BOARD OF PIRELLI & C. SPA REVIEWS PRELIMINARY DATA FOR THE YEAR ENDED 31 DECEMBER 2014
RESULTS IN LINE WITH TARGETS
FURTHER REINFORCEMENT OF PREMIUM (VOLUMES +17.8%) IN ALL MARKETS; PRICE/MIX AT +4.2%; EFFICIENCIES OF €92 MILLION
CASH GENERATION ABOVE EXPECTATIONS; IN FOURTH QUARTER THE NET FINANCIAL POSITION IMPROVED BY MORE THAN €1 BILLION
CONSOLIDATED RESULTS
• EBIT: +6.8% TO €838 MILLION (€784.7 MILLION IN 2013), IN LINE WITH 2014 TARGET OF APPROX. €840 MILLION
• EBIT MARGIN BEFORE RESTRUCTURING COSTS AT 14.4% (13.4% IN 2013); EBIT MARGIN AFTER RESTRUCTURING COSTS AT13.9% (12.9% IN 2013)
• REVENUES: €6,018 MILLION, IN LINE WITH THE TARGET OF >€6.0/ < 6.1 BILLION, WITH ORGANIC GROWTH OF 5.9%; -0.7% COMPARED WITH €6,061 MILLION IN 2013 INCLUDING FOREX EFFECT (-6.6%),
• NET FINANCIAL POSITION NEGATIVE APPROX. €980 MILLION; EXCLUDING STEELCORD DISPOSAL THE FIGURE IS ABOUT €1,170 MILLION BETTER THAN 2014 TARGET OF ~€1,200 MILLION (€1,322.4 MILLION AT END 2013 AND €2,003.9 MILLION ON 30 SEPTEMBER 2014)
TYRE ACTIVITIES
• EBIT: +4.5% TO €853 MILLION (€815.7 MILLION IN 2013)
• EBIT MARGINE BEFORE RESTRUCTURING COSTS AT 14.7% (13.9% IN 2013), EBIT MARGIN AFTER RESTRUCTURING COSTS AT 14.2% (13.5% IN 2013)
• TOTAL VOLUMES +2.0% , CONSUMER VOLUMES +5.0% AND PREMIUM VOLUMES +17.8%, INDUSTRIAL VOLUMES -6.5% DUE TO THE SLOWDOWN OF SOUTH AMERICAN MARKET
• PREMIUM REVENUES: €2,536 MILLION, WITH ORGANIC GROWTH OF 13.2%; +11.5% INCLUDING FOREX EFFECT (-1.7%). PREMIUM EQUAL TO 55% OF CONSUMER REVENUES (+4 PERCENTAGE POINTS COMPARED TO 2013)
• REVENUES: €6,008 MILLION, WITH ORGANIC GROWTH OF 6.2%; - 0.4% COMPARED WITH €6,030.6 MILLION IN 2013 INCLUDING FOREX EFFECT (-6.6%)
• CONSUMER EBIT MARGIN BEFORE RESTRUCTURING COSTS AT 15.1% (13.7% IN 2013); EBIT MARGIN AFTER RESTRUCTURING COSTS AT 14.7% (13.3% IN 2013)
• INDUSTRIAL EBIT MARGIN BEFORE RESTRUCTURING COSTS AT 13.1% (14.6% AT END 2013); EBIT MARGIN AFTER RESTRUCTURING COSTS AT 12.6% (14.1% AT END 2013). THE INDUSTRIAL ANNUAL PROFITABILITY TREND REFLECTS THE 6.5% FALL IN VOLUMES MAINLY IN EMERGING MARKETS
2015 TARGETS
• CONSOLIDATED EBIT ~930 MILLION EURO AFTER RESTRUCTURING CHARGES OF APPROX. 40 MILLION EURO
• CONSOLIDATED EBIT WILL BE DRIVEN BY:
- THE CONSUMER BUSINESS WITH A MARGIN BEFORE RESTRUCTURING CHARGES EQUAL TO OR ABOVE 16% ON SALES OF APPROX. 4.9 BILLION EURO
- THE INDUSTRIAL BUSINESS WITH A MARGIN BEFORE RESTRUCTURING CHARGES OF APPROX. 12% ON EXPECTED SALES OF APPROX. 1.5 BILLION EURO AFTER THE COMPLETE DECONSOLIDATION OF STEELCORD
• TOTAL REVENUES FORECAST TO GROW BY +6%/+6.5% TO APPROX. 6.4 BILLION EURO DERIVING FROM:
- VOLUME GROWTH EXPECTED AT EQUAL TO OR ABOVE+3%. PREMIUM WILL BE THE DEVELOPMENT DRIVER WITH A RATE OF VOLUME GROWTH EQUAL TO OR ABOVE +10%
- PRICE/MIX GROWTH AT EQUAL TO OR ABOVE +4%
- FOREX IMPACT AT ABOUT -1%
• CASH GENERATION BEFORE DIVIDENDS OVER 300 MILLION EURO
• 2015 TARGETS REFLECT ADJUSTMENT OF VENEZUELAN EXCHANGE RATE TO 20 BOLIVAR PER US DOLLAR
• INVESTMENTS BELOW 400 MILLION EURO
The Board of Directors of Pirelli & C. SpA met today to review the preliminary and not audited results for the year ended December 31st, 2014. The year’s performance, which saw growth in the main economic indicators, was characterised in particular by: - growth above expectations of the Premium segment, with volumes increasing 17.8% (above the 2014 target of >16%), and the consequent strengthening of Pirelli’s positioning in all main geographical areas, in particular Apac. Premium revenues accounted for 55% of Consumer revenues, an increase from 50.8% in 2013; - the price/mix component at +4.2% (in line with the 2014 target of about +4%/~+5%) thanks to the performance of Premium, the greater weight of sales in the replacement channel and price increases in emerging markets to compensate for currency devaluations; - organic growth in revenues +5.9% (-0.7% net of the negative forex variation of 6.6%). As well as the already mentioned price/mix, higher volumes (+2%) also contributed. The 5% volume growth in the Consumer business, in particular, offset the 6.5% decline in volumes of the Industrial business which discounts the unfavourable economic context of the Latam market, in particular in Original Equipment; - the achievement of internal efficiencies of €92 million (in line with the annual target of approximately €90 million of the approximately €350 million four-year efficiencies plan for 2014-2017); - the marked improvement in profitability, with EBIT growth of 6.8% to €838 million (in line with the target of circa €840 million) and an EBIT margin of 13.9% - with growth of one percentage point compared with 12.9% at the end of 2013 – thanks to the Premium strategy, price increases in emerging markets, and the efficiencies which more than offset the negative forex impact and inflation in production factors. - the positive performances in the Apac, Europa and Nafta areas, with respective revenue growth of 16.5% (Apac) and approximately 5% (Europe and Nafta) and an improvement in profitability which attenuated the effects of the slowdown in the South American market; - the turnaround of the business in Russia, characterised by a marked improvement in the product mix and positive “mid-single-digit” profitability from "negative" in 2013, and improvement in the MEAI area; - cash generation before dividends and the steelcord disposal above expectations at approximately €312 million (above the 2014 target of >€250 million). Taking receipts from the steelcord disposal into account, cash generation before dividends was approximately €500 million; - the improvement in the net financial position which as at 31 December 2014 was approximately €980 million after the disposal of steelcord or, excluding the disposal of the steelcord activities, approximately €1.17 billion, better than the 2014 target of approximately €1.2 billion. In the fourth quarter, in particular, the net financial position saw an improvement of over €1 billion, mainly thanks to the operating result, the positive performance of working capital and the impact of the disposal of the steelcord business; 
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