COMPANY PROFILE

TARGET
“VALUE”

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We want to be an increasingly Premium Company, focused on most profitable products and processes

Premium is ingrained in Pirelli DNA. It is not only a product,
but also an attitude to create value

MARCO TRONCHETTI PROVERA
LONDON - INDUSTRIAL PLAN ANNOUNCEMENT

We anticipate market trends and make them our strengths through:

  • focus on the Top of the Range;
  • expansion in rapidly developing economies;
  • a new organisation model.


With the new Industrial Plan, we further renew our business approach by capitalising on our past achievements and moving towards:

  • a sound cash generation;
  • a high ROI.

Our macro-objectives for 2017

PROFITABILITY

>15%* (13% in 2013)

ROI

˜28% (20% in 2013)

CASH
GENERATION

1.6mld/€**

*Ebit margin before restructuring costs / **cumulated figures 2014-2017

NET DEBT EQUAL TO

˜0.5mld/€ | 0.3times Ebitda (1.4mld/€ in 2013; 1.2 times Ebitda)

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Premium on the Rise

Growth will remain our main driver:

  • in the business segments with the highest added value;
  • in the Premium segment, a market that keeps expanding three times as fast as the non-Premium.

TYRE MARKET: PREMIUM GROWS 3X NON PREMIUM

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High Potential Medium

Our new Plan will allow us to:

  • further reduce volumes and capacity of Standard products;
  • start extracting value from a selected portfolio of high potential Medium products.

Strategy guidelines

A new Efficiency Plan, selective investments in high-return projects and a careful working capital management complete the picture of our strategy guidelines for the 2013-2017 period.

2014 - 2017

EFFICIENCIES

350€/mln (=1% of revenues per year)

CAPEX

1,6€/bln (-5% of revenues in 2017, 11% in 2011)

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Towards Emerging Markets

We are aiming at a further expansion and strengthening in Emerging Markets, currently accounting for over 56% of sales and more than 60% of EBIT.

X

Russia

Strategic area for Winter Tyre demand, set to require products of higher range. We make our presence felt with a renewed commercial offering and with the development of our sales network.

X

Europe

The Premium segment is the core. Renewed momentum of the NAFTA Region for a growth of the Premium and SuperPremium segments. Growth of European Premium OEMs.

X

China

Increase of our production capacity with new partnerships in the Truck Business of the Asia Pacific Region.

X

MEA

Confirmed leadership in the Truck Business, with an expansion of the product portfolio and a strengthening, together with the Car Business, in Middle East key markets.

X

Latin America

Market leadership consolidation in the Car and Truck Businesses through a progressive shift to high added value products, such as Series 01.

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Customer-centric

From Premium and Prestige Car Makers up to the end user, we are all strongly focused on our Customers' needs. A completely renewed and diversified product portfolio in all business segments (Car – Moto – Truck), based on local specificities, will be our most important strategic lever.

2014-2017 Product Line-UP

Car
  • 14

    product lines of which 6 winter

Motorcycle
  • 10

    new Pirelli
    lines

  • 11

    new Metzeler
    lines

Truck
  • 11

    new product
    lines

OE Partnerships

The strong bond with Premium and Prestige OEMs has made us an increasingly global and unreplaceable partner.
Our technological level, the quality of our production and our geographic reach ensure high product and service standards in all the Regions where we operate.

Agreements in the Replacement Channel

Our presence in the Original Equipment channel is also one of the primary drivers for the development of the Replacement channel, where our services to the Client are provided through targeted agreements with dealers, the relaunch and optimisation of our distribution network and the enhancement of marketing.

  • frankfurt, germany

  • wuhan, china

  • moscow, russia

Sustainability Plan

Fully integrated in the Industrial Plan, our Sustainable Development Model encompasses the entire value chain,integrating the sustainability principles in every area, process and company function. A sustainable approach, able to generate tangible and intangible wealth, enduring for the Group.

To us, sustainability is a founding principle, integrated in the Group's vision,
governance and growth strategies.

Drivers and objectives of sustainable value generation

GROWTH

  • Focusing strategy on materiality of our targetsProduct lifecycle study based analysis

  • innovation of materialsBio-silica, alternative natural rubber, functionalized polymers of electronics: Pirelli Cyber tyre

  • PerformanceEnhancement of Green and Safety performance. Example: Average rolling resistance of CAR production=-40% by 2020 vs. 2007

PRODUCTIVITY

  • Operational efficiency

    • -18%Energy savings
      by 2020

    • -15%CO2 emissions

    • -58%Water consumption
      by 2020

    • >95%Waste recycling
      by 2020

    (performance on specific indices vs. 2009)

  • Health and safety

    • -90%Incidence of accidents at work vs. 2009

RISK MANAGEMENT


  • Strategic
    and operational
    risks management
    solid tool

  • Investments +8,3% CAGRCapex e Opex invested by 2017Target: risk mitigation and business continuity

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Risk management plan

We convert risks into opportunities by applying an all-round proactive risk management model. A careful analysis and anticipation of risk and uncertainty factors and the assessment of their impact on the Company's performance is a vital prerequisite for the creation of sustainable value.

Our Risk Model systematically assesses three risk categories:

1

EXTERNAL
RISKS

2

STRATEGIC
RISKS

3

OPERATIONAL RISKS

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