20
February
2003
|
00:00
Europe/Amsterdam

Pirelli & C. 2002 preliminary and unaudited financial statements

Preliminary Financial Statements
For Year Ended December 31st 2002 Examined:

 

 

  • CONSOLIDATED REVENUES: 6.700 MILLION EUROS, -11% NET OF THE EXCHANGE RATE EFFECT

  • EBITDA: 520 MILLION EUROS AGAINST 704 MILLION EUROS IN 2001

  • EBIT: 118 MILLION EUROS AGAINST 297 MILLION EUROS IN 2001 WHICH INCLUDED EUROS 59 MILLION FROM THE CISCO SYSTEMS SUPPLY AGREEMENT

  • THE CONTRACTION OF 70% IN WORLD-WIDE DEMAND FOR TELECOMMUNICATION EQUIPMENT IMPACTS FINANCIAL RESULTS

  • PROGRESS IN TYRE SECTOR CONTINUES

  • PROFITABILITY IN ENERGY CABLES AND SYSTEMS SECTOR IMPROVES, IN SPITE OF THE ECONOMIC SLOWDOWN.

  • REAL ESTATE ACTIVITIES RECORD STRONG GROWTH

  • NET FINANCIAL POSITION IMPROVES AGAINST JUNE 30 (-2.234 MILIONI DI EURO): NEGATIVE FOR ABOUT 2.050 MILLION EUROS

  • IN FOURTH QUARTER SIGNS OF IMPROVEMENT IN INDUSTRIAL ACTIVITIES; FIRST INDICATIONS FOR YEAR 2003 CONFIRM THE IMPROVEMENT TREND

  • FURTHER GROWTH EXPECTED IN 2003 FOR REAL ESTATE ACTIVITIES


Milan, 20 February 2003 - The Board of Managing Partners today met and examined the Pirelli & C. consolidated financial statements, which are still preliminary and unaudited, for the year ended 31 December 2002.

Preliminary Group results at December 31st 2002

Group's revenues in 2002 amounted to Euros 6,700 million, down 11% on last year, net of exchange rate effect. The industrial activities (Pirelli SpA Group) contribution to the figure was approx. Euros 6,300 million (-11%); the real estate activities (Pirelli & C. Real Estate Group) contribution was approx. Euros 420 million (+57%). It should be noted that in the real estate business the "sales" figure does not signify the volume of business registered, as operations are conducted principally through acquisition of qualified minority participations in companies which own real estate assets under management. A more significant indicator of the business volume actually managed by Pirelli & C. Real Estate is the aggregate value of production (the sum of revenues and changes to inventory), which also includes the minority equity interests managed. At December 31st 2002, the aggregate value of production, net of acquisitions, amounted to about Euros 1,298 million, up 114% against Euros 607.6 million in 2001. Including acquisitions, the figure amounted to Euros 6,019 million (against Euros 792.7 million in 2001).

EBITDA amounted to about Euros 520 million (7.7% of sales), against Euros 704 million in 2001 (9% of sales), figure that included Euros 59 million arising from the supply agreement with Cisco Systems.

Consolidated EBIT amounted to about Euros 118 million (1.8% of sales), against Euros 297 million in 2001

The performance of industrial activities in 2002 was strongly influenced by the crisis in the telecommunications equipment and infrastructure market, which impacted the performance of the sector in the major developed world markets. This market has seen a world-wide contraction in demand of approximately 70% in value.

The international economic environment slowdown and the non-resumption of investments impacted the Energy Cables and Systems sector, which, nevertheless, slightly improved its profitability. The Tyres Sector has continued to deliver growth. Telecom Cables and Systems sector was impacted by falling demand, but was able to limit losses thanks to significant and timely efficiencies measures

Company actions, aimed at facing the economic downturn through improved efficiency measures - which resulted for 2002 in a gross figure of Euros 210 million and a net figure of Euros 160 million - could not offset the negative market conditions, but succeeded in a marked free cash flow improvement and in keeping debt under control. In November 2002, Group's management has in fact decided to accelerate and intensify the efficiency actions in order to take advantage of any upturn in the market. These actions impacted 2002 accounts for an overall amount of Euros 260 million.
The fourth quarter of 2002 showed first signs of improvement in Energy Cables and Systems sector, as well as continued growth in Tyres sector

The real estate activities, managed by subsidiary Pirelli & C. Real Estate, experienced in turn a particularly important year: the Company became operational in new lines of business that offer strong prospects for the future, foremost among these is non-performing loans; it launched a strategic reorganisation for the commercial property portfolio, with the creation of a first line of long term investments that will lead to the establishment of real estate funds; the flotation of the Company was completed, attracting an influx of financial resources as a support to investments. The achievement of these key strategic objectives allowed the company to close the year on the crest of a strong upwards trend in results. EBIT including income from pro-quota participations more than doubled, totalling approximately Euros 102 million, as compared with Euros 47.2 million in 2001 (+116%).

Net financial position at December 31st 2002 is negative by about Euros 2,050 million, improving when compared with negative figure of Euros 2,234 at June 30th 2002 (Euros 1,954 million at December 31st 2001).

IThe total number of employees at January 1st 2003 was 36,882, down about 2,900 from 39,771 at end of 2001; out of this number, 1,500 related to new efficiency measures in the industrial activities.

For more information on the performance of industrial activities, please see Pirelli SpA's press release of February 18th 2003; for more information on the performance of real estate activities, please see Pirelli & C. Real Estate SpA's press release of yesterday.

Forecasts for current year

In industrial activities (Pirelli SpA), first signs for year 2003 confirm the improvement trend already shown in fourth quarter 2002.
In real estate activities (Pirelli & C. Real Estate SpA), on the basis of information available, it is reasonable to forecast for 2003 a further improvement in EBIT including income from pro-quota equity participations compared to previous year.


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