U.Forner - PREMIUM AND EFFICIENCY

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U. Forner - Industrial Plan

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U.Forner - PREMIUM AND EFFICIENCY

  1. 1. PREMIUM AND EFFICIENCY Ugo Forner BU Car
  2. 2. 2
  3. 3. AGENDA INVESTMENT PLAN TARGETS 2011-2013 MARKET SCENARIO LEVERAGE ON PREMIUM 3
  4. 4. NEW CAR REGISTRATIONS CONFIRM PREMIUM TREND Non PremiumVehicles fitting Premium 5.6%5.6% 2.0%2.0% 56 69 74 84 90 2000 2010 2011 2013 2015 11% 12% 13% 15% 2.8%2.8% 1.9%1.9% 9.6%9.6% 5.0%5.0% Mln Passenger + Light Commercial Vehicles Source: Global Insight, Eurostat, Anfac, Pirelli estimates 4
  5. 5. EMEA + NAFTA LATAM + APAC SAME TREND IN ALL REGIONS 6.1%6.1% 8.1%8.1% 5.1%5.1% 41 14% 2000 35 19% 2010 38 20% 2011 44 2013 47 2015 20,9%21% -1.5%-1.5% 15 3% 2000 34 5% 2010 36 6% 2011 40 2013 43 2015 20,9%8% 1.4%1.4% -2.1%-2.1% 8.3%8.3% 5.5%5.5% 13.1%13.1% 7.9%7.9% 14.4%14.4% 4.5%4.5% Mln Passenger + Light Commercial Vehicles Source: Global Insight, Eurostat, Anfac, Pirelli estimates Non PremiumVehicles fitting Premium 5
  6. 6. Global Tyre market 2.8%2.8% 4.3%4.3% 925 1221 1287 1402 1505 2000 2010 2011 2013 2015 9% 10% 11% 12% 4.7%4.7% 2.6%2.6% 6.5%6.5% 4.0%4.0% TYRE MARKET EVOLUTION REFLECTS THE SAME TREND Non Premium TyresPremium Tyres (W, Y, Z only) Mln pieces Source: Europool, RMA, Anip, CRIA, Pirelli estimates 6
  7. 7. EMEA + NAFTA LATAM + APAC SAME TREND IN ALL REGIONS 2.5%2.5% 5.8%5.8% 7.1%7.1% 669 11% 2000 770 14% 2010 798 15% 2011 839 2013 871 2015 20,9%16% 1.4%1.4% 256 2% 2000 450 4% 2010 490 4% 2011 563 2013 635 2015 20,9%5% Non Premium Tyres Mln pieces Source: Europool, RMA, Anip, CRIA, Pirelli estimates 4.0%4.0% 1.1%1.1% 5.2%5.2% 2.0%2.0% 11.9%11.9% 5.6%5.6% 14.0%14.0% 6.8%6.8% 7 Premium Tyres (W, Y, Z only)
  8. 8. AGENDA INVESTMENT PLAN TARGETS 2011-2013 MARKET SCENARIO LEVERAGE ON PREMIUM 8
  9. 9. Replacement Price Index Overall Tyre Diameter, Load & Speed Performances 1X 3X 225/45 R17 W 245/50 R18 RF Y 6X FOCUS ON HIGH VALUE PREMIUM SEGMENTS 295/35 ZR20 (Y) 10X 155/80 R13 T 9
  10. 10. SUV D - F SUV A - C BEST PRODUCT RANGE LINED UP TO MEET CONSUMER NEEDS Launch Year Renewal Year URBAN TOURING PURE PERFORMANCE CONSUMER STYLE VEHICLE SEGMENT A B D FEC Race 2007 20122012 2010 2010 2011 2009 2010 10
  11. 11. New Products (% on Total sales) OEM’s Homologations GREEN, RENEWAL SPEED, INNOVATION AND OPTIMIZATION 21% 2010 2013 20152009 25% 30% 28% 31% 20152009 35% 50% 61% 138 2010 2013 20152009 140 160 170 2010 2013 Green Products (% on Total sales) Portfolio Optimization Size covered From 2009… …To 2015 496 680 Product lines SKU 47 ~1.70 0 35 ~1.60 0 SKU = Stock-Keeping Unit 11
  12. 12. EXPECTED DIRECT RETURNS  Increased Pirelli Sales, especially PZero (double speed growth vs. average)  Higher Dealer penetration  Higher price positioning  Stronger partnerships with “high-end” car- makers F1 marketing investments will create concrete returns through commercial support programs F1 MARKET ACTIVATION WILL DRIVE VALUE SALES GROWTH + EXPECTED INDIRECT RETURNS Brand awareness (particularly in RDE) Brand value Increase of Consumer consciousness (proud to fit Pirelli tyres) 12
  13. 13. RIDING THE PREMIUM INCREASE WITH ONE POWER BRAND ~95%~95% ~97%~97% Weight of Premium products on total sales Weight of Pirelli branded products on total sales 201 0 201 3 2015 66% 71% 73% 200 5 62% ~93%~93% 13
  14. 14. 2010 14 64% 71% % on OE sales VALUE CREATION IN OE BEING SELECTIVE ON CUSTOMERS, MODELS AND SIZES 2013 Prestige Premium Synergic Pirelli Segment Share Pull-through + - # 1 Strong, 2- digits Low, 1- digits Premium Mix on OE Sales 72% 2015
  15. 15. WHILE THE REPLACEMENT FOCUS CONTINUES TO BE THOSE CONSUMERS THAT SEEK, RECOGNIZE AND PAY FOR VALUE Supporting Actions EMEA + NAFTA 75% 80% % on sales Replacement rate RDE mkts 47% 57% 79% 52%  Enlarge retail network  Develop the B2C platform and Web-Market Place for our hard-franchise network  F1 Market Commercial Activation  Exploit Moto best practices in engaging the Consumer  Enhance Web-based customer integration to optimize Supply Chain + - 2010 2013 2015 Premium on total Replacement Sales Premium high/end cars Mass market 15
  16. 16. AGENDA INVESTMENT PLAN TARGETS 2011-2013 MARKET SCENARIO LEVERAGE ON PREMIUM 16
  17. 17. PREMIUM & EFFICIENCY Greenfield New capacity / Mix improvement … Capex ROMANIA +60% by 2013 focused on Premium / Specialties MERCOSUR +10% by 2011 and another 10% available thanks to Mexican ramp-up by 2012 MEXICO Operational by 2012 Better service and lower costs to deliver high-end NAFTA markets Debottlenecking Latam  Operational by 2012  Radial only to serve International markets ITALY Hi-Tech Prestige Competence Center Next MIRS 100% Green Performance 30% higher efficiency RUSSIA JV with initial output by 2012 CHINA +100% by 2013 focused on Premium / Specialties 2010 56 70 ≤80 Mln pieces (Radial only) 800 ml€800 ml€ 500 ml€500 ml€ 70 80 2013 2015 +25% +15% YEAR END CAPACITY Improve focus, simplify operations 17
  18. 18. Production by Plant MaturityPirelli Industrial FootprintProduction by Area “Old Plants” “New Plants” GermanyGermany TurkeyTurkeyTurkeyTurkeyTurkey UK UK ItalyItalyItaly USAUSA ArgentinaArgentinaArgentina VenezuelaVenezuelaVenezuela Greenfield Mix Improvement Capacity Increase China Romania MexicoMexico Mature RDE COMPETITIVE CAPACITY INCREASE IN HIGH GROWTH AND LOW COST AREAS 2010 70% 30% 2013 61% 2015 48% 39% 52%* 2010 29% 71% 2013 26% 2015 20% 74% 80% Russia Localization: increase of local for local production from 83% to 89% (reduction of logistic and duties costs) Specialized platform, product customization and new processes (NEXT MIRS and PTSM for a flexible UHP production in small lots)  Average plant capacity +30% 2015 vs. 2010  New and recent Greenfields capacity projected > 10 mln pcs * 10% coming from new machineries in old factories 18
  19. 19. AGENDA INVESTMENT PLAN TARGETS 2011-2013 MARKET SCENARIO LEVERAGE ON PREMIUM 19
  20. 20. Sales EBIT MARGIN BU CONSUMER *: TARGETS ~8.5% €/ bln > 4.1 2013E 3.3 2010E 2.8 2009A > 3.5 2011E 2013E2010E2009A 2011E 9÷10% 11÷12% 8.3% 89% 89% 89% 90% 10% 11% 11% 11% Car Moto 20 +7.6%+7.6% CAGR
  21. 21. CONSUMER EBIT INDEX BRIDGE 2010-2013 21 Depreciation/ others EfficienciesPrice/mix Raw materials & cost of inputs Volume EBIT 2013EBIT 2010 index “170”(30) 50 60 index “100” 60 (70) Index “100” = Ebit Consumer 2010
  22. 22. ScaleProductivityTarget Cost Management Total savings 2013 vs. 2010 Allocation to low Cost plants 15% 30% 25% 30% 100% AN EFFICIENCY PLAN WILL SIGNIFICANTLY CONTRIBUTE TO BUSINESS RESULTS IN THE NEXT 36 MONTHS 22
  23. 23. DISCLAIMER 23 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 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. 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.

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