Pirelli & C. S.p.a. · MIL:PIRC
Pirelli & C — Investor Presentation (March 2003)
25 slides from Pirelli & C's investor presentation, Mar 12, 2003
Slide 1: Capital increase, control chain simplification, Pirelli FY 2002 results
Capital increase Control chain simplification Pirelli FY 2002 results Milan, March 12th, 2003 0
Slide 2: Presentation Agenda
Presentation Agenda • Capital Increase and Control chain simplification - Strategic Rationale of the Transaction - New Pirelli Group Structure - Transaction details - Expected timetable • Group Overview • Questions and Answers 1
Slide 3: Strategic Rationale
Strategic Rationale The transaction is structured in a capital increase of Pirelli & C. followed by the incorporation of Pirelli S.p.A. and Pirelli & C. Luxembourg into Pirelli & C. Main purposes: 1) strengthening the Group Financial Structure through a capital increase of roughly € 1,250 mln 2) ado
Slide 4: Main Advantages
Main Advantages ¾ Maximize market capitalization and liquidity ¾ Simplify the investment approach offering to shareholders one listed company with a wider activity portfolio ¾ Allow a better focus on value creation for every shareholder ¾ Optimise the economic and financial flows among the group and
Slide 5: New Pirelli Group Structure
New Pirelli Group Structure Current Structure Envisaged Structure 100% Pirelli & C. Luxembourg 100% 100% 50,4% 100% 61,2% 27,5%* 14,2% Pirelli Energy Telecom Olimpia Tyres Real Estate 100% 100% 50,4% 100% Cables Cables 61,2% Energy Telecom Olimpia Tyres Cables Cables ¾ From three to one-layer struct
Slide 6: Transaction details: Main steps
Transaction details: Main steps Transformation • The transformation of Pirelli & C. from Limited Partnership (“Società in Accomandita”) to Limited Company (“Società per Azioni”) and the alignment of of Pirelli & C. to the Pirelli & C. bylaws to the one of Pirelli S.p.A. Limited Company • A capital i
Slide 7: Transaction details: Capital Increase
Transaction details: Capital Increase Total € 1,014 million, subject to reduction for the withdrawal right amount: Subscription • Intended to all the current Pirelli & C. shareholders (ordinary and saving), right: excluding those shareholders which declared the intention to withdraw • Commitment of
Slide 8: Transaction details: Valuation and Swap Ratios
Transaction details: Valuation and Swap Ratios The exchange ratio has been determined based on: • Evaluation of the two companies’ economic value • Average market prices in the last 3 months (including the Pirelli & C. capital increase effect) It was also confirmed by Primary Investment Banks fairne
Slide 9: Transaction details: Saving Shares Rights
Transaction details: Saving Shares Rights The existing rights of the Pirelli & C. and Pirelli S.p.A. saving shares are as follows: Pirelli & C. S.A.p.A. Pirelli S.p.A. • Minimum dividend yield: 5% of • Minimum dividend yield: 7% of par value (€ 0.52) par value (€ 0.52) • Preference dividend yield ov
Slide 10: Transaction details: New Shareholders structure
Transaction details: New Shareholders structure Current Shareholders Structure Envisaged Shareholders Structure (*) PIRELLI PIRELLI & & C. C. S.A.p.A. S.A.p.A. PIRELLI PIRELLI & & C. C. S.p.A. S.p.A. Treasury Other syndicated shares shareholders Market 0.4% 37.5 % 53.2 % CAMFIN Market 29.9% 32.2 % O
Slide 11: Expected Timetable
Expected Timetable Date Event 11-mar-03 X BoD Pirellli & C., Pirelli & C. Luxembourg and Pirelli S.p.A. 7-may-03 X+57 Ordinary and Extr. General Meeting of P&C, P&C Lux and Pirelli S.p.A. 6-jun-03 X+87 Withdrawal right Payment 9-jun-03 X+90 Dividend Payment and offer’s beginning 27-jun-03 X+108 End
Slide 12: Presentation Agenda
Presentation Agenda • Capital Increase and Control chain simplification • Group Overview - FY 2002 at a Glance - Olimpia new Shareholders Structure - Pirelli FY 2002 Group Results • Questions and Answers 11
Slide 13: The Year 2002 at a Glance
The Year 2002 at a Glance MARKET CONDITIONS • Economic slowdown sharpened abruptly in second half MAIN • Olimpia shareholders structure opened to a new Strategic Partner EVENTS • Pirelli Real Estate IPO • Pirelli Real Estate strong upwards trend in results, confirming HIGHLIGHTS plans and commitment
Slide 14: Pirelli Tyres: Profit And Loss (Euro mln)
Pirelli Tyres: Profit And Loss (Euro mln) FY 2002 FY 2001 Var. % Q4 2002 Q3 2002 Var. % Q4 2001 Var. % Net Sales 2,857 2,831 +0.9% 702 667 +5.2% 698 +0.6% EBITDA 365 347 +5.2% 81 82 -1.2% 70 +15.7% Ebitda margin 12.8% 12.3% 11.5% 12.3% 10.0% EBIT 191 172 +11.0% 41 39 +5.1% 28 +46.4% Ebit margin 6.7%
Slide 15: Tyres Sector
Pirelli Tyres Sector ENVIRONMENT PIRELLI ACTIONS ¾ Market of High Performance products still ¾ Mirs plants increasing output in Germany, UK and increasing at double digit growth USA; CCM (innovative mixing room) pilot plant launched in Milan ¾ Light vehicle production down 1.7% in Western Europe. La
Slide 16: Pirelli Energy Cables: Profit And Loss (Euro mln)
Pirelli Energy Cables: Profit And Loss (Euro mln) FY 2002 FY 2001 Var. % Q4 2002 Q3 2002 Var. % Q4 2001 Var. % Net Sales 3,021 3,532 -14.5% 715 692 +3.3% 1,045 -31.6% EBITDA 158 149 +6.0% 49 32 +53.1% 39 +25.6% Ebitda margin 5.2% 4.2% 6.9% 4.6% 3.7% EBIT 55 52 +5.8% 22 7 + 214% 15 +46.7% Ebit margin
Slide 17: Energy Sector
Pirelli Energy Sector BUSINESS ENVIRONMENT PIRELLI ACTIONS ¾Weak demand in industrial applications and ¾Major restructuring effort (4 plants closed and 2,044 contraction of Utility investments headcount reduced by 14.1%YoY) ¾Rationalisation focusing on higher added value ¾Overcapacity and need of re
Slide 18: Pirelli Telecom Cables and Systems: Profit And Loss (Euro mln)
Pirelli Telecom Cables and Systems: Profit And Loss (Euro mln) FY 2002 FY 2001 Var. % Q4 2002 Q3 2002 Var. % Q4 2001 Var. % Net Sales 468 1,230 -62.0% 88 96 -8.3% 106 -17% EBITDA (22) 134 n.m. (12) (21) n.m. (4) n.m. Ebitda margin n.m. 10.9% n.m. n.m. EBIT (84) 76 n.m. (28) (36) n.m. (18) n.m. Ebit
Slide 19: Telecom Sector
Pirelli Telecom Sector OVERVIEW 2002 MARKET EXPECTATIONS 2003 ¾ Optical cable demand < 50% of 2001 level ¾ YoY Optical volume generally flat – slight decrease on 2002 ¾ Cable prices 30% lower than 2001 ¾ Cable prices lower – average 10% reduction on 2002 ¾ Fiber capacity 3x’s current demand Q4 ¾ Pre
Slide 20: Pirelli & C. Real Estate: Profit And Loss (Euro mln)
Pirelli & C. Real Estate: Profit And Loss (Euro mln) FY 2002 FY 2001 Var. % Aggregate value of production (net of acquisition) 1,297.3 607.6 +113% EBIT including pro-quota income from participations 102.2 47.2 +117% Consolidated net income from real estate activities 82.6 33.5 +147% Total consolidat
Slide 21: Real Estate Sector
Pirelli Real Estate Sector OVERVIEW ¾ The Italian real estate market is undergoing significant structural changes: ¾ Still immature versus rest of Europe ¾ Attractiveness of market/opportunity has led to increased transactions/improved professionalism ¾ Key development plans for the near future: ¾ L
Slide 22: Pirelli Group Profit and Loss (Euro mln)
Pirelli Group Profit and Loss (Euro mln) PIRELLI SPA GROUP PIRELLI & C. GROUP FY 2002 FY 2001 Var. % FY 2002 FY 2001 Var. % Net Sales 6,311 7,509 -16% 6,718 7,762 -13% EBITDA 480 666 -28% 523 704 -25% Ebitda Margin 7.6% 8.9% 7.8% 9.1% EBIT 117 295 -60% 118 297 -60% Ebit Margin 1.9% 3.9% 1.8% 3.8% Fi
Slide 23: Olimpia New Shareholders Structure
Olimpia New Shareholders Structure Hopa entry into Olimpia • Hopa becomes new shareholder in Olimpia with 16% stake shareholder structure effective from April 2003 • Olimpia improves its balance sheet and its financial structure Olimpia balance sheet The New Shareholders Structure Edizione Unicredit
Slide 24: More attractive portfolio, balancing growth and profitability recovery
More attractive portfolio, balancing growth and profitability recovery ¾ Tyre in constant improvement, thanks to successful “High Performance“ focus and leading-edge products (MIRS) ¾ Real Estate capturing growth opportunities with an original business model ¾ Energy and Telecom Cables and Systems w
Slide 25: Presentation Agenda
Presentation Agenda • Capital Increase and Shareholders structure simplification (or chain of control simplification) • Group Overview • Questions and Answers 24