Meeting with Investors and Analysts Milan, 21st March 2001

Transcription

1 Meeting with Investors and Analysts Milan, 21st March 2001

2 Marco Tronchetti Provera

3 2001 ECONOMIC SCENARIO NORTH AMERICA GDP 2.1% Inflation rate 2.6% Interest rate 4.8% BRAZIL GDP 3.8% Inflation rate 5.1% Interest rate 14.0% EUROPEAN UNION GDP 2.7% Inflation rate 2.0% Interest rate 4.3% TURKEY GDP 1.2% Inflation rate 73% EASTERN EUROPE GDP Hungary 4.3% Czech Rep. 3.5% Inflation rate Hungary 7.6% Czech Rep. 4.7% JAPAN GDP 1.0% CHINA GDP 7.3% SOUTHEAST ASIA GDP GDP 3.9% 3.9% Inflation Inflation rate rate 4.4% 4.4%

4 TURNOVER AT Energy Cables & Systems 2. Tyres 3. Telecom Cables & Systems 42% 39% 19% 1. Italy 2. Rest of Europe 3. North America 4. Latin America 5. Australia, Africa, Asia 10.8% 43.8% 16.2% 16.5% 12.7%

5 Pirelli & C. Real Estate S.p.A. 100% PIRELLI GROUP SHAREHOLDER STRUCTURE (as of ) PIRELLI & C. 33.4% (*) PIRELLI S.p.A. Camfin 29.99% Generali Group 6.17% Ed. Holding 6.03% HdP 6.01% SAI 5.70% RAS 5.25% Mediobanca 5.00% BZ Group Holding Limited 10.6% (**) 100% 100% PIRELLI TYRE HOLDING N.V. PIRELLI CAVI e SISTEMI S.p.A. (*) Treasury shares at : 190mn (9.9% of voting capital) (**) 5% of voting rights are exercised according to the will of Mr. Tronchetti Provera

6 PIRELLI Tyres PIRELLI GROUP 2000 RESULTS PIRELLI SPA PIRELLI Cables & Systems SALES 4,591 EBIT * 289 ROS 6.3% *Incl. Cisco supply agreement PIRELLI Energy Cables & Systems PIRELLI Telecom Cables & Systems SALES 2,880 EBIT 180 ROS 6.3% Employees 20,637 Plants 22 SALES 3,162 EBIT 58 ROS 1.8% Employees 14,384 Plants 54 (shared 6) ROS (w/o overhead) 3.2% SALES 1,376 EBIT 154 ROS 11.2% Employees 5,802 Plants 17 (shared 6) ROS (w/o overhead) 13.2%

7 MAJOR EXTRAORDINARY EVENTS IN 2000 Sale to Cisco of Terrestrial Optical Systems: gross proceeds 1,575 mn Euro Sale to Corning of Optical Components: gross proceeds 3,558 mn Euro BICC acquisition: 194 mn Euro Acquisition of 100% of Pirelli Brazilian companies and delisting: 90 mn Euro Acquisition of 100% of Pirelli Cables Australia and delisting: 20 mn Euro Acquisition of own shares: 74 mn Euro (book value 3.34 Euro per share) Extraordinary restructuring costs: 433 mn Euro (original plan: 254 mn Euro*) * Increase due to Cables and Systems (127 mn Euro) and Tyres (52 mn Euro)

8 REORGANIZATION COSTS 2000 Euro mn LayOff Costs WriteOff Costs Relocation/ Other Total Cables and Systems Tyres Total

9 CAPEX: PLAN 2000 & 2001 Euro mn Telecom ** Energy 126 ** 385 with Acquisitions 120 Tyres Total Including 150 MIRS 850 (*) New Telecom Business investment plan (included Pirelli Optical Labs and increase of Optical Fiber production capacity) (**) Excluding assets arising from NKF deal

10 FROM THE OLD MODEL PIRELLI GROUP THE BUSINESS STRUCTURE 1 Corporate Tyres Cables and Systems Sector Sector Country A Country B Country Country A Country B Country

11 TO THE NEW ONE PIRELLI GROUP THE BUSINESS STRUCTURE 2 Corporate Network company model Shared Services Tyres Energy Telecom BU BU Car/LT HP/STD BU BU Truck BU BU Moto BU BU St. St. cord cord BU BU Utilities BU BU Gen. Gen. Market BU BU Specials BU BU Fiber Optics BU BU Subm. Syst Syst BU BU Install. North America Latin America Sector focalisation Businesses strongly focused on customer needs, with BU organisation Lean corporate structure in the businesses Important transversal projects (epirelli, shared services) Strengthening competencies

12 Buyside PIRELLI GROUP AN INTERNETWORKING COMPANY Inside Sellside Sector infrastructure Finance, Administration and Control, IT, Human Resources, R&D and Product Supply chain Trade End User Suppliers Procurement 1 Inbound Logistics Operations Outbound Logistics Sales, Marketing and Service OEMs. eprocurement MRO. Rubbernetwork. Group Portal (e.g. KPI s). elearning. Knowledge Management. Demand Net Integration. B2B Tyres. B2B2C. ecrm. Salesforce Autom.. Cables@Pirelli. Voltimium Portal. B2B Power Utilities

13 RESULTS ON KEY PROJECTS Projects Results so far Objectives 2001 B2B Tyres 10 active markets 27% on line transactions connected customers 15 active markets 40% on line transactions connected customers eprocurement MRO 37 active plants across 5 countries 800 orders/week 1 Mn Euro/week Turkey, Latin America and commercial unit Europe extension orders/week 2.3 Mn Euro/week B2B General Wiring Cable@Pirelli 7 active markets 25% consolidated on line turnover (e.g. Italy 76%) All domestic markets (14) > 50% on line turnover ecrm profiles profiles on unique database

14 Carlo Buora

15 PROFIT & LOSS Euro mn CABLES & SYSTEMS TYRES GROUP SECTOR SECTOR CONSOLIDATED Net sales 4,591 3,921 2,880 2,559 7,477 6,482 YoY % variation 17.1% 12.5% 15.4% EBITDA % on net sales 10.2% 9.1% 12.8% 13.6% 11.0% 10.5% EBIT % on net sales 6.3% 4.7% 6.3% 7.2% 5.9% 5.1% Financial income and expenses (14) (36) (79) (19) (75) (24) Extraordinary items 2,173 8 (224) (11) 4, Income taxes (668) (19) (49) (43) (1013) (91) Net result 1, (172) 112 3, % on net sales n.m. 3.5% 6.0% 4.4% n.s. 4.7% Net income attributable 3, Earnings per share Net debt (1,644) (3,495) 1,017 Employees 20,496 19,046 20,637 20,332 41,914 40,103 Factories

16 SALES VARIATIONS 2000/1999 % Variation EXCHANGE METAL VARIATION PRICES OTHER PRICES VOLUME NEW CONSOLI DATIONS DECONSO LIDATIONS MIX AND OTHERS 2000

17 EBIT VARIATIONS 2000/1999 Euro mn EXCHANGE VARIATION VOLUME ACQUISIT. DECONSO LIDATIONS SALE UNITARY PRICES COST (EXCL. METALS) MATERIALS EFFICIENCY AMMORT. AND DEPREC. SUPPLY AGREEM. CISCO MIX AND OTHERS 2000

18 CONSOLIDATED CASH FLOW STATEMENT (Euro mn) ,413 4,277 1, (61) (166) (75) (306) (597) (1,013) EBIT Deprec. Net Operat. and Invest. Work. Amortization Capital Variations Funds Variation and Other Free Cash Flow Acquisition and Transfer effect Dividends paid Taxation Net financial charges Extraord. Other Items Variations Net Cash Flow

19 FINANCIAL HIGHLIGHTS Euro mn CABLES & S. TYRES GROUP SECTOR SECTOR CONSOLIDATED Fixed assets 1,325 1,161 1,440 1,456 3,331 3,062 Net Working Capital ,200 Net Invested Capital 1,426 1,735 1,927 1,917 3,584 4,262 Shareholder's Equity 2, ,958 2,454 Provisions , Net Financial Position (1,644) (3,495) 1,017 Total Financing 1,426 1,735 1,927 1,917 3,584 4,262 Net shareholder's equity attributable 5,756 2,275 Net Equity per Share Free Cash Flow

20 KEY RATIOS ECONOMIC VALUE ADDED (Euro mn) 14.0% 12.0% 13% % 8.0% 6.0% 4.0% 2.0% 0.0% 8.2% 7.8% (230) (131) WACC ROI NOPAT/NCI Ebit Nopat EVA

21 PERSONNEL Employees at Acquisitions Deconsolidations Efficiencies 40,103 3,749 (911) * (1,027) Employees at ,914 * Temporaries rose by 689 units year on year

22 PIRELLI S.P.A. STATUTORY ACCOUNTS as proposed by the Board to Shareholders Net Profit (mn Euro) Dividend Ordinary Saving 1,733 Lit 300 (Euro ) Lit 320 (Euro ) 229 Lit 160 (Euro ) Lit 180 (Euro )

23 CABLES AND SYSTEMS SECTOR

24 CABLES AND SYSTEMS SECTOR PROFIT & LOSS Euro mn Net Sales EBITDA % on Net Sales EBIT % on Net Sales Net Result , % 1,780 FULL YEAR RESULTS Var. 2000/ * 3, % 9.1% % % +31% +58% n.m. 4, % % 1,814 Net Debt Employees Factories (*) Excluding acquisitions (1,644) 20, ,046 n.m. (1,725) 16,

25 CABLES AND SYSTEMS SECTOR SALES VARIATIONS 2000/1999 Volume and mix Exchange rate Prices Prices non metal Deconsolidation New consolidations TOTAL Var. % +1.1% +6.9% +5.9% 0.1% 5.4% +8.7% 17.1%

26 CABLES AND SYSTEMS SECTOR EBIT VARIATIONS 2000/1999 Euro mn Exchange rate + 18 Deconsolidation +10 Prices (metals excluded) (17) Cisco supply agreement +83 Volume and mix +77 Consolidations +5 Materials +1 Efficiency +8 Unitary cost var. & Other (79) Total +106

27 CABLES & SYSTEMS SECTOR RESULTS ON KEY PROJECTS Projects Results so far Objectives 2001 B2B General Wiring 7 active markets 25% consolidated on line turnover (e.g. Italy 76%) All domestic markets (14) > 50% on line turnover eprocurement MRO * 37 active plants across 5 countries 800 orders/week 1 Mn Euro/week * Shared across all Pirelli Group sectors Turkey, Latin America and commercial unit Europe extension orders/week 2.3 mn Euro/week B2B Power Utilities 15 major power utilities connected (supply chain integration) > 25 major power utilities connected Voltimum.com (European electrical installers portal) New JV with ABB, Nexans, Scheneider, Legrand, Philips, Osram Portal go live: France 2Q Italy 3Q Germany 4Q