CABLES AND SYSTEMS
MARKET TRENDS 1998-1999 CABLES ENERGY Stable volume Europe and S. America: continuous price erosion NORTH AMERICA End of monopolies Markets opening INDUSTRY RESTRUCTURING COMMUNICATIONS N. America: growing volume and price erosion Europe: volume increase, price shock AUSTRALIA SOUTH AMERICA EUROPE
TURNOVER 1999 (EXCLUDING NKF-BICC) Total Sales: 3,921 Euro Mln GEOGRAPHICAL BREAKDOWN 11% 43% 21% 15% 10% Italy Rest of Europe North America Central and South America Australia, Asia, Africa Energy cables Telecom cables & systems PRODUCTS 31% 29% Enamelled, building wires and special cables 26% Installation services, accessories and other Products 14%
1999 SALES (Euro Bln) Pirelli Cables and Systems ENERGY COMMUNICATION GENERAL MKT UTILITIES + ACC. SPECIAL CABLES + ENAMELLED SUBMARINE & HV + INSTALL.
PIRELLI ENERGY STRATEGY - Strengthening competitive position through: - Technology innovation - Cost leadership - Global leadership in the industry restructuring POWER CABLES INNOVATION AFUMEX COMPACT AIR BAG ZIP
PLANT MAP (EUROPE) - 2000 (including BICC) SVFO AMFREVILLE DESCO LEIGH PRESCOTT WREXHAM ERITH ABERDARE NEWPORT HARLOW EASTLEIGH B STOKE SOUTHAMPTON ANGY LAON CAVIGEL BARCELONA CAVIMAR DELFT WUPPERTAL XOULCES PARON VOLOGNE GRON CHAVANOZ CHARVIEU SETTIMO T. MERLIN ESMAR LIVORNO O SCHWERIN BERLINO NEUSTADT BRATISLAVA INVEX LIVORNO F. BICOCCA MILANO ACS ALFACAVI ASCOLI P. ARCO F. BATTIPAGLIA GIOVINAZZO F.O.S. PIGNATARO MARE PIKKALA BALASSAGYARMAT BUDAPEST KISTELEK SLATINA Pirelli 44 New acquisition 8 MUDANYA TOTAL 52
PLANT MAP (WORLD) - 2000 (including BICC) Pirelli 65 New acquisition 13 TOTAL 78 SURREY COLUSA ST. JEAN PRESCOTT LEXINGTON ABBEVILLE TIANJIN BAOYING WUXI TONGLING CERQUILHO QUILMES ST. ANDRE SOROCABA SOLAC LA ROSA SICABLE ANGOLA ZIMBABWE MOZAMBICO VEREENGING CLAYTON MALAYSIA JAKARTA DEE WHY MINTO LIVERPOOL
1999 SALES (Euro Bln) Pirelli Cables and Systems ENERGY COMMUNICATION OPTICAL FIBRE TLC CABLES OPTICAL COMPONENTS TERRESTRIAL OPTICAL SYSTEMS SUBMARINE OPTICAL SYSTEMS
CISCO TRANSACTION OVERVIEW TRANSACTION STRUCTURE AND RESULTING OWNERSHIP STRATEGIC ALLIANCE 90% 90% 100% 100% TERRESTRIAL OPT. SYSTEMS OPTICAL COMPONENTS SUBMARINE OPTICAL SYSTEMS OPTICAL CABLES FIBER OPTICS 100% 10% 10%
PHOTONIC TECHNOLOGIES OWNED BY PIRELLI (after Cisco deal) LiNbO 3 Technology GaAs Technology Modulators Pump laser Fiber Gratings Filters Device packaging Packaging of all devices
LITHIUM NIOBATE TECHNOLOGY: LABS Wafer Cleaning Machine 6x6 Polarization Indep.. Switch Thermal Diffusion Oven
GaAs TECHNOLOGY - LABS Clean room for device fabrication MBE chamber for material growth Material characterization lab
FIBER GRATING TECHNOLOGY - LABS Grating writing set-up Grating recoating Chromatic Dispersion Compensator packaging
TELECOM CABLES & FIBERS INTERNET PROTOCOL Broadband services expansion EXISTING OPTICAL NETWORK Narrow bandwidth ( last mile ) Low transmission speed is leading INTERNET technology capability at competitive costs INNOVATIVE FIBERS FIBER TO HOME NEW CABLES END-USER IP (Internet) E-Commerce Broadband Services (voice +video+ data)
PAST PRODUCTS Pirelli Cables & Systems FIBER OPTICS INNOVATION PRESENT - FUTURE PRODUCTS APPLICATIONS NewLight TM + Long length terrestrial systems FreeLight TM Enhanced FreeLight TM Long length, high optical power terrestrial systems SMR fibres DeepLight TM NewLight TM - Enhanced DeepLight TM Long length submarine systems WideLight TM + Metropolitan area (no compensation) ThinLight TM + Premises (last mile area)
SUBMARINE TELECOM SYSTEMS MARKET TREND (Euro Mln) Market Value (Order intake) Order intake for upgrading on installed systems 1997 2001 3,200 5,900 1,900 7,800 MARKET: DRIVING FACTORS Internet as the major source of demand for new capacity Technological continuous improvement: clients want to buy tomorrow s technology to be able to compete in terms of bandwidth costs and availability Time to Market Integration of terrestrial - submarine system Cost competitiveness System upgradability
SUBMARINE OPTICAL SYSTEMS FUTURE PROJECT AC2 Connectivity Project Europe-Ireland-U.S.A. HIBERNIA LEVEL 3 New York - London BALTIC CROSSING MEDCROSSING TAT15 CABLE NETWORK FLAG ATLANTIC APCN 2 AUSTRALIA? JAPAN SAC SOUTH AMERICA CROSSING SAT 3 SOUTH ATLANTIC TELEPHONY SAFE SOUTH AFRICA? FAR EAST
PIRELLI COMMUNICATION OPTICAL CABLES FIBER OPTICS (CONNECTIVITY DATA CABLES) OPTICAL COMPONENTS TLC SUBMARINE SYSTEMS INSTALLATION MAINTENANCE SYSTEMS INTEGRATION ACCESS NETWORK (F.T.T.H.) OEM CARRIERS MODULES DEVICES
E-BUSINESS PROJECT: LOCAL INTERNET SITES E-Services for Installers & specifiers: Online Product Catalogue Distributor Locator Technical Training / News / Updates/ Software Web-enabled Call Center On-line Engineering Service & Support On-line Interactive Training Push and pull promotions Frequent Buyer Program Web Marketing Plan to support: technical marketing customer relationship management (e.g. Pirelli Club, etc.)