Pirelli & C. Group 9M 2003 Results

Transcription

1 0 Pirelli & C. Group 9M 2003 Results

2 PRELIMINARY NOTES 1 3Q 03 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 1 st January 2003

3 CONTENTS 2 Group Results Industrial Businesses Pirelli & C. Real Estate Olimpia Outlook

4 PIRELLI & C. 9M 2003 YoY AT A GLANCE 3 Results confirm improvements in both organic* sales and margins compared to M2003 vs 9M2002: Sales to 4,928 m ; organic growth: +9.3% EBIT increased from 105 to 197 m (+88%) Operating Free Cash Flow: 238 m Net Financial Position improved from 2,050m to 1,518 m (**) 3Q2003 vs 3Q2002: Sales to 1,630 m ; organic growth: +9.7% EBIT increased from 4 to 55 m (*) Net of exchange rates, metal prices and perimeter variation (**) Including Net Capital Increase

5 GOOD RESULTS IN A TOUGH ENVIRONMENT 4 Market scenario recovering slowly, pressure on prices and volumes still high Unchanged R&D commitment (3.5% of total sales) Energy Cables and Systems: positive effect of timely restructuring effort Telecom Cables and Systems: cost reduction to approach break-even Tyres: continued improvement due to mix and volumes Real Estate: strong growth versus 9M 2002 (Operating Profit incl. Income from Equity Participations: +25%)

6 THE PIRELLI GROUP 9M 2003 FINANCIALS (ml Euros) 5 Net Sales (as reported) Net Sales (Organic) - EBITDA EBITDA margin - EBIT EBIT margin Results from Equity Participation Olimpia - Op. result incl. Equity Partic. Financial expenses - PBEIT Extraordinary Items Income taxes - Net Income (loss) % of net sales Attributable Income (loss) 4,538 Industrial Businesses Pirelli & C. Real Estate Other (incl. Olimpia) Total (post merger) 9M03 9M02 9M03 9M02 9M03 9M02 9M03 9M (10) (23) % 7.9% 9.5% 8.1% (39) (63) % 2.6% 4.0% 2.1% (1) (5) (19) 24 (3) (65) (82) (65) (82) 193 (71) (69) % 4, (91) 36 (241) (43) (248) 413 * 72 (0) 72 (0) (20) (2) (26) 80 ** (23) (109) (34) (143) (20) 4 (159) (37) (164) (36) (200) (25) (94) 4, (105) 1 (85) (33) 5,027 4,538 4, ,928 4, (129) (109) (59) (94) (262) (53) (17) (*) Figure does not represent business volumes; Aggregate Production Value 982 ml Euro (+41%) (**) Of which 41 ml real estate activities and 39 ml other components (disposal UNIM securities portfolio)

7 POSITIVE CONSOLIDATED EBIT TREND (m ) D +23 D D Q 2Q 3Q 4Q

8 CONTENTS 7 Group Results Industrial Businesses Pirelli & C. Real Estate Olimpia Outlook

9 INDUSTRIAL BUSINESSES RESULTS (ml Euros) 8 9M M 2002 Var (%) Net Sales (as reported) Net Sales (Organic *) 4,538 4,841 4,538 4, % + 5.1% EBITDA EBITDA Margin EBIT EBIT Margin % % % % Net Result (**) 74 (248) % % +5% increase in organic sales Strong recovery in profitability (*) Net of exchange rates, metal prices and perimeter variation (**) 2002 figures includes restructuring costs 247 million

10 INDUSTRIAL EBIT VARIATIONS (ml Euros) (24) Exchange Rates 42 Prices and MIX 39 Volumes (70) Raw materials (39) Unitary Labour Costs 135 Efficien_ cies 5 Amorti_ sations (21) Others 194 EBIT 9M2002 EBIT 9M2003

11 INDUSTRIAL EBIT POSITIVE TRENDS (m ) 10 ENERGY CABLES AND SYSTEMS 30 D D D Q 2Q 3Q 4Q TYRES TELECOM CABLES AND SYSTEMS 10 0 D D D Q 2Q 3Q 4Q TOTAL INDUSTRIAL EBIT D +12 D +6 D D +9 D +9 D Q 2Q 3Q 4Q 0 1Q 2Q 3Q 4Q

12 PIRELLI ENERGY SECTOR 11 SALES (as reported) 9M M 2002 Var. % 1,966 2, Volumes: -1.8% Price/mix: +0.4% SALES (organic *) 1,966 1, % Organic Variation: -1.4% EBITDA EBITDA margin % % +6.4% Exchange rates: -5.6% Metal price: -3.9% Perimeter: -3.8% EBIT EBIT margin % (**) % +54.5% Total sales: -14.7% (**) Including a positive contribution of 10 ml Euro related to a settlement with a major customer - Operating margin improvement through efficiency (78m ) - On track with new major high voltage projects worldwide (*) Net of exchange rates, metal prices and perimeter variation

13 PIRELLI TELECOM SECTOR 12 9M M 2002 Var. % SALES (as reported) % Volumes: +12.0% Price/mix: % SALES (organic *) % Organic Variation: -8.7% EBITDA EBITDA margin (3) n.m. (10) n.m. n.m. Exchange rates: -6.6% Total sales: -15.3% EBIT EBIT margin (31) n.m. (**) (56) n.m. n.m. (**) Including a positive contribution of 6 ml Euro related to an insurance compensation - Improving operating results - Broadband ADSL devices sales: 19.6 m in 9M 2003 vs. 5.6 m in 9M 2002 (*) Net of exchange rates

14 PIRELLI TYRES SECTOR 13 9M M 2002 Var. % SALES (as reported) 2,250 2, % Price/mix: +6.3% Volumes: +8.0% SALES (organic *) 2,250 1, % Organic Variation: % EBITDA EBITDA margin % % +9.5% Exch. rates: -9.9% Total sales: +4.4% EBIT % EBIT margin 7.7% 7.0% - Continued volume growth in Performance Segments (Moto and car HP/UHP/SUV) - Price/mix improvements consolidation - Strong contribution from winter sales, also expected in the last quarter - Natural rubber cost increases (*) Net of exchange rates

15 CONTENTS 14 Group Results Industrial Businesses Pirelli & C. Real Estate Olimpia Outlook

16 PIRELLI & C. REAL ESTATE ENVIRONMENT AND ACTIONS 15 Environment Residential - Family high propensity to save money and buy home, sustained demand for housing Pirelli Actions - Portfolio rotation: sold 481 m, acquired 295 m, 400/500 m acquisitions under negotiation Commercial - High liquidity available for investments alternative to Stock Market. - Investors appetite for financial products Real Estate Backed. - Portfolio rotation: sold 503 m, acquisitions 747 m (incl. Fonsai) Retail Fund: - Bank of Italy approval obtained - Awaiting Consob approval - Placing pocess presumably to start on Jan Institutional Fund - Pre-marketing under way, placement first half 2004 Services - Huge potential for upgrade of services to European standards - Officially launched Franchise Network 130/150 Sales points by year end - New mandates in agency, property management and facility management

17 PIRELLI & C. REAL ESTATE BUSINESS RESULTS 16 Profit and loss 9M M 2002 Var. % Balance sheet 9M M 2003 FY 2002 Net Aggregate Production value EBIT including Results from Equity Participations % % Equity Net Financial Position NFP not incl. shareholders loans (12) 167 Net Income from Real Estate activities % Gearing 0.7 x 0.7 x 0.5 x Additional information on 9M 2003 results available on the IR section of the Web Site

18 CONTENTS 17 Group Results Industrial Businesses Pirelli & C. Real Estate Olimpia Outlook

19 OLIMPIA PURCHASED 2.6% OF TI SHARES 18 On 15th October 2003 Olimpia sold million convertible bonds TI ", at a unit price of 1.17 euros. At the same time Olimpia purchased million TI ord. shares, at a unit price of 2.24 euros Olimpia crystallized the bond premium to increase its shareholding in TI to 14.2% from 11.6% Positive P&L impact from TI dividend in 2004

20 OLIMPIA CAPITAL INCREASE MAIN FEATURES 19 Total amount up to 770 m : first tranche equal to 700 m New shares issued: up to 770 m at nominal value (1 ) First tranche proceeds (700 m ) will be used to purchase roughly 295 m TI ordinary shares at an average price of 2.37 per share (*) Second tranche could be subscribed under the same terms until 7 th January 2004 (*) The shares have been purchased bymediobanca following an agreement signed on 5 th November 2003 for the purchase of TI ordinary shares on the market. The shares will be available for Olimpia on 18 th december 2003

21 OLIMPIA CAPITAL INCREASE MAIN EFFECTS 20 Olimpia Capital Increase will grant: substantial strengthening of Olimpia P&L 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)

22 CONTENTS 21 Group Results Industrial Businesses Pirelli & C. Real Estate Olimpia Outlook

23 OUTLOOK 22 Positive trend in backlog (Energy, Submarine Systems) Strong winter tyre season expected to further enhance margins Residential and Commercial short term better than plan. Year End Targets on Track: 20-25% growth confirmed FY 2003 operating results expected in progress vs. FY 2002

24 Recent Events (1) 23 Industrial Businesses A NEW TYRE FACTORY IN BRAZIL Pirelli inaugurates on September its new factory in Bahia, with an initial investment of US$ 120 million. 32,000 square meters of productive area Daily production of 7,500 performance tires by end 04 At full operating capacity (by 2006), daily production will reach 13,500 tires /day. PIRELLI J.D. POWER AWARD A customer study by J.D. Power and Associates places Pirelli highest in satisfaction for its original equipment car/compact van tyres among over 30,000 new vehicle users in USA. PIRELLI TYRES RUN PETTER SOLBERG TO WIN FIA WORLD RALLY CHAMPIONSHIP In a spectacular finale to the 2003 WRC series, Petter Solberg takes his first drivers' world title driving a Subaru Impreza WRC equipped with Pirelli tyres. For Pirelli this is the 19 World Rally Championship in his history (11 Manufacturers' championship and 8 Drivers' championships).

25 Recent Events (2) 24 PIRELLI LAUNCHES NEXT GENERATION TELECOM EQUIPMENT Presented at ECOC 2003 new systems, modules and components, based on Pirelli Labs advanced research which will allow customers to boost performance while saving costs PIRELLI AWARDED WITH SIGNIFICANT NEW CONTRACTS IN TLC... Pirelli to supply 400 kilometers of high-tech submarine fiber optic cable to link Kuwait and Iran Pirelli and Siemens awarded a tlc contract in Indonesia...AND ENERGY CABLES Pirelli and Nexans Awarded a 100 Million Euros Contract in Tunisia to provide and install underground high voltage cables and accessories for new power lines in the Tunis area and Bizerte. Pirelli Cables UK signed a contract with Kuwait Ministry of Electricity and Water for the supply of 39Km 132KV HV Oil filled cable.

26 Recent Events (3) 25 Pirelli Real Estate PIRELLI RE FRANCHISING LAUNCHED Pirelli RE franchise network operating from October: a network of more than 130/150 agencies by the end of the year arriving at 1,000 by the end of The franchise represents the strategic evolution of the Pirelli RE business model. BANK OF ITALY APPROVES THE ORDINANCE OF FIRST PRIVATE, QUOTED REAL ESTATE FUND BY CONTRIBUTION IN ITALY The fund will specialise in the office sector and will be known as the Tecla Offices Fund. The fund, managed by Pirelli RE SGR, will be set up with the contribution of real estate assets by Tiglio I S.r.l., the company controlled by Morgan Stanley real estate funds.