.5% +1.2 p.p % +1.9 pp p.p % 10.0% 1Q 10 2Q % +17.4% +2.0 p.p. 2, % % +21.4% +34.5% +1.3 p.p % +2.1 pp p.p % 9.3% +2.2 p.p. n.m % % +10.1% +7.5% 1H % +12.3% High quality operating performance with a sound combination of volumes & value Well grounded premium segment position Leading pricing policy Increased exposure to emerging markets in Q2 (52% of Revenues, +2 pp yoy) Highest Ebit ever despite significant raw materials cost impact Rev. (before exch. rate impact) +18.8% +17.6% +18.2% Exch. Rate +1.0% +5.3% +3.2% 13

15 Pirelli Tyre: a solid positioning to capture growth Sales by region 2Q 10 Actions and Results % on sales 100% 100% Yoy growth Europe 42% 39% Mature Europe Benefiting from Premium and Prestige OEMs sales increase Green Performance driving replacement sales Markets +17% North America High double digit revenues growth with a focus on selective customers and OE platforms. North 9% America 8% New sales & marketing office in New York in 3Q to promote Pirelli brand South America MEA Asia Pacific 32% 36% 11% 10% 7% 6% 2Q 09 2Q 10 Emerging Markets +29% LatAm Seizing Industrial segment solid growth on both Replacement and OE Consolidating leadership MEA & Asia-Pacific Constrained capacity limitingiti sales 14

16 Pirelli Tyre 1H 10 operating performance (74.9) (2.8) 2Q 2010 Raw materials: (62.1) Labour / energy / other: (12.8) EBIT 2Q 09 (before restr. costs) Price mix Volume Cost of inputs Efficiencies Depreciation/ other costs Exchange rate EBIT 2Q 10 (before restr.costs) (89.0) 12.9 (10.9) (3.0) H 2010 Raw materials: (68.8) Labour / energy / other: (20.2) EBIT 1H 09 (before restr. costs) Price mix Volume Cost of inputs Efficiencies Depreciation/ other costs Exchange rate EBIT 1H 10 (before restr.costs) 15

17 Pirelli Tyre NFP evolution EBIT (before restr. costs): 98.1 Investments: (47.6) Depreciation: 48.3 NWC & others: (132.2) EBIT (before restr. costs): Investments: (84.5) Depreciation: 50.4 NWC & others: , (6.0) 1, (5.6) ,027.3 (130.0) NFP: 95.2 NFP: 90.4 FY 09 Operating Financial Restructuring Other 1Q 10 Cash Flow charges / Taxes Operating Financial Restructuring Cash out Cash out Cash Flow charges / Taxes Dividends Other 1H 10 Solid FCF generation in 2Q 2010 due to strong operating performance & effective working capital management (tight credit policy, inventories at efficient level) Capacity increase investment in Europe and Brazil 16

18 Consumer Business: key market trends Car tyre shipments. % (yoy) 2Q 09 3Q 09 4Q 09 1Q % +37% 2Q % Europe * North America OE Replacement OE Replacement -25% -7% -48% -12% +1% -22% +3% +12% +2% +8% +10% +11% +73% +74% +8% +8% -10% +44% +25% +12% Mercosur OE Replacement -10% +2% -8% +11% +21% +26% +14% * Turkey and Russia included Sources: major external data provider for each region and Pirelli estimates 17

19 Consumer Business: Pirelli performance 1Q 10 YoY% 2Q 10 YoY% 1H 10 YoY% Revenues % EBITDA (before restruct. costs) margin EBIT (before restruct.costs) margin Revenue drivers Price/Mix Volume % % +37.0% +2.1 p.p % +2.7p.p % 1, % % % +35.4% +1.7 p.p % +2.3p.p % % 1Q 10 2Q 10 1H % +14.9% +8.7% +6.2% +5.0% +10.5% +36.1% +1.9 p.p % +2.5p.p. Significant double-digit top line growth driven by volume growth limited by factory shut-down in Dec. 09 strong mix improvement in replacement and OE: the advantage of being premium player price increase mainly in Europe and North America Double digit profitability due to volume and price mix improvement cost efficiencies Rev. (before exch. rate impact) +16.1% +14.9% +15.5% Exch. Rate +0.4% +4.2% +2.3% 18

20 Industrial Business: key market trends Car tyre shipments, 2Q 09 3Q 09 4Q 09 1Q 10 +1% 2Q % Euro ope* OE -72% -66% -50% +12% +38% +19% Replacement -22% -14% +3% +65% +61% Mercos sur OE Replacement -33% -16% -32% -10% +23% +26% +19% * Turkey and Russia included Sources: major external data provider for each region and Pirelli estimates 19

21 Industrial Business: Pirelli performance 1Q 10 YoY% 2Q 10 YoY% 1H 10 YoY% Revenues EBITDA (before restruct. costs) margin % % 12.3% +0.4 p.p % % Sales growth in the more profitable markets % +29.3% -0.3 p.p % +30.8% +0.1 p.p. Solid price increase across the regions EBIT (before % % % restruct.costs) margin 8.7% +1.2p.p. p 11.2% +0.4 pp p.p. 10.0% 0% +0.8 pp p.p. Continuous mix improvement Revenue drivers Price/Mix Volume 1Q 10 2Q 10 1H % +13.7% +8.0% +24.1% +10.4% +16.9% Highest profitability despite raw materials impact Rev. (before exch. rate impact) +25.9% +24.1% +24.9% Exch. Rate +2.5% +7.9% +5.4% 20

22 Accelerating investments in 2010 (capacity increase from 2009 to 2011) RUSSIA Greenfield start up ITALY New green factory EGYPT + 20% Truck Tyres ROMANIA + 60% Car Tyres CHINA + 20% Truck Tyres + 100% Car Tyres MERCOSUR + 20% Truck Tyres + 25% Car Tyres Over 350 investments in 2010 to speed up capacity increase 21

23 Pirelli Tyre 2010 targets update FY Targets (March 10, 2010) st Targets upgrade (May 5, 2010) nd Targets upgrade (July 29, 2010) Revenues 3,993 +6% / + 8%* >10%* Up to 15%* EBIT % post restruct. 7.7% ~flat yoy EBIT post restruct (Implicit in the guidance ) (floor) (floor) Raw Material 200 >250 Cost headwind (Natural Rubber price 3000 $/ton.) confirmed Capex 217 >300 confirmed >35 0 (*) Homogeneous terms variations, excluding exchange rate effects 22

24 Pirelli Eco Technology: 1H 10 Key Financial Results 1H 10 1H 09 YoY Revenues % of which Filters Gecam % +0.5% Ebitda (2.3) (4.4) Ebit (3.5) (5.5) Net income NFP (5.0) 37.2 (6.6) 32.8 Filters sales growth driven by Italy China operations and start-up costs negatively impacting 1H results: new Silicon Carbide Filters production from 4Q for the local market NFP improving (21% debt reduction vs. 09 y.e.) in line with FY 2010 target 23

25 Agenda Key Messages Pirelli Financial Review Pirelli Tyre & Parts Pirelli Real Estate Appendix 24

26 Results and Targets H H FY 2010 target FY ) Real Estate Sales () ,300-1,500 1,031 Service Platform incl. G&A (3.2) +20/ ) Fixed Cost Saving (versus previous year) / NFP (excluding shareholders's loan) (452.3) (828.5) stable (445.8) 1) Thanks to the placement of the Anastasia Fund, sales will reach approx. 771 mln 2) Including 13.5 mln related to 10% Pirelli RE SGR and 20% Credit Servicing shares disposals 25

27 Consolidated Profit and Loss ACTUAL JUNE ACTUAL MARCH ACTUAL JUNE Revenues of which service activities of which other revenues EBIT services Income from equity participations services (5.2) 2.0 Service platform/g&a (3.2) EBIT consolidated investment activities Income from equity participations Interest income from Shareholders' loans (4.0) (2.2) 12.9 (1.2) (0.1) (22.8) 13.7 Investments (6.0) EBIT incl. income from equity part. & interest income from shareholders' loans (9.2) Restructuring costs 1) Real estate writedowns/revaluations EBIT incl. inc. from equity part.after restr. costs, writedown/ reval. Financial charges Profit before taxes Income taxes Net income Minority interests 0.0 (18.3) (0.4) (11.9) (12.3) (8.1) (20.4) (0.5) (5.2) 5.0 (4.1) 0.9 (0.6) (11.5) (4.8) (25.6) (14.7) (40.3) (2.4) (42.7) 0.4 Net income after minority interests (20.9) 0.4 (42.3) 1) Market appraisals by indipendent evaluators are updated on a six month basis 26

28 Segment Report Italy Germany Poland NPL Holding Total Service platform Vehicles & funds EBIT including income and interest income SH Loans (0.9) (0.1) (0.6) (2.4) (5.2) (10.0) 11.2 (3.2) 2.8 (10.3) 4.3 (0.9) (1.5) (6.0) 18.0 (3.6) (2.1) 1.0 (5.2) (10.0) 17.9 (9.2) 27

29 Sales trend 1,300/1,500 Italy Germany Poland Development ~250 Gross margin of sales is approx. +5% as of June 2010 ~1,050 Trading & Soho ~200 Other ~600 Sales price vs market value is approx. -0.5% as of June Anastasia fund ~ ~ Target 2010 June 2010 June

30 Update on Cost Saving 2010 vs 2009 Consulting costs IT & Communication +1.2 Depreciation s +0.9 Others fixed costs Headquarter s / +30 Fixed Costs Savings 6/ ) Labour Labour costs costs Marketing +0.7 Travel +0.8 Other ) Target Q 10 1) Includes cost of Directors 2) Includes provisions, consummables and other 29

31 Impact of Real Estate Writedowns and Revaluations on P&L June 2010 June 2009 Wit Writedowns (18.3) (50.3) Revaluations 45.5 June 2009 Revaluations Total impact (18.3) (4.8) 45.5 June 2010 (18.3) (4.8) (18.3) Writedowns (13.0) Italy (50.3) (5.3) Germany Writedowns 30

32 Real Estate AUM Evolution - like for like (Market Value) /bln -0.6 /bln -0.1 /bln -0.3 /bln bln 14.1 bln Capex, Dec 2009 acquisitions & Sales Writedowns Highstreet 1) Jun 2010 other The valuation of the Real Estate portfolio estimated by indipendent appraisers shows a -0.6% decrease on a like 2) for like basis in the first half 2010 The Italian portfolio marks a -1.1% and the German portfolio -0.3% 2) 1) Pending finalization of the negotiations aimed at restructuring the Karstdat group, the Highstreet s real estate market value has been conventionally estimated consistently with the expectations of recovery of the remaining net invested capital equal to approx mln 2) Excluding Highstreet 31

33 Fund Management New business for third parties /bln Expected new assets under Management Effective from Progetto Mida 0.6 Jan 2010 Fondo Anastasia Fondo Fedora 0.1 / / 2012 Enasarco 0.6 / / 2012 Total 1.6 / / /

34 Key Real Estate Portfolio Data as of June 2010 Mkt. Value Mkt. Value Book Value UCG Net Debt 100% 1) PRE pro-quota (27% average) PRE pro-quota PRE pro-quota PRE pro-quota LTV NAV PRE pro-quota NIC PRE pro-quota IAS 40 % ITALY 6,254 1,775 1, % % GERMANY 6,644 1,664 1, ,325 80% % POLAND % % TOTAL REAL ESTATE 13,070 3,503 3, ,348 67% 1, % NPL (investment) SERVICES TOTAL PIRELLI RE 1,146 1) Participated AUM (market value) NOTE: The difference between NAV and UCG+NIC (equal to 177 mln) is due to other assets and liabilities not included into the calculation of real estate NAV 33

35 NFP excl. Shareholders Loans (43.4) NFP Dec 2009 NFP Mar 2010 Sales / distributions Equity contrib. to funds and SPV Layoff Interests and other financial expenses Capex and other NFP Jun

36 Group Corporate Lines Current Situation Situation post separation Bank Commitment Expiry Bank Commitment Expiry CLUB DEAL (*) 320,000 Jul-12 WEST LB 50,000 May-11 UNICREDIT 25,000 Dec-10 POP MILANO 10,000 Jul-11 RBS 25,000 Feb-11 CLUB DEAL (*) WEST LB UNICREDIT POP MILANO RBS PIRELLI & C. (**) 320,000 50,000 25,000 10, , ,000 Jul-12 May-11 Feb-11 Jul-11 Feb-11 Jul-12 TOTAL 430,000 TOTAL 580,000 AVERAGE RESIDUAL LIFE 21 months AVERAGE RESIDUAL LIFE 22 months (*) Club Deal Partecipants: Unicredit 100M Banca Popolare Sondrio 20M Intesa SanPaolo 50M Banca Popolare Emilia Romagna 20M Monte Paschi Siena 50M Banca Carige 20M Banca Popolare Milano 50M UBI - Centrobanca 10M (**) Previously it was an uncommitted line; still under negotiation 35

37 Financial situation of partecipated vehicles/funds 1/2 AUM 1) 2) Net debt as of June 30, 2010 Refinancing 14, ,4 AuM 100% Net Debt 100% Net Debt proquota NPL Real Estate Beyond 1) Participated Real Estate+ NPL 2) Due to maturity 36

38 Financial situation of partecipated vehicles/funds 2/2 Bank Loan characteristics 1) LTV 67%: Italy 56%, Germany 80% and Poland 38% Ero B o M?? Average Duration close to 3.2 years (PRE pro-quota 3.0): Italy 2.7, Germany 3.6 and Poland 1.8 years Average spread: 222 bps (PRE pro-quota 177 bps) 83% hedged interest rate risk (PRE pro-quota 77%) Pro-quota recourse guarantees pro-quota for approx. 29 mln/ 1) Excluding NPL and subsidiaries. 37

39 Consolidated Balance Sheet ACTUAL JUNE 2010 ACTUAL December 2009 ACTUAL JUNE 2009 Fixed assets of which participations of which goodwill Net working capital Net invested capital Net equity of which Group net equity Funds Net financial position of which Shareholders' loan (390.5) (404.4) (491.1) Total sources NFP excluding shareholders' loan NIC excluding shareholders' loan 1, , ,196.4 Gearing

40 Appendix 39

41 Pirelli Group 1H 10 Results * Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre 1H 10 1H 09 Pirelli Eco Technology Broadband Access Others Pirelli & C. Cons. 1H 10 1H 09 1H 10 1H 09 1H 10 1H 09 1H 10 (restated) 1H 09 (restated) Sales % EBITDA before Restruct Costs % on sales EBIT before Restruct Costs % on sales Restructuring Costs EBIT % on sales Results from equity partecipations Financial Income/Charges 2, , , , % 24.0% -20.6% 19.8% (2.3) (4.4) (16.4) (10.9) % 12.6% n.s. n.s. 3.3% 4.4% 12.7% 11.3% (3.5) (5.5) (21.9) (15.2) % 7.6% 2.6%. 3.7% 8.3% 6.3% (7.9) (9.7) (7.9) (9.7) (3.5) (5.5) (21.9) (15.2) % 7.1% 2.6% 3.7% 8.0% 5.9% (4.4) 10.8 (4.0) (7.0) (38.7) (43.0) (0.9) (1.1) (0.9) 5.0 (38.0) (38.4) EBT (4.4) (6.6) (27.2) (21.0) Fiscal Charges (68.6) (43.4) (0.6) (0.2) 0.7 (1.2) (0.4) (70.6) (43.1) Net Result before disc. Op. %onsales % % (5.0) (6.6) (28.4) (21.4) %. 3% %. Tot discont. operat. (236.0) 0.0 (256.4) (42.7) Net income (5.0) (6.6) (264.4) (21.4) (175.6) (12.4) % on sales 4.7% 2.8% n.s. n.s. Attributable Net income (165.5) (6.3) Net Financial Position 1, , (24.3) (31.9) (590.7) (697.7) ,107.6 (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 40

42 Pirelli Group 1H 10 Results * Profit & Loss and Net Financial Position by Business Unit Sales % EBITDA before Restruct Costs EBIT before Restruct Costs Restructuring Costs EBIT Pirelli Ambiente PZero Other Total Others 1H 10 1H 09 1H 09 1H 10 1H 09 1H 10 1H 10 (restated) 1H 09 (restated) % 59.1% (1.0) (1.1) (0.4) (1.9) (15.0) (7.9) (16.4) (10.9) (1.8) (1.2) 0.6 (1.9) (19.5) (12.1) (21.9) (15.2) (1.8) (1.2) (0.6) (1.9) (19.5) (12.1) (21.9) (15.2) Results from equity partecipations 0.3 (0.7) (4.7) (10.1) (4.4) (10.8) Financial Income/Charges (0.9) (0.1) (0.1) (0.1) 5.2 (0.9) 5.0 EBT (2.4) (2.0) (0.6) (2.0) (24.2) (17.0) (27.2) (21.0) Fiscal Charges (0.2) (1.0) (0.4) (1.2) (0.4) Net income before discont. Op. (2.6) (2.0) (0.6) (2.0) (25.2) (17.4) (28.4) (21.4) Net Financial Position (641.8) (706.2) (590.7) (697.7) (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 41

43 Pirelli Group 2Q 10 Results * Profit & Loss and Net Financial Position by Business Unit Pirelli Eco Technology Broadband Access Others Pirelli & C. Cons. Pirelli Tyre 2Q 10 2Q 09 2Q 10 2Q 09 2Q 10 2Q 09 2Q 10 2Q 09 2Q 10 (restated) 2Q 09 (restated) Sales % EBITDA before Restruct Costs % on sales EBIT before Restruct Costs % on sales Restructuring Costs EBIT % on sales Results from equity partecipations Financial Income/Charges 1, , ,037,0 22.9% 10.7% 6.3% -50.0% 0% 21.9% (2.1) (2.1) (12.1) (4.9) % 13.4% n.s. n.s. 5.2% 1.7% 13.0% 12.2% (2.7) (2.7) (14.8) (7.0) % 8.6% 4.2% 0.7% 8.8% 7.3% (5.3) (6.2) (5.3) (6.2) (2.7) (2.7) (14.8) (7.0) % 8.0% 8.4% 6.7% (1.3) (20.6) (1.1) (20.3) (22.3) (19.9) (0.4) (0.5) (0.2) 2.1 (21.5) (18.0) EBT (3.1) (3.2) (16.3) (25.5) Fiscal Charges (39.4) (20.1) (0.5) (0.1) 0.8 (0.1) 0.4 (40.1) (18.9) Net Result before disc. Op (3.6) (3.2) (16.4) (25.1) % on sales 5.0% 4.0% 3.4%. 1.2%. Tot discont. operat. (236.0) 0.0 (257.4) (26.1) Net income (3.6) (3.2) (252.4) (25.1) (214.5) (13.5) % on sales 5.0% 4.0% n.s. n.s. Attributable Net income (204.7) (3.2) Net Financial Position 1, , (24.3) (31.9) (590.7) (697.7) ,107.6 (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 42

44 Pirelli Group 2Q 10 Results * Profit & Loss and Net Financial Position by Business Unit Sales % EBITDA before Restruct Costs EBIT before Restruct Costs Restructuring Costs EBIT Pirelli Ambiente PZero Other Total Others 2Q 10 2Q 09 2Q 09 2Q 10 2Q 09 2Q 10 2Q 10 (restated) 2Q 09 (restated) % 0.5 (0.4) (0.5) (1.0) (12.0) (3.5) (12.1) (4.9) (0.0) (0.4) 0.6 (1.0) (14.2) (5.6) (14.8) (7.0) (0.4) (0.6) (1.0) (14.2) (5.6) (14.8) (7.0) Results from equity partecipations 0.3 (0.4) (1.6) (20.2) (1.3) (20.6) Financial Income/Charges (0.5) (0.1) (0.2) 2.1 EBT (0.2) (0.9) (0.6) (1.0) (15.5) (23.6) (16.3) (25.5) Fiscal Charges (0.2) 0.1 (0.1) (0.3) (0.1) 0.4 Net income before discont. Op. (0.4) (0.8) 0.6 (1.0) (15.4) (23.3) (16.4) (25.1) Net Financial Position (641.8) (706.2) (590.7) (697.7) (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 43

45 Pirelli Group 1Q 10 Results * Profit & Loss and Net Financial Position by Business Unit Pirelli Eco Technology Broadband Access Others Pirelli & C. Cons. Pirelli Tyre 1Q 10 1Q 09 1Q 10 1Q 09 1Q 10 1Q 09 1Q 10 1Q 09 1Q 10 (restated) 1Q 09 (restated) Sales % EBITDA before Restruct Costs % on sales EBIT before Restruct Costs % on sales Restructuring Costs EBIT % on sales Results from equity partecipations Other Financial i Income/Charges 1, , % 37.1% -38.2% 17.5% (0.2) (2.3) (4.3) (6.0) % 11.6% n.s. n.s. 1.1% 6.1% 12.2% 10.3% (0.8) (2.8) (7.1) (8.2) % 6.6% 0.7% 5.7% 7.8% 5.3% (2.6) (3.5) (2.6) (3.5) (0.8) (2.8) (7.1) (8.2) % 6.2% 7.6% 5.0% (3.1) 9.8 (2.9) 13.3 (16.4) (23.1) (0.5) (0.6) (0.7) 2.9 (16.5) (20.4) EBT (1.3) (3.4) (10.9) (4.5) Fiscal Charges Net Result before disc. Op. % on sales Net income % on sales Attributable Net income (29.2) (23.3) (0.1) (0.1) (0.1) (1.1) (0.8) (30.5) (24.2) (1.4) (3.4) (12.0) % 1.6% 3.3%. 1.8% (1.4) (3.4) (12.0) % 1.6% 3.4%. 0.1% Net Financial Position 1, , (23.6) (32.3) (517.8) (546.7) ,278.9 (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 44

46 Pirelli Group 1Q 10 Results * Profit & Loss and Net Financial Position by Business Unit Sales % EBITDA before Restruct Costs EBIT before Restruct Costs Restructuring Costs EBIT Results from equity partecipations Pirelli Ambiente PZero Other Total Others 1Q 10 1Q 09 1Q 09 1Q 10 1Q 09 1Q 10 1Q 10 (restated) 1Q 09 (restated) % 72.2% (1.4) (0.7) 0.1 (0.9) (3.0) (4.4) (4.3) (6.0) (1.8) (0.8) 0.0 (0.9) (5.3) (6.5) (7.1) (8.2) (1.8) (0.8) 0.0 (0.9) (5.3) (6.5) (7.1) (8.2) (0.3) (3.1) 10.1 (3.1) 9.8 Financial Income/Charges (0.4) (0.1) (0.3) 3.0 (0.7) 2.9 EBT (2.2) (1.1) 0.0 (1.0) (8.7) 6.6 (10.9) 4.5 Fiscal Charges (0.1) (1.1) (0.7) (1.1) (0.8) Net income (2.2) (1.2) 0.0 (1.0) (9.8) 5.9 (12.0) 3.7 Net Financial Position (567.5) (554.0) (517.8) (546.7) (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 45

47 Pirelli Group FY 09 Results * Profit & Loss and Net Financial Position by Business Unit Pirelli Tyre Pirelli Eco Technology Broadband Access Others Pirelli & C. Cons. FY 09 FY 09 FY 09 FY 09 (restated) FY 09 (restated) Sales 3, ,197.5 EBITDA before Restruct Costs % on sales EBIT before Restruct Costs % on sales Restructuring Costs EBIT % on sales (9.1) 5.3 (21.1) % n.s. 4.0% 12.2% (10.8) 4.5 (29.8) % 3.4% 7.4% (37.0) (0.5) (18.2) (55.7) (10.8) 4.0 (48.0) % 3.0% 6.0% Results from equity partecipations 4.2 (15.8) (11.6) Financial Income/Charges (76.1) (2.5) (69.8) EBT (13.3) 4.3 (55.3) Fiscal Charges (90.0) (0.4) (90.1) Net income before discont. operat (13.7) 4.6 (55.3) 82.2 Tot discont. operat. 0.0 (104.8) Net income % on sales Attributable Net income (13.7) 4.6 (55.3) (22.6) 3.7% n.s Net Financial Position 1, (35.7) (551.3) (*) Pirelli RE has discontinued operations since June 30, 2010, 2009 figures have been restated for the purpose of data homogeneity 46

48 Pirelli Group FY 09 Results Profit & Loss and Net Financial Position by Business Unit Sales Pirelli Ambiente PZero Other Total Others FY 09 FY 09 FY 09 (restated) FY 09 (restated) EBITDA before Restruct Costs EBIT before Restruct Costs (2.3) (3.7) (15.1) (21.1) (2.4) (3.8) (23.6) (29.8) Restructuring Costs EBIT (1.3) (16.9) (18.2) (3.7) (3.8) (40.5) (48.0) Results from equity partecipations (1.4) (14.4) (15.8) Financial Income/Charges (0.2) (0.1) Fiscal Charges Net income before discont. operat Discontinued Operations Net income (5.3) (3.9) (46.1) (55.3) 0.0 (5.3) (3.9) (46.1) (55.3) Net Financial Position (598.8) (551.3) 47

49 Pirelli Balance Sheet 1H 10 FY 09 % Net Invested Capital Fixed Assets Net Working Capital 3, , Net Invested Capital continuing operations 3, ,045.8 Net Invested capital Pirelli Real Estate Overall Net Invested Capital 3, ,818.0 P.Tyre PEco P.Eco Tech. P.Real Est. PBS 72.9% 1.1% 14.4% 0.3% 65.6% 1.4% 20.2% -0.1% Total Net Equity 2, ,494.7 Others 11.3% 12.9% Continuing operations provisions Pirelli Real Estate provisions Continuing Operations Net Financial Position Pirelli Real Estate Net Financial Position Total Attributable Net Equity , , , ,175.0 Equity per Share (euro)

50 Pirelli Group Cash Flow 1Q 10 2Q 10 1H 10 2Q 09 1H 09 EBIT before restructuring costs , Depreciation , Net investments (50.1) (85.4) (135.5) (29,1) (65.4) Working capital/other variations (156.7) 40.7 (116.0) 77,0 (181.8) OPERATING CASH FLOW (64.6) ,4 (18.5) Financial income (expenses) (16.5) (21.5) (38.0) (18,0) (38.4) Tax charges (30.5) (40.1) (70.6) (18,9) (43.1) NET OPERATING CASH FLOW (111.6) 58.6 (53.0) 137,5 (100.0) Financial investments/disinvestitures , Dividends paid - (85.1) (85.1) (2,4) (2.4) Cash out for restructuring (34.0) (10.4) (44.4) (8,3) (47.3) PRE Net Cash Flow (14.0) (6.5) (20.5) (28,1) (47.9) Exchange rate differentials/others (5,5) 5) 1.7 NET CASH FLOW (149.6) (18.5) (168.1) 171,3 (79.9) 49

51 Pirelli Group: Net financial position 1H 10 by Business Tyre Other business Other Pirelli Group June 10 Mar.10 Dec. 09 June 10 Mar.10 Dec. 09 June 10 Mar.10 Dec. 09 June. 10 Mar.10 Dec. 09 Gross Debt 1,779 1,489 1, ,299 1,347 1,407 to Corporate Financial receivables (154) (97) (84) (26) (26) (37) (871) (545) (561) (193) (163) (159) Cash and cash equivalents (412) (269) (442) (10) (10) (4) (49) (282) (314) (471) (561) (760) Net Financial Position 1,213 1,123 1, (643) (568) (599) PRE Net Financial Position Net Financial Position including PRE

52 1H 10 Pirelli Tyre Mix Consumer 70% Sales by business Car 60% Sales by segment Motorbike 10% Industrial 30% Truck 28% Steelcord & others 2% Sales by channel Replacement 75% Latin America 35% Sales by region North America 9% Asia Pacific 6% MEA 10% OE 25% Europe 40% 51

53 1H 10 Pirelli Tyre People Headcount 29,048 27,241 People by region North America Latin America 1% 43% Asia Pacific 8% MEA 11% Jun. 09 Jun. 10 People by contract Permanent 89% Workers 82% Europe 37% People by cluster Employees 17% Temps & Agency 11% Management 1% 52

54 Raw Materials 2Q 2010 mix (Based on purchasing cost) 220,0 Raw Materials price trend Natural Rubber 36% (+15pp yoy) Synth. Rubber 23% (+4pp yoy) Carbon black 11% (-3pp yoy) 200,0 180,0 160,0 140,0 120,0 100,0 80,0 Steelcord Chemicals 12% 60,0 8% (-6pp yoy) Textiles 40,0 (-4pp yoy) QI/07 QII/07QIII/07QIV/07QI/08 QII/08QIII/08QIV/08QI/09 QII/09QIII/09QIV/09QI/10 QII/10lug-10 9% (-6pp yoy) Natural Rubber Brent Oil Synthetic Rubber 53

55 Pirelli Tyre: 20 industrial plants in 11 Countries (as of June 2010) Italy Burton Carlisle U.K. Car Car Bollate (MI) Car Settimo Torinese Car Settimo Torinese Truck Figline Valdarno Steelcord Breuberg Merzig Germany Car/Moto Steelcord Turkey U.S.A Izmit Car/Truck Steelcord Rome Car Romania Slatina Car/Steelcord Guacara Venezuela Car China Yanzhou Car/Truck Brazil Campinas Car Feira de Santana Car/Truck Santo André Truck/Agro Gravatai Moto/Truck Sumaré Steelcord Merlo Argentina Car Alexandria Egypt Truck 54

56 Consolidated Pirelli RE Net Cash Flow ACTUAL JUNE 2010 ACTUAL JUNE 2009 Ebit before restructuring costs, reval./deval. Depreciation Change in investments Change in other fixed assets Chenge in NWC, Funds (0.3) (30.8) (2.0) 3.6 (37.5) (0.7) 15.7 Free cash flow (15.2) (20.8) Restructuring costs Interest income/expenses and taxes (7.5) 2.3 (23.6) (3.4) Cash flow before dividends (20.5) (47.8) Dividends paid Net cash flow (20.5) (47.8) 55

57 Key Real Estate Portfolio Data as of June 2010 Mkt. Value Mkt. Value Book Value UCG Net Debt 100% 1) PRE pro-quota (27% average) PRE pro-quota PRE pro-quota PRE pro-quota LTV NAV PRE pro-quota NIC PRE pro-quota IAS 40 % ITALY 6,254 1,775 1, % % GERMANY 6,644 1,664 1, ,325 80% % POLAND % % TOTAL REAL ESTATE 13,070 3,503 3, ,348 67% 1, % NPL (investment) SERVICES TOTAL PIRELLI RE 1,146 1) Participated AUM (market value) NOTE: The difference between NAV and UCG+NIC (equal to 177 mln) is due to other assets and liabilities not included into the calculation of real estate NAV 56

58 Italy: Key Real Estate Portfolio Data as of June 2010 Mkt. Value Mkt. Value Book Value UCG Net Debt PRE pro-quota 100% 1) PRE pro-quota PRE pro-quota PRE pro-quota LTV NAV PRE pro-quota NIC PRE pro-quota COMMERCIAL YIELDING & CORE 4,013 1, % TRADING & SOHO % DEVELOPMENT 1, % TOTAL ITALY 6,254 1,775 1, % Italian participated portfolio 6.3 mln Development 21% Trading & Soho 15% Commercial Yielding & Core 64% 1) Participated AUM (market value) NOTE: The difference between NAV and UCG+NIC (equal to 78 mln) is due to other assets and liabilities not included into the calculation of real estate NAV 57

59 Germany & Poland: Key Real Estate Portfolio Data as of June 2010 Mkt. Value Mkt. Value Book Value UCG Net Debt PRE pro-quota 100% 1) PRE pro-quota PRE pro-quota PRE pro-quota LTV NAV PRE pro-quota NIC PRE pro-quota DGAG (Residential) % BAUBECON (Residential) 1, % HIGHSTREET (Commercial) 3, % Other (Ger) % Development (Poland) TOTAL GERMANY TOTAL POLAND % ,644 1,664 1, ,325 80% % ) Participated AUM (market value) NOTE: The difference between NAV and UCG+NIC (equal to 99 mln) is due to other assets and liabilities not included into the calculation of real estate NAV 58

60 Economic Results Total Pirelli RE JUNE 2010 MARCH 2010 JUNE 2009 Service platform & G&A Revenues Services Platform/G&A Result (3.2) Vehicles & funds Result from vehicles & funds (6.2) of which Real estate (3.4) of which NPL (2.8) Int. Inc. from shareholders' loans 12.9 (1.2) (3.5) (19.8) (22.8) Vehicles & Funds Result (*) (6.0) Total Result (*) (9.2) (*) Result' represents EBIT including income from equity participations including interest income from shareholders loans 59

61 Economic Results Italy JUNE 2010 MARCH 2010 JUNE 2009 Fund & AM Fee Revenues Fund & AM Fee Result Agency Revenues Agency Result (3.5) Property Revenues Property Result Total Revenues Service Platform Result Result from vehicles & funds 0.0 (0.1) (14.6) Int. Inc. from shareholders loans Vehicles & Funds Result (*) (10.3) Total Italy (*) (3.6) (*) Result' represents EBIT including income from equity participations including interest income from shareholders loans 60

62 Economic Results Germany JUNE 2010 MARCH 2010 JUNE 2009 Fund & AM Fee Revenues Fund & AM Fee Result Agency Revenues Agency Result Property Revenues Property Result Facility Revenues Facility Result (0.1) (0.5) (0.4) Total Revenues Service Platform Result Result from vehicles & funds (3.6) (3.4) (8.8) Int. Inc. from shareholders loans Vehicles & Funds Result (*) (0.9) Total Germany (*) (*) Result' represents EBIT including income from equity participations including interest income from shareholders loans 61

63 Economic Results Poland JUNE 2010 MARCH 2010 JUNE 2009 Fund & AM Fee Revenues Fund & AM Fee Result 0.9 (0.2) 0.4 (0.1) 1.1 (0.5) Agency Revenues Agency Result 0.3 (0.1) 0.2 (0.0) 0.5 (0.1) Facility Revenues Facility Result (0.5) (0.2) 0.6 Total Revenues Service Platform Result Result from vehicles & funds Int. Inc. from shareholders loans Vehicles & Funds Result (*) (0.9) (0.3) (0.1) Total Poland (*) (*) Result' represents EBIT including income from equity participations including interest income from shareholders loans 62

64 Economic Results NPL JUNE 2010 MARCH 2010 JUNE 2009 Service platform Revenues Services Platform Result (0.6) (0.0) (2.4) Vehicles & funds Result from vehicles & funds Int. Inc. from shareholders' loans (2.8) Vehicles & Funds Result (*) Total NPL (*) (1.5) (2.1) (*) Result' represents EBIT including income from equity participations including interest income from shareholders loans 63

65 Participated Real Estate Assets under Management 1H % Quota PRE Passing Rent Passing Vacancy Book Value Market Value Net Debt ( /000) Commercial Core Italy 95,099 Yield 5.9% 7.7% 1,612,607 1,738,160 1,082,738 Fondo TECLA 44.8% 40, % 8.1% 688, , ,142 Fondo Cloe 18.1% 30, % 10.7% 446, , ,964 FONDO RETAIL & ENTERTAINMENT 31.6% 24, % 477, , ,632 Commercial Yieding Italy 151, % 8.5% 2,153, ,274, ,108, Fondo FIRPS 22.0% 20, % 286, , ,977 TIGLIO % 13, % 45.9% 175, , ,666 Fondo Raissa 35.0% 21, % 309, , ,878 Fondo Olinda 11.3% 32, % 4.0% 518, , ,411 Dolcetto Tre S.r.l. 33.0% 1, % 13,675 19,100 9,722 PROGETTO PERUGIAsrl 100.0% 1, % 1.7% 32,737 34,200 - Fondo Armilla 2.0% 16, % 224, , ,778 FONDO SPAZIO INDUSTRIALE 22.1% 34, % 3.1% 486, , ,581 FONDO HOSPITALITY & LEASURE 35.0% 9, % 106, ,240 77,831 TOTAL Italy 246, % 8.4% 3,765,876 4,012,700 2,191,581 Commercial Germany 6, % 9.1% 104, ,910 65,878 Mistral Properties 35.0% 6, % 9.1% 104, ,910 65,878 Residential Yielding Germany 188, % 4.1% 1) 2,728,803 2,762,449 2,154,861 DGAG - Residential+Special Properties 40.0% 66, % 2.4% 904, , ,270 BIB 40.0% 102, % 4.8% 1,540,145 1,552,741 1,302,040 Small Deal 49.9% 18, % 5.4% 284, , ,551 TOTAL Germany 2) 194, % 4.6% 2,833,795 2,869,359 2,220,739 TOTAL YIELDING PORTFOLIO 441, % 6.4% 6,599,671, 6,882,059, 4,412,319, Residential Small Office House Office ITA 14,791 n.m. n.m. 822, , ,417 Development ITA 2,401 n.m. n.m. 1,217,789 1,296, ,528 Highstreet Germany 3) 271,166 n.m. n.m. 3,650,000 4) 3,650,000 3,279,625 Development Germany 5,364 n.m. n.m. 111, ,430 65,708 Development Poland 208 n.m. n.m. 130, ,297 60,930 OTHER PORTFOLIO 293,930 5,932,313 6,187,548 4,750,210 GRAND TOTAL REAL ESTATE 735,211 12,531,983 13,069,607 9,162,529 1) Vacancy calculated on units 2) Excluding Highstreet 3) Passing rents not including potential changes related with the current negotiation on the restructuring of Karlstadt group 4) Pending finalization of the negotiations aimed at restructuring the Karstdat group, the Highstreet s real estate market value has been conventionally estimated consistently with the expectations of recovery of the remaining net invested capital equal to approx mln 64

66 Pro-quota Real Estate Assets under Management 1H 2010 ( /000) Commercial Core Italy Quota PRE Passing Rent Passing Vacancy Book Value Market Value Net Debt pro-quota Yield quota PRE Pro-quota Pro-quota 31, % 7.5% 540, , ,529 Fondo TECLA Fondo Cloe FONDO RETAIL & ENTERTAINMENT Commercial Yieding Italy Fondo FIRPS TIGLIO 1 Fondo Raissa Fondo Olinda Dolcetto Tre S.r.l. PROGETTO PERUGIAsrl Fondo Armilla FONDO SPAZIO INDUSTRIALE FONDO HOSPITALITY & LEASURE TOTAL Italy Commercial Germany Mistral Properties Residential Yielding Germany DGAG - Residential+Special Properties BIB Small Deal TOTAL Germany 2) TOTAL YIELDING PORTFOLIO Residential Small Office House Office ITA Development ITA Highstreet Germany Development Germany Development Poland OTHER PORTFOLIO GRAND TOTAL REAL ESTATE 44.8% 17, % 8.1% 308, , , % 5, % 10.7% 80,863 99,472 49, % 7, % 150, , ,218 30, % 5.6% 439, , , % 4, % 62,969 63,646 46, % 1, % 45.9% 22,608 27,378 15, % 7, % 108, ,844 40, % 3, % 4.0% 58,546 64,185 27, % % 4,513 6,303 3, % 1, % 1.7% 32,737 34, % % 4,499 4,752 2, % 7, % 3.1% 107, ,826 51, % 3, % 37,375 37,884 27,241 62, % 6.2% 979,258 1,023, ,864 2, % 10.1% 44,556 45,234 27, % 2, % 10.1% 44,556 45,234 27,790 76, % 4.1% 1) 1,112,301 1,125, , % 26, % 2.4% 370, , , % 41, % 4.8% 616, , , % 8, % 5.4% 125, ,597 88,678 78, % 4.7% 1,156,857 1,171, , , % 6% 5.2% 2,136, ,194,727 1,485,987 5,082 n.m n.m 290, , , n.m n.m 382, , ,873 3) 32,811 n.m n.m 441,650 4) 441, ,223 2,302 n.m n.m 45,806 51,271 29, n.m n.m 49,560 64,827 24,485 40,865 1,210,723 1,308, , ,713 3,346,837 3,503,494 2,347,758 1) Vacancy calculated on units 2) Excluding Highstreet 3) Passing rents not including potential changes related with the current negotiation on the restructuring of Karlstadt group 4) Pending finalization of the negotiations aimed at restructuring the Karstdat group, the Highstreet s real estate market value has been conventionally estimated consistently with the expectations of recovery of the remaining net invested capital equal to approx mln 65

67 Rents and NPL Recoveries () RENTS NPL RECOVERIES 100% Pro quota 100% Pro quota June 2010 June 2009 June 2010 June 2009 June 2010 June 2009 June 2010 June