26
July
2007
|
17:52
Europe/Amsterdam
Pirelli: Board of Directors reviews preliminary results as of 30 June 2007
PIRELLI & C. SPA BOARD OF DIRECTORS REVIEWS PRELIMINARY RESULTS AS OF 30 JUNE 2007: DOUBLE DIGIT GROWTH IN REVENUES (+11.1%) AND EBIT INCLUDING INCOME FROM EQUITY PARTICIPATIONS (+10.2%)
The Pirelli & C. SpA Group
In the first half of 2007 the Pirelli & C. SpA Group continued growing, mainly due to the contribution from the tyre and real estate businesses. In particular, there was a double-digit increase in revenues (+11.1% on a like-for-like basis) and of EBIT including income from equity participations (+10.2%), the most significant indicator for expressing the overall performance of the Group taking into account the different types of businesses.
In industrial activities, Pirelli Tyre realized an increase in revenues (+6.6%) and operating income (+6%), in a competitive market characterized by the consolidation of raw materials costs at high levels, greater than those in the corresponding period of last year. Focus on greater added value segments and growth in emerging markets were confirmed. In real estate activities, Pirelli RE registered significant growth (+36%) in EBIT including income from equity participations. In the start-up businesses, revenues of Pirelli Broadband Solutions suffered from a change in product mix in broadband access, and from a reduction in photonics sale linked to slowing investments in infrastructure by major telecommunications operators worldwide. Revenues of Pirelli Ambiente, net of extraordinary components, were substantially stable.
At consolidated level, revenues of the Group as of 30 June 2007 amounted to 3,188 million euros, up 30.3% compared with 2,446 million euros in the same period of 2006. Excluding revenues relating to the partial deconsolidation of DGAG real estate assets in Pirelli RE and the exchange rate effect in Pirelli Tyre, revenues amounted to 2,681 million euros (+11.1%).
Consolidated operating income (EBIT) stood at 214 million euros, substantially in line with the 216 million euros of the first half of 2006.
EBIT including income from equity participations, which also includes the effect of the results of the companies valued according to the shareholders' equity method and the dividends of the other participations that are not consolidated, amounted to 342 million euros, up 10.2% compared with 310 million euros as of 30 June 2006.
The net financial position of the Group as of 30 June 2007 was negative for 2,969 million euros (an improvement over the -3.074 million euros as of 31 March 2007), including a temporary impact of 979 million euros on the net financial position of Pirelli RE deriving from the DGAG transaction. That impact, as already communicated, will fall to about 90 million euros by the end of 2007, at the conclusion of the deconsolidation process. Excluding temporary effects of the DGAG transaction, the net financial position of the Group as of 30 June 2007 was negative for 2,080 million euros, an improvement compared with -2,183 million euros as of 31 March 2007.
Pirelli Tyre
Revenues of Pirelli Tyre as of 30 June 2007 amounted to 2,151 million euros, with an increase of 6.6% compared with 2,018 million euros in the first half of 2006 (+8.4% net of the exchange rate effect) determined mainly by growth in volumes and the focus on product mix, even in the presence of a negative exchange rate effect. The Consumer business generated revenues of 1,492 million euros, up 6.4% compared with the first half of 2006; the Industrial business had revenues of 659 million euros, up 7.1% compared with the same period last year.
EBITDA was equal to 302 million euros (14% of sales), up 3.1% compared with 293 million euros in the first half of 2006.
Operating income amounted to 206 million euros, up 6% compared with 195 million euros in the first half of 2006, with a ROS of 9.6%, in line with last year. The Consumer business obtained operating income of 149 million euros, up 8.5% compared with the first half of 2006 (137 million euros), reaching ROS of 10% (9.8% in the first half of 2006), while the Industrial business confirmed in absolute value the same result as last year, equal to 57 million euros, with a percentage reduction in ROS from 9.3% to 8.7%.
Pirelli RE
Pirelli RE is a management company that manages funds and companies that own real estate and non-performing loans, in which it coinvests with minority stakes (investment and asset management business) and to which it provides, as well as to other customers, every kind of specialized real estate service, both directly and through a network of franchised agencies (service provider business). Consequently, the most significant performance indicators of the Group's share of turnover and trend in earnings are respectively pro-quota aggregate revenues and EBIT including income from equity participations in reading the results reported below.
Pro-quota aggregate revenues, net of the component relating to the DGAG deconsolidation (equal to 507.6 million euros), amounted to 827 million euros, up 23% compared with the first half of 2006 (673.5 million euros). Consolidated revenues, net of the component relating to DGAG deconsolidation, amounted to 435.4 million euros, with an increase of 41% (308.4 million euros as of 30 June 2006). Total consolidated revenues were 943 million euros.
EBIT including income from equity participations amounted to 125 million euros, with an increase of 36% compared with 92.3 million euros in the first half of 2006. In particular, Investment and Asset Management activities saw an increase in results of 14% (from 78.7 million euros in the first half of 2006 to 89 million euros as of 30 June 2007), while increasing the value of the Facility business through the entry of a 49% partner (Intesa Sanpaolo), for development of the sector in a European perspective, contributed significantly to the strong growth in EBIT including income from equity participations of Services (+93%).
For further information on the performance of the real estate business please refer to the press release issued on 25 July by Pirelli & C. Real Estate.
Pirelli Broadband Solutions
Revenues as of 30 June 2007 amounted to 56 million euros, down from 73 million euros in the first half of 2006. The variation was due to a change in the product mix in the broadband access business and to a shifting of orders to the second half of the year in the world photonics market.
EBITDA of the company was negative for 5.9 million euros, compared with a substantial break-even as of 30 June 2006.
Operating income was negative for 6.9 million euros, compared with -0.6 million euros in the same period of 2006. In addition to the contraction in revenues and relating margins, research costs sustained by new generation photonics for development and customizing of products also affected the change in operating results.
Pirelli Ambiente
Pirelli Ambiente reached revenues of 35 million euros as of 30 June 2007, substantially stable compared with 39 million euros in the first half of 2006 net of the positive effect of the agreement with UK company ReEnergy that had characterized the previous period.
Operating income as of 30 June 2007, negative for 3 million euros, was affected by start-up costs of the new businesses of manufacturing and sales of particulate filters. In the first half of 2006, operating income was positive for 1.5 million euros, mainly thanks to the effect of the agreement with ReEnergy.
Prospects for the current year
The strategy of focusing on segments of greater added value and the good performance of the main businesses in the first half allow the Pirelli & C. SpA Group to confirm for the full year 2007 further improvement of results, assuming no external elements of an extraordinary nature unpredictable as of today.
Coopting a director
The Board of Directors, in addition, proceeded to coopt Enrico Cucchiani, Member of the Board of Management of Allianz SE and Chief Executive Officer of RAS SpA, in place of Paolo Vagnone. The cv of Mr. Cucchiani, a non-executive director not in possession of the requisites to be qualified as an independent director, will be available for consultation on www.pirelli.com.
Relevant facts which occurred after 30 June 2007
On 3 July, Pirelli Ambiente and Global Cleantech Capital (GCC), a private equity fund specialized in clean energy investments, signed an agreement to set up Solar Utility SpA, a joint venture in the photovoltaic energy sector. Solar Utility SpA will be owned 50% each by Pirelli Ambiente and GCC. The new JV plans to invest about 24 €M of equity, in the next 5 years, in roof-based solar energy systems for the production, in Italy, of about 50MW of clean electricity.
On 5 July, the public purchase offer on the quotas of the Tecla fund by Gamma RE, a joint venture between Morgan Stanley Real Estate Special Situations Fund (51%) and Pirelli RE (49%), closed, reaching more than 86% of quotas with voting rights.
On 17 July, Pirelli RE and the real estate funds of RREEF (Deutsche Bank Group) signed a binding agreement for purchase of 100% of BauBeCon, an important German real estate group active mainly in the residential segment, from US private equity fund Cerberus.
On 18 and 19 July 2007, agreements were signed, respectively, for joint ventures setting up Pirelli RE Romania, 80% Pirelli RE and 20% UniCredit Tiriac Bank, one of the main banking institutions in Romania, and Pirelli RE Bulgaria, 75% Pirelli RE and 25% UniCredit Bulbank, the main Bulgarian financial institution.
On 19 July, Pirelli presented in Slatina (province of Olt) development plans and activities of the new industrial and technology pole of the Group in Romania. The presentation was held on the occasion of the ceremony for manufacturing the millionth high-performance tyre in Romania. The new Pirelli pole in Romania is made up of three manufacturing facilities, two already functioning (high-performance tyres and steelcord) and one under construction (particulate filters), for a total investment of about 235 million euros.
§
The half-year results as of 30 June 2007 of Pirelli & C. SpA will be reviewed by the Board of Directors on 11 September 2007.
- REVENUES: 2,681 MILLION EUROS, UP 11.1% ON A LIKE-FOR-LIKE BASIS COMPARED WITH 2,446 MILLION EUROS IN THE FIRST HALF OF 2006. INCLUDING SALES DERIVING FROM THE PARTIAL DECONSOLIDATION OF DGAG (PIRELLI RE), THE INCREASE IS 30.3%
- EBIT INCLUDING INCOME FROM EQUITY PARTICIPATIONS: 342 MILLION EUROS (UP 10.2% FROM 310 MILLION EUROS IN THE FIRST HALF OF 2006)
- NET FINANCIAL POSITION: -2,969 MILLION EUROS, IMPROVED FROM -3,074 MILLION EUROS AS OF 31 MARCH 2007. NET OF THE TEMPORARY IMPACT OF DGAG, THE NET FINANCIAL POSITION AMOUNTS TO -2,080 MILLION EUROS (-2,183 MILLION EUROS AS OF 31 MARCH 2007)
- FOR 2007 THE PIRELLI & C. SPA GROUP CONFIRMS ITS EXPECTATIONS OF IMPROVEMENT OF RESULTS
-
ENRICO CUCCHIANI JOINS BOARD OF DIRECTORS
PIRELLI TYRE - REVENUES: 2,151 MILLION EUROS, UP 6.6% FROM 2,018 MILLION EUROS IN THE FIRST HALF OF 2006 (+8.4% NET OF EXCHANGE RATE EFFECT)
-
OPERATING INCOME: 206 MILLION EUROS (+6%); ROS TO 9.6%
PIRELLI RE - PRO-QUOTA AGGREGATE REVENUES (NET OF PARTIAL DECONSOLIDATION OF DGAG): 827 MILLION EUROS (+23%)
- EBIT INCLUDING INCOME FROM EQUITY PARTICIPATIONS: 125 MILLION EUROS (+36%)
The Pirelli & C. SpA Group
In the first half of 2007 the Pirelli & C. SpA Group continued growing, mainly due to the contribution from the tyre and real estate businesses. In particular, there was a double-digit increase in revenues (+11.1% on a like-for-like basis) and of EBIT including income from equity participations (+10.2%), the most significant indicator for expressing the overall performance of the Group taking into account the different types of businesses.
In industrial activities, Pirelli Tyre realized an increase in revenues (+6.6%) and operating income (+6%), in a competitive market characterized by the consolidation of raw materials costs at high levels, greater than those in the corresponding period of last year. Focus on greater added value segments and growth in emerging markets were confirmed. In real estate activities, Pirelli RE registered significant growth (+36%) in EBIT including income from equity participations. In the start-up businesses, revenues of Pirelli Broadband Solutions suffered from a change in product mix in broadband access, and from a reduction in photonics sale linked to slowing investments in infrastructure by major telecommunications operators worldwide. Revenues of Pirelli Ambiente, net of extraordinary components, were substantially stable.
At consolidated level, revenues of the Group as of 30 June 2007 amounted to 3,188 million euros, up 30.3% compared with 2,446 million euros in the same period of 2006. Excluding revenues relating to the partial deconsolidation of DGAG real estate assets in Pirelli RE and the exchange rate effect in Pirelli Tyre, revenues amounted to 2,681 million euros (+11.1%).
Consolidated operating income (EBIT) stood at 214 million euros, substantially in line with the 216 million euros of the first half of 2006.
EBIT including income from equity participations, which also includes the effect of the results of the companies valued according to the shareholders' equity method and the dividends of the other participations that are not consolidated, amounted to 342 million euros, up 10.2% compared with 310 million euros as of 30 June 2006.
The net financial position of the Group as of 30 June 2007 was negative for 2,969 million euros (an improvement over the -3.074 million euros as of 31 March 2007), including a temporary impact of 979 million euros on the net financial position of Pirelli RE deriving from the DGAG transaction. That impact, as already communicated, will fall to about 90 million euros by the end of 2007, at the conclusion of the deconsolidation process. Excluding temporary effects of the DGAG transaction, the net financial position of the Group as of 30 June 2007 was negative for 2,080 million euros, an improvement compared with -2,183 million euros as of 31 March 2007.
Pirelli Tyre
Revenues of Pirelli Tyre as of 30 June 2007 amounted to 2,151 million euros, with an increase of 6.6% compared with 2,018 million euros in the first half of 2006 (+8.4% net of the exchange rate effect) determined mainly by growth in volumes and the focus on product mix, even in the presence of a negative exchange rate effect. The Consumer business generated revenues of 1,492 million euros, up 6.4% compared with the first half of 2006; the Industrial business had revenues of 659 million euros, up 7.1% compared with the same period last year.
EBITDA was equal to 302 million euros (14% of sales), up 3.1% compared with 293 million euros in the first half of 2006.
Operating income amounted to 206 million euros, up 6% compared with 195 million euros in the first half of 2006, with a ROS of 9.6%, in line with last year. The Consumer business obtained operating income of 149 million euros, up 8.5% compared with the first half of 2006 (137 million euros), reaching ROS of 10% (9.8% in the first half of 2006), while the Industrial business confirmed in absolute value the same result as last year, equal to 57 million euros, with a percentage reduction in ROS from 9.3% to 8.7%.
Pirelli RE
Pirelli RE is a management company that manages funds and companies that own real estate and non-performing loans, in which it coinvests with minority stakes (investment and asset management business) and to which it provides, as well as to other customers, every kind of specialized real estate service, both directly and through a network of franchised agencies (service provider business). Consequently, the most significant performance indicators of the Group's share of turnover and trend in earnings are respectively pro-quota aggregate revenues and EBIT including income from equity participations in reading the results reported below.
Pro-quota aggregate revenues, net of the component relating to the DGAG deconsolidation (equal to 507.6 million euros), amounted to 827 million euros, up 23% compared with the first half of 2006 (673.5 million euros). Consolidated revenues, net of the component relating to DGAG deconsolidation, amounted to 435.4 million euros, with an increase of 41% (308.4 million euros as of 30 June 2006). Total consolidated revenues were 943 million euros.
EBIT including income from equity participations amounted to 125 million euros, with an increase of 36% compared with 92.3 million euros in the first half of 2006. In particular, Investment and Asset Management activities saw an increase in results of 14% (from 78.7 million euros in the first half of 2006 to 89 million euros as of 30 June 2007), while increasing the value of the Facility business through the entry of a 49% partner (Intesa Sanpaolo), for development of the sector in a European perspective, contributed significantly to the strong growth in EBIT including income from equity participations of Services (+93%).
For further information on the performance of the real estate business please refer to the press release issued on 25 July by Pirelli & C. Real Estate.
Pirelli Broadband Solutions
Revenues as of 30 June 2007 amounted to 56 million euros, down from 73 million euros in the first half of 2006. The variation was due to a change in the product mix in the broadband access business and to a shifting of orders to the second half of the year in the world photonics market.
EBITDA of the company was negative for 5.9 million euros, compared with a substantial break-even as of 30 June 2006.
Operating income was negative for 6.9 million euros, compared with -0.6 million euros in the same period of 2006. In addition to the contraction in revenues and relating margins, research costs sustained by new generation photonics for development and customizing of products also affected the change in operating results.
Pirelli Ambiente
Pirelli Ambiente reached revenues of 35 million euros as of 30 June 2007, substantially stable compared with 39 million euros in the first half of 2006 net of the positive effect of the agreement with UK company ReEnergy that had characterized the previous period.
Operating income as of 30 June 2007, negative for 3 million euros, was affected by start-up costs of the new businesses of manufacturing and sales of particulate filters. In the first half of 2006, operating income was positive for 1.5 million euros, mainly thanks to the effect of the agreement with ReEnergy.
Prospects for the current year
The strategy of focusing on segments of greater added value and the good performance of the main businesses in the first half allow the Pirelli & C. SpA Group to confirm for the full year 2007 further improvement of results, assuming no external elements of an extraordinary nature unpredictable as of today.
Coopting a director
The Board of Directors, in addition, proceeded to coopt Enrico Cucchiani, Member of the Board of Management of Allianz SE and Chief Executive Officer of RAS SpA, in place of Paolo Vagnone. The cv of Mr. Cucchiani, a non-executive director not in possession of the requisites to be qualified as an independent director, will be available for consultation on www.pirelli.com.
Relevant facts which occurred after 30 June 2007
On 3 July, Pirelli Ambiente and Global Cleantech Capital (GCC), a private equity fund specialized in clean energy investments, signed an agreement to set up Solar Utility SpA, a joint venture in the photovoltaic energy sector. Solar Utility SpA will be owned 50% each by Pirelli Ambiente and GCC. The new JV plans to invest about 24 €M of equity, in the next 5 years, in roof-based solar energy systems for the production, in Italy, of about 50MW of clean electricity.
On 5 July, the public purchase offer on the quotas of the Tecla fund by Gamma RE, a joint venture between Morgan Stanley Real Estate Special Situations Fund (51%) and Pirelli RE (49%), closed, reaching more than 86% of quotas with voting rights.
On 17 July, Pirelli RE and the real estate funds of RREEF (Deutsche Bank Group) signed a binding agreement for purchase of 100% of BauBeCon, an important German real estate group active mainly in the residential segment, from US private equity fund Cerberus.
On 18 and 19 July 2007, agreements were signed, respectively, for joint ventures setting up Pirelli RE Romania, 80% Pirelli RE and 20% UniCredit Tiriac Bank, one of the main banking institutions in Romania, and Pirelli RE Bulgaria, 75% Pirelli RE and 25% UniCredit Bulbank, the main Bulgarian financial institution.
On 19 July, Pirelli presented in Slatina (province of Olt) development plans and activities of the new industrial and technology pole of the Group in Romania. The presentation was held on the occasion of the ceremony for manufacturing the millionth high-performance tyre in Romania. The new Pirelli pole in Romania is made up of three manufacturing facilities, two already functioning (high-performance tyres and steelcord) and one under construction (particulate filters), for a total investment of about 235 million euros.
§
The half-year results as of 30 June 2007 of Pirelli & C. SpA will be reviewed by the Board of Directors on 11 September 2007.