Pirelli SpA preliminary and unaudited financial results for year 2002
Preliminary Financial Statements For Year Ended December 31st 2002 Examined:
- In Fourth Quarter First Signs Of Improvement In Energy Cables And Systems Sector
- 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
- Consolidated Revenues: Euros 6,300 Million,
-11% Net Of The Exchange Rate Effect - Ebitda: Euros 478 Million Against Euros 666 Million In 2001
- Ebit: Euros 117 Million Against Euros 295 Million In 2001, Which Included Euros 59 Million From The Cisco Systems Supply Agreement
- Net Financial Position Improves Against June 30 (Euros -1,618 Million):
Negative For Euros 1,470 Million - Free Cash Flow Posts A Strong Increase To About Euros 400 Million
Milan, February 18th 2003 - The Board of Directors today met and examined the Pirelli SpA consolidated financial statements, which are still preliminary and unaudited, for the year ended 31 December 2002.
The performance of Pirelli SpA Group in 2002 was strongly influenced by the unprecedented 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 uncertainties in the macroeconomic framework impacted the Energy Cables and Systems sector, which, notwithstanding the non-resumption of investments, slightly improved its profitability.
The Tyres Sector has continued to deliver growth.
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.
Against this backdrop, which has impacted the telecommunications equipment and infrastructure market along with the failed recovery of investments in the Energy sector, the Group's management, as already announced in November 2002,has 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 efficiency actions are being carried out as scheduled and they will be substantially completed by next March.
The fourth - and last - quarter of 2002, in fact, showed first signs of improvement in Energy Cables and Systems sector, as well as continued growth in Tyres sector.
Preliminary Group results at December 31st 2002
Group's revenues in 2002 amounted to Euros 6,300 million, down 11% on last year (Euros 7,509 million) net of exchange rate effect; this decrease can be fully attributed to the already mentioned crisis in tlc infrastructures market.
Energy Cables and Systems sector sales were about Euros 3,000 million, down approx. 10% if compared to 2001 figure of Euros 3,532 million, net of exchange rate and metals prices effects.
Tyres sector continued to grow: sales were about Euros 2,850 million, up approx. 9% if compared with 2001 figure of Euros 2,831 million, net of exchange rate effect.
Telecom Cables and Systems sector sales declined from Euros 1,230 in 2001 to Euros 460 million - down 59% net of exchange rate effect - due to the already mentioned world markets conditions.
EBITDA amounted to about Euros 478 million, against Euros 666 million in 2001.
Consolidated EBIT amounted to about Euros 117 million, against Euros 295 million in 2001, figure that included Euros 59 million arising from the supply agreement with Cisco Systems.
As concerning the profitability of each sector:
- Tyres sector profitability continued to strongly grow, confirming last years trends;
- Energy Cables and Systems sector improved, notwithstanding the economic slowdown;
- Telecom Cables and Systems sector was impacted by falling demand, but was able to limit losses thanks to significant and timely efficiencies measures.
Return on Sales (ROS) was 1.9% against 3.9% in 2001 (approx. 3.1% net of the Cisco Systems supply agreement).
Net financial position at December 31st 2002, in line with targets set out in the 2002-2004 Industrial Plan, is negative by about Euros 1,470 million, improving (-9%) when compared with negative figure of Euros 1,618 at June 30th 2002, thanks to efficiencies in Net Working Capital management. The variation on end - 2001 (Euros 1,089 million) relates to: the payment of the final non-recurring taxes for Euros 263 million on the sale of Optical Technologies to Corning; non-recurring restructuring costs for Euros 130 million; the payment of dividends for Euros 149 million.
Group's free cash flow from operations in 2002 markedly improved and was close to Euros 400 million.
The Group's priority commitment to Research and Development is confirmed, with investments equal to 3.5% of sales, compared with 3.2% in 2001.
The total number of employees at January 1st 2003 was 35,610, down about 3,500 from 39,127 at end of 2001; out of this number, 1,500 related to new efficiency measures.
Fourth - and last - quarter of 2002 showed signs of improvement both in Energy and Telecom Cables and Systems sectors: EBIT amounted to Euros 22 million, against Euros 2 million in third quarter 2002 and Euros 5 million in fourth quarter 2001. Sales in fourth quarter amounted to Euros 1,490 million, against Euros 1,450 in third quarter 2002 and Euros 1,810 million in fourth quarter 2001.
First signs for year 2003 confirm the improvement trend already shown in fourth quarter 2002.
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