25
February
2005
|
00:00
Europe/Amsterdam

BoD examines 2004 prelim. financial statements

PIRELLI & C. SPA BOARD OF DIRECTORS EXAMINES PRELIMINARY FINANCIAL STATEMENTS FOR the YEAR ENDED DECEMBER 31st 2004:

IN 2004 ALL FINANCIALS SIGNIFICANTLY IMPROVED

STRONG GROWTH IN PROFITABILITY OF ALL GROUPS ACTIVITIES CONTINUED

NET FINANCIAL POSITION SIGNIFICANTLY IMPROVED

PIRELLI & C. SPA GROUP:

  • REVENUES: APPROX. 7,130 MILLION EUROS, COMPARED TO 6,671 MILLION EUROS IN 2003 (+6.9%); ON A LIKE FOR LIKE BASIS, A GROWTH OF 3.4% WAS POSTED
  • OPERATING INCOME (EBIT): APPROX. 380 MLN EUROS, IN STRONG GROWTH (+42%) COMPARED TO 268 MLN EUROS IN 2003
  • NET DEBT: APPROX. 1,475 MILLION EUROS, IMPROVED VERSUS 1,745 MILLION EUROS AT END 2003


  • INDUSTRIAL ACTIVITIES:
  • REVENUES: APPROX. 6,560 MILLION EUROS, COMPARED TO 6,034 MILLION EUROS IN 2003 (+8.8%); ON A LIKE FOR LIKE BASIS (NET OF EXCHANGE RATES, METAL PRICES AND CHANGES IN CONSOLIDATION SCOPE) A 5.0% INCREASE WAS POSTED
  • OPERATING INCOME: APPROX. 380 MILLION EUROS, UP 43.9%, WITH ROS RISING TO 5.8% FROM 4.4%
  • TYRES: REVENUES AT APPROX. 3,250 MILLION EUROS (+11.5% ORGANIC GROWTH), ROS AT 8.5% FROM 7.4%
  • ENERGY CABLES AND SYSTEMS: REVENUES AT APPROX. 2,890 MILLION EUROS (+9.5% COMPARED TO 2003, UNCHANGED ON A LIKE FOR LIKE BASIS), WITH ROS RAISING TO 4.1% FROM 3.1%
  • TELECOM CABLES AND SYSTEMS: CABLES AND FIBER AT BREAK-EVEN; BROADBAND SOLUTIONS ACTIVITIES STRONGLY GROWING, WITH SALES OF MORE THAN 60 MILLION EUROS (+133%); OVERALL, OPERATING INCOME SIGNIFICANTLY IMPROVED, THOUGH STILL NEGATIVE


  • REAL ESTATE ACTIVITIES:
  • OPERATING INCOME INCLUDING INCOME FROM EQUITY PARTICIPATIONS: 157 MILLION EUROS, +23%

 


Milan, 25 February 2005 - The Board of Directors of Pirelli & C. SpA today met and examined the preliminary and unaudited consolidated financial statements for the year ended 31st December 2004.

During 2004, the Pirelli & C. SpA Group posted a significant improvement of all the economic indicators, confirming trends showed during the year, in which a stable process of growth was undertaken. Performances of all the activity Sectors of the Group further profited by the focalization on higher value-added segments.

In the Industrial Activities, for Tyres Sector 2004 was the best year in the last ten in terms of profitability. During the year important investments were undertaken in order to increase output capacity in geographical areas where highly technologic productions are strongly growing; Energy Cables and Systems Sector confirmed its international leadership both for technology and market shares with an operating income in strong growth; in the Telecom Cables and Systems Sector, the Cables and Fiber business reached the break-even and the new broadband access and photonics activities of Pirelli Broadband Solutions more than doubled revenues to more than 60 million Euros, through innovations jointly developed Pirelli Labs.

In 2004, the Real Estate Activities trend of strong growth was confirmed, in line with targets of the Three Year Plan 2003-2005.

The Group also strengthened its efforts in the environmental sector through integrating in a single company controlled by Pirelli & C. - Pirelli & C. Ambiente Holding SpA - the activities of Pirelli & C. Ambiente SpA, in the field of energy recovery from waste and soil remediation, and Cam Tecnologie SpA (today Pirelli & C. Ambiente Tecnologie), the company formerly controlled by Camfin producing the low environmental impact fuel GecamTM - Il Gasolio Bianco.

The Group Pirelli & C. Spa
In 2004, the consolidated revenues of Pirelli & C. SpA Group amounted to approx. 7,130 million Euros, raising by 6.9% against 6,671 million in 2003. on a like for like basis - net of exchange rates, metal prices and changes in the scope of consolidation - growth was a 3.4%.

The consolidated operating income (EBIT) amounted to approx. 380 million Euros, with a 42% growth when compared to 268 million Euros of 2003. It is worth reminding that 2003 benefited the settlement with Ciena for the use of patents for a value of 10 million Euros.

Consolidated ROS (Return On Sales) was 5,3%, in further growing compared to 4.0% in 2003.

The net financial position at 31st December 2004 is negative for approximately 1,475 million Euros - improving from -1,745 of 2003 year end - considering the effects connected with dividends distribution (132 million Euros), the transaction through which Pirelli exercised its call option on more than 47 million Telecom Italia shares (110 million Euros), the subscription of Eurostazioni SpA's capital increase (33 million Euros) and the acquisition of RCSMediaGroup shares (33 million Euros). Those effects were counterbalanced by the cash generation coming from the ordinary activities for more than 240 million Euros and incomes deriving from Deutsche Bank's placement of Pirelli & C. Real Estate shares (93 million Euros), the sale of industrial non strategic assets (approximately 90 million Euros) and the subscription of Warrants Pirelli & C. 2003-2006 (approximately 175 million Euros).

The industrial operations of the Group
The trend of Group's industrial activities in 2004 showed a significant improvement in operating income, especially through the excellent performances in terms of profitability of Tyres and Energy Cables and Systems Sectors. Telecom Cables and Systems Sector also posted an improvement of operating income, though a continuous and strong pressure on cables and optic fibers prices persists.

In 2004 revenues amounted to approx. 6,560 million Euros, with a 8.8% increase. At comparable conditions (net of effects due to exchange rates, metal prices and changes in the scope of consolidation), revenues grew by 5.0%.

Gross operating income (EBITDA) was approximately 660 million Euros (10.1% on sales), compared to 567 million Euros of 2003 (9.4% on sales).

Operating income (EBIT) amounted to approximately 380 million Euros, in strong growth (+43.9%) when compared to 264 millions Euros of 2003; ROS raises to 5.8% from 4.4% of 2003.

The fourth quarter 2004 operating income amounted to 90 million Euros against 70 million Euros of 2003.

Employees number in the industrial operations of the Group at December 31st, 2004 was 33,956 (of which 3,368 temporary workers), against 33,401 of year end 2003 (of which 2,253 temporary workers).

Industrial sector operations
Revenues in Tyres Sector amounted to approx. 3,250 million Euros with an increase at comparable conditions of 11.5%: approximately 8% refers to increased volumes and the remaining to prices/mix, thus confirming the focus on high performance segments. EBITDA was approximately 455 million Euros (399 million Euros in 2003).
Operating income was approximately 275 million Euros, with a ROS of 8.5% (7.4% in 2003), raising 25% compared to 220 million Euros in 2003.

Revenues in the Energy Cables and Systems Sector amounted to approximately 2,890 million Euros, growing by 9.5% when compared to 2003; on a like for like basis, net of the effects of exchange rates, metal prices and changes in the scope of consolidation, revenues were in line with 2003. EBITDA was approximately 200 million Euros (169 million Euros in 2003).
Operating income was approx. 118 milion Euros, growing by 43% compared to 83 million Euros of 2003 with ROS raising to 4.1% from 3.1%.

In the Telecom Cables and Systems Sector, revenues amounted to approximately 425 million Euros, substantially in line with 427 million Euros of 2003. On a like for like basis, the decrease was 1.9%, due to price pressures just partially compensated by volume growth. EBITDA was approximately 8 million Euros (it was negative by 1 million Euros in 2003). Operating income is negative by approximately 15 million Euros (of which -6 million Euros related to the submarine activities subject of the agreement with Alcatel and -10 million Euros related to the start-up of the activities in broadband and second generation photonics), improving when compared to -39 million Euros in 2003. Cables and Fibers activities have thus reached the operating break-even, mainly thanks to the actions of efficiency undertaken by the Company's management.

The Group's Real Estate Activities
It is worth to remind that Pirelli RE is a management company which manages special purpose vehicles and funds owner of real estate and non performing loans portfolios, investing through minority stakes (asset management and fund management activity) and providing these and other clients with a range of real estate specialist services (service provider activity). Consequently, the aggregate production value net of acquisitions and EBIT including income from equity participations (pro-quota) are the most significant indicators of the business volume managed by the Group and results at operational level, respectively.
The aggregate production value of 2004, net of acquisitions, was of approximately 1,973 million Euros, with a growth of 29% compared to 1,525.5 million euros of 2003. EBIT including income from equity participations (pro quota) amounted to approximately 157 million Euros, compared to 128.1 million euros of 2003 with a 23% growth.

For further information on Real Estate activities, please refer to the press release issued by Pirelli RE last 22 February.

Olimpia
In 2004 Olimpia further improved its economic and financial structure and, after the 2003 merger of Telecom Italia and Olivetti, benefited of a cash flow for dividends, reaching financial equilibrium. Olimpia results - which do not affect preliminary Pirelli & C. Group financial statements - will be, as usual, disclosed when annual report project will be presented.


Finally Board of Directors - partially executing a right attributed by the Shareholders' Meeting of 7 May 2003 - approved a capital increase dedicated to the stock option plans: "Pirelli to People" and "Group Senior Executives", introduced by the incorporated Pirelli SpA in 2001 and referring to overall 570 people among Group's executives, cadres and employees with high potential skills.

In details, the operation - aiming at ensuring the availability of the shares serving the two plans should holders decide to subscribe the respective options - foresees the possible emission of a maximum amount of 54,225,850 ordinary shares with a par value of 0.52 euros each, to be subscribed at a unit price of 1.15 euros per share. If issued, considering the above-mentioned capital increase, these shares would represent approximately 1% of Pirelli & C. SpA ordinary share capital.

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