Pirelli RE: Figures at September 30th, 2009 approved
• THIRD QUARTER CLOSES WITH EBIT, INCLUDING NET INCOME FROM INVESTMENTS BEFORE RESTRUCTURING COSTS AND WRITEDOWNS/ REVALUATIONS, UP ON PREVIOUS TWO QUARTERS. TARGET EBIT FOR 2009 CONFIRMED AT BETWEEN -€25 AND -€35 MILLION
• MAJOR IMPROVEMENT IN RESULTS FROM REAL ESTATE MANAGEMENT AND SERVICES (-€0.5 MILLION, VERSUS -€5.2 MILLION IN 2008)
• COST-SAVING PLAN PROCEEDS: SAVINGS OF €47 MILLION ALREADY ACHIEVED; TARGET RAISED TO €65 MILLION FOR 2009
NINE-MONTH FINANCIAL HIGHLIGHTS:
• TOTAL SALES: €657.6 MILLION ALREADY REALIZED AT SEPTEMBER 30TH (€714.5 MILLION AT SEPTEMBER 2008), THE COMPANY EXPECTS TO REACH ITS TARGET OF €1 BILLION
• EBIT INCLUDING NET INCOME FROM INVESTMENTS BEFORE RESTRUCTURING COSTS AND WRITEDOWNS/REVALUATIONS: -€30.2 MILLION (€22.4 MILLION AT SEPTEMBER 2008). ALSO CONSIDERING INTEREST INCOME FROM SHAREHOLDER LOANS, EBIT IS NEAR BREAK-EVEN (-€8.9 MILLION)
• NET RESULT: -€57.9 MILLION (-€12.9 MILLION AT SEPTEMBER 2008)
• NET FINANCIAL POSITION, EXCLUDING SHAREHOLDER LOANS GRANTED: -€447.4 MILLION (-€861.8 MILLION AT DECEMBER 31ST, 2008) THANKS TO CAPITAL INCREASE COMPLETED AT THE START OF JULY
Milan, November 4th, 2009 – At today's meeting, the Board of Directors of Pirelli & C. Real Estate examined and approved the Interim Management Statement at September 30th, 2009.
The Company continues to work on completing the turnaround announced in its three-year plan for 2009/2011. In fact, internal reorganization is proceeding, as is the cost-saving plan, started in 2008 in the face of the new market conditions. The Company is also focusing on its recurring revenues from real estate management and specialized services and on reducing debt and net invested capital.
In keeping with the announced strategy, the sale of 5% of Pirelli RE SGR to institutional partner Intesa Sanpaolo during the third quarter, is designed to support growth in the assets managed by the fund manager and hence in fund management activities, both of which are core elements of the development strategy contained in the 2009-2011 business plan, with the goal of increasing recurring profits from real estate management activities, as well as making potential 2 partnerships with other sector operators.
The Company is also continuing to implement the cost-saving plan started in 2008, with the savings of €47 million achieved in the period to September 30th close to the original full-year target for 2009 of €50 million; the annual target has been revised up accordingly to around €65 million in total savings.
As far as the Company's capital and financial strengthening is concerned, the capital increase was completed successfully and a committed credit line has been obtained from eight leading financial institutions which is more appropriate to the Company's new requirements not only in terms of amount (€320 million) but also in terms of maturity (July 2012).
Despite the impact of the international crisis, which is still affecting results, Pirelli RE closed the third quarter with a negative EBIT, inclusive of net income from investments before restructuring costs and writedowns/revaluations, of €7.3 million although better than the previous two quarters (-€14.7 million in the first quarter and -€8.2 million in the second quarter). Management activities (fund & asset management) and real estate services (property management, agency) inclusive of headquarter costs reported considerably better results (-€0.5 million, versus -€5.2 million in 2008 which included €17.0 million in indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund) thanks to the steps taken to cut costs. The current year's result includes the gain on selling 5% of Pirelli RE SGR (€6.1 million).
Performance in the first nine months of 2009**
Real estate sales amounted to €657.6 million at September 30th, 2009 (€714.5 million at September 30th, 2008). Sales margin was 12% (19% in the first nine months of 2008). The Company confirms that it will be able to meet its year-end sales target of €1 billion.
Consolidated revenues were €199.2 million at September 30th, 2009 (€296.5 million at September 30th, 2008). Worth remembering is that the 2008 figure benefited from around €49 million in revenues from the sale of just one asset in Poland.
EBIT, including net income from investments before restructuring costs and asset writedowns/revaluations, came to -€30.2 million compared with €22.4 million in the first nine months of 2008. The Company confirms its EBIT target for 2009 at between -€25 and -€35 million, as previously announced.
Part of the difference in EBIT relative to September 2008 (-€52.6 million) is due to more than €30 million of non-recurring income from which the company benefited in the prior period on the sale of just one asset in Poland and indemnity received upon replacing Pirelli RE SGR as the manager of the Berenice fund. In addition, the fair value measurement of hedging derivatives had a positive impact of €2.8 million on the income statement in the first nine months of 2008, but a negative one of €9.9 million in the first nine months of 2009 due to movements in interest rates.
When EBIT including net income from investments before restructuring costs and writedowns/revaluations is summed with interest income from shareholder loans, EBIT shows a loss of €8.9 million in the first nine months of 2009 and a profit of €0.3 million in the third quarter.
Of the loss at September 30th, 2009, €8.4 million is attributable to the results of funds and vehicle companies, while €0.5 million is attributable to the service business, including headquarter costs.
The net balance of revaluations and writedowns is a negative €11.9 million at September 30th, 2009 (-€1.4 million in the first nine months of 2008).
Consolidated net income (loss) is -€57.9 million at September 30th, 2009 (-€12.9 million in the first nine months of 2008).
Group net equity is €679.9 million at September 30th, 2009 (€361.7 million at December 31st, 2008).
The net financial position reports net cash of €43.5 million at September 30th, 2009 compared with net debt of €289.5 million at December 31st, 2008. The net financial position, excluding shareholder loans granted , reports net debt of €447.4 million, representing a major reduction from €861.8 million at December 31st, 2008 primarily thanks to the capital increase.
Gearing (given as the ratio between net financial position, excluding shareholder loans granted, and net equity) is 0.65 at the end of September compared with 2.35 at December 31st, 2008.
Divisional performance
ITALY
Real estate sales amounted to €356.4 million in the first nine months of 2009 compared with €480.5 million in the first nine months of the previous year.
EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to €4.3 million at September 30th, 2009 compared with €28.1 million at September 30th, 2008. EBIT comprises €19.5 million in income from services (an improvement of €18.9 million on 2008 and €15.1 million in losses from real estate funds and vehicle companies (€9.2 million in 2008).
GERMANY
Real estate sales amounted to €274.9 million in the first nine months of 2009 compared with €173.7 million in the first nine months of the previous year.
EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to -€0.4 million at September 30th, 2009 compared with -€3.6 million at September 30th, 2008. EBIT comprises €2.2 million in income from services (-€6.4 million in losses in 2008) and -€2.6 million in losses from real estate vehicle companies (€2.8 million in income in 2008).
POLAND
Real estate sales amounted to €26.3 million at September 30th, 2009 compared with €60.3 million in the first nine months of the previous year.
EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations came to €0.9 million at September 30th, 2009 compared with €18 million at September 30th, 2008 when this figure benefited from a nonrecurring disposal of a major asset. EBIT comprises €1.1 million in net losses from services (- €0.4 million in 2008) and €2 million in income from real estate vehicle companies (€18.5 million in 2008).
NPL
Collections of non performing loans amounted to €226.7 million in the first nine months of 2009 compared with €321.3 million in the first nine months of last year.
EBIT, including net income from investments and interests from shareholder loans and before restructuring costs and writedowns/revaluations, came to €2.1 million at September 30th, 2009 compared with €21 million at September 30th, 2008. EBIT comprises €5.2 million in losses from services (income of €0.2 million in 2008) and €7.3 million in income from vehicle companies (income of €20.8 million in 2008).
Expected outlook for the business in 2009
The Company confirms its previously announced target level for full-year EBIT including net income from investments before restructuring costs and property writedowns/revaluations (between -€25 and -€35 million). It is well to recall that such projections for 2009 could be heavily influenced by exogenous factors beyond the Company's control, such as changes in the macroeconomic scenario, the trend in the real estate market, movements in interest rates and the terms of access to credit.