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BOARD OF PIRELLI & C. S.P.A. APPROVES RESULTS FOR YEAR ENDED 31 DECEMBER 2016

- Growth of all main economic indicators in 2016

- Further strengthening of Premium: volumes grow by 14.2% and revenues represent 64.0% of the Consumer business (61.5% in 2015)

- Improvement of price/mix: +5.0% thanks above all to the sales mix

- Progressive improvement in volumes, growth of 2.1% (+5.1% in fourth quarter)

- Efficiencies of 90.5 million euro: reaching 79% of 4-year 2014-2017 target of 350 million euro

- Profitability growth, with a total Adjusted Ebit margin of 14.8% (14.4% in 2015 on like-for-like basis). Record profitability for the Consumer business with an adjusted Ebit margin of 16.8% for the year (16.2% in 2015 on like-for-like basis)

- Significant improvement of net financial position

- Europe sees increased profitability. Apac and Nafta remain most profitable areas

- Investment in Research & Development of 228.1 million euro, equal to about 4% of total revenues (6% of Premium segment revenues)

- The process of Pirelli’s transformation continues

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As an effect of the acquisition by Marco Polo Industrial Holding S.p.a. of Pirelli and its subsequent merger by incorporation of Marco Polo Industrial Holding S.p.A. into Pirelli, following the Purchase Price Allocation (PPA) conducted on the basis of that which is established in the relevant accounting principles, greater amortizations were booked mainly referable to immaterial assets identified in the context of this operation. The “EBIT adjusted” excludes – beyond non-recurring and restructuring charges – also amortization that refer to intangible assets identified in the PPA.

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The Board of Directors of Pirelli & C. S.p.A. has reviewed and approved the group’s results for the year ended on December 31, 2016. The results for 2016 show growth in the main economic indicators.

Revenues amounted to 6,058.4 million euro, with organic growth of 7% at the annual level (on a like-for-like basis and net of forex effects, which were negative 5.4%) and of 8.7% in the fourth quarter. The revenue trend benefitted from strong growth – both in the Consumer and Industrial businesses – of the price/mix component (+5.0%) in particular thanks to improvement in the sales mix, as well as price increases in emerging markets.

Volumes’ performance was positive (+2.1% in 2016, +5.1% in the fourth quarter) thanks to the Consumer business (+3.5% during the year, +4.8% in the fourth quarter). The performance of Industrial volumes, negative at the annual level (-3.8%) as a result of the weakness of the South American market, registered growth in the fourth quarter of 6.5% thanks to the business’s recovery in the region, above all in the Replacement channel.

Premium saw improvement with volume growth of 14.2%, above the Premium market’s global trend (+9.4%). The segment posted organic growth of 12.3% to 3,244.6 million euro, accounting for a total of 64% of Consumer revenues, up from 61.5% in 2015 on a like-for-like basis.

The Adjusted Ebit (operating result before non-recurring and restructuring charges and amortization of intangible assets identified in the context of PPA) was 896.6 million euro (860.5 million in 2015 on a like-for-like basis), with an Adjusted Ebit margin growing to 14.8% compared with 14.4% in 2015 on a like-for-like basis. The improvement can be attributed to internal levers such as volumes’ growth, price/mix and efficiencies achieved to contrast forex volatility, increased raw material costs and inflation in emerging markets. Efficiencies totaled 90.5 million euro, bringing the total of efficiencies achieved since 2014 to 277.3 million euro, equal to 79% of the 4-year 2014-2017 target of 350 million euro.

The operating result (Ebit) was 724.2 million euro (compared with 786.1 million in 2015 on a like-for-like basis) and mainly reflects 66.6 million in non-recurring and restructuring charges linked to rationalization processes and costs related to reorganization activities of the Industrial segment and 105.8 million euro relative to amortizations for intangible assets resulting from the acquisition of Pirelli assets by Marco Polo.

The total net result was 147.6 million euro compared with -383.5 million in 2015. This figure included a loss of 559.5 million for the de-consolidation of Venezuela and a negative impact of 14.6 million euro deriving from the operational activities disposed of. The result from equity investments was negative 20 million euro (-41.4 million euro in the same period of 2015).

The net cash flow from operations shows a net improvement, passing from 701.4 million in 2015 to 882.7 million euro in 2016, thanks to the management of working capital, and after having sustained investments of 372.2 million euro (391.4 million in 2015), mainly earmarked for increases of Premium capacity in Europe, Nafta and China, as well as improvements in the mix.

The total net cash flow – before dividends and the effects deriving from the merger with Marco Polo Industrial Holding and from the re-organization of the industrial activities – was positive for 383.1 million euro (192.1 million euro in 2015) and include approximately 200 million euro of inflows deriving from the sale of some shareholdings (mainly the disposal of the investment held by Eurostazioni S,p.A. in Grandi Stazioni Retail) and real estate assets.

The net financial position on 31 December 2016 was negative 4,912.8 million euro, an improvement of 418.2 million compared with 5,331.0 million euro at the end of 2015. The positive performance stems mainly from the high level of cash generation, as well as an inflow of 266 million euro deriving from the entry, with a stake of 38%, of the Chinese fund Cinda into the capital of Pirelli Industrial in the context of the reorganization project of the industrial business.

Investments in Research & Development totaled 228.1 million euro, equal to about 4% of total sales, of which 191.0 million euro for activities linked to Premium products (about 6% of the segment’s sales).

At the geographic level, Apac registered, together with Nafta, the highest profitability of all the macro-areas, remaining at the twenties level. Revenue performance improved (organic growth +12.1% in 2016 and +25.4% in the fourth quarter) which include the sales of Jiaozou Aeolus Tyre from October 1, 2016. On a like-for-like basis, growth was 9% at the annual level and 17.9% in the fourth quarter, thanks to the positive performance of the Consumer business and the strengthening of the Original Equipment channel thanks to new homologations with European and local brands.

Nafta posted an Ebit margin at the twenties level, in line with 2015, with organic revenue growth of 12.0% in 2016 (+18.6% in the fourth quarter) thanks to the good performance of Premium and Super Premium.

Profitability in Europe improved to mid-teens level thanks to the 10.0% Premium revenue growth, supported by the good performance of sales both in the Original Equipment and Replacement channels. Organic revenues grew by 5.1%.

Meai registered stable profitability at the high-teens level, with organic revenues growth of 7.2%.

The reduction of profitability in South America (mid-single-digit) was mainly due to the performance of the Industrial business which discounted the market’s weakness, while profitability in the Consumer segment was confirmed at the high single-digit level. During the year, revenues at the organic level registered progress of 6.0% (-6.6% including forex effect of -12.6%). There was a marked improvement in performance in the fourth quarter with revenues growing 12%, in particular in the industrial business, with a volume increase above the market’s.

Forex volatility and the weakness of the market had a negative impact on the results in Russia (revenues down 1.0% net of forex) with profitability at break-even level, an improvement compared with the first nine months of 2016 thanks to a marked recovery in the fourth quarter (organic revenue growth of 9.6%, underpinned above all by the good performance of price/mix and a forex effect of +6.5%.

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ECO-FRIENDLY CAR SHARING GETS THE THUMBS UP

Car sharing has been with us ever since kindly drivers first responded to the homespun philosophy of hopeful hitch-hikers who scribbled – and often misspelled – the names of their destinations on handmade signs.

Today car sharing is very different. It is no longer about the haves helping out the have-nots, but entire communities – from vehicle manufacturers to local councils – coming together to organise and share efficient fleets of cars. It’s also big business. Global revenue from car-sharing services is expected to total $34.6 billion (£24 billion) over the 10 years to 2024, according to Navigant Research.

It’s easy to see why its popularity is soaring. Sharing cars means sharing the significant costs of owning them – and that includes the purchase price, tax, insurance, testing, parking and maintenance. Saving on overheads, of course, means you can afford to splash out on moments of motoring luxury. How about taking a spin to the shops in a prestige car? A drop-top with premium Pirelli tyres?

Read more on Pirelli.com


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IN SETTIMO TORINESE FROM 18 JANUARY TO 1 MAY, THE EXHIBITION ENTITLED “PIRELLI IN 100 PICTURES. BEAUTY, INNOVATION, MANUFACTURING”

The exhibition held in the Archimede Library in Settimo Torinese retraces the over 140 years of Pirelli, one of the most important industries in the district.

From 18 January 2017 to 1 May 2017, the Archimede Library in Settimo Torinese will host the exhibition entitled “Pirelli in 100 Pictures. Beauty, Innovation, Manufacturing”. The exhibition traces over 140 years of Pirelli: factory workers, technology, new product research, relationships with the arts and innovative communications, motorsports and the famous calendar. It is also the opportunity to present first pictures of a new project taken inside the Pirelli industrial Hub in Settimo Torinese by Peter Lindbergh, author of the 2017 Pirelli Calendar, to the general public.

The exhibition, curated by Fondazione Pirelli which runs the Historical Archives from where the material was picked, is promoted and organized by Comune di Settimo Torinese with the contribution of Pirelli and Fondazione ECM (Esperienze di Cultura Metropolitana) and is sponsored by Regione Piemonte and Città Metropolitana di Torino. Attending the presentation were the President of Regione Piemonte, Sergio Chiamparino, Mayor of Settimo Torinese, Fabrizio Puppo, Executive Vice President and CEO of Pirelli, Marco Tronchetti Provera, the President of Fondazione ECM, Aldo Corgiat, and Managing Director of Fondazione Pirelli Antonio Calabrò.

We are privileged to offer the opportunity of a unique exhibition to visitors to the Archimede Library”, said the Mayor of Settimo Torinese, Fabrizio Puppo. “The photographs and illustrations retrace the over 140 years of history of Pirelli, which is in part the history of our city and of many workers and citizens of Settimo Torinese and the surrounding towns who have worked there and contributed to its growth. Employment, culture and innovation and three key concepts that tie the history of Pirelli to that of our city and that is told in the most exciting way in the ‘Pirelli in 100 pictures’ exhibition”.

“Innovation and product quality, attention to people and communication with the district where our plants are situated, in Italy and in the world, have always been among the strongest values of Pirelli”, declared Executive Vice President and CEO of Pirelli, Marco Tronchetti Provera. “The exhibition in Settimo Torinese, the site of our most innovative industrial hub, is proof of this. The commitment of the Settimo and Regione Piemonte local authorities, which whom we have interacted with mutual benefit for many years, drives us to continue to operate by combining local and international perspectives”.

“We are proud to have this opportunity to host the splendid ‘Pirelli in 100 Pictures’ exhibition”, added the president of Fondazione ECM, Aldo Corgiat. “This activity is part of a comprehensive cultural program involving Settimo local authorities, Fondazione ECM and Pirelli, which included the shows of Marco Paolini and Moni Ovadia to celebrate the 50th anniversary of Settimo earning city status, the WORKERS exhibition, concerts in the factory for the MITO festival, the Innovation and Science Festival of which Pirelli is Main Sponsor and the library opened in the plant with the collaboration of Archimede”.

The “Pirelli in 100 Pictures. Beauty, Innovation, Manufacturing” exhibition is further confirmation of the importance of culture as a tool for driving development, social cohesion and integration, in addition to reasserting the bond between culture and employment in Settimo Torinese. For Pirelli, in particular, the exhibition follows the activities organized and sponsored in Settimo by the company and by Fondazione Pirelli, which was established in 2009 to promote and disseminate corporate culture, history and documentation. Examples of these activities include the three concerts organized at the Hub in 2010, 2011 and 2014 for the MITO Festival, that Pirelli has been sponsoring since 2007, and the support offered by Pirelli to the Innovation and Science Festival.

The exhibition

The exhibition develops through six sections. “Una P lunga oltre 140 anni” (a “P” over 140 years long) traces the history of Pirelli through the pictures of its factories and its products: from the first plant on the outskirts of Milan to the first international exhibitions, illustrated catalogues and “Pirelli” magazine covers. “La fabbrica degli artisti” (the factory of artists) presents some of the many opportunities that painters and photographers have taken to express their art and tell about the world of factories and manufacturing. Si va che è un incanto” (it runs like a charm) documents the daily challenges that Pirelli has tackled in the racing world since 1907. “Una Musa tra le ruote” (a muse in the wheels) focuses on the relationships between Pirelli and the arts since the beginning of its history from the earliest artist advertising campaigns to illustrations. Elogio della Bellezza” (celebration of beauty) is a line-up of the female icons that introduces visitors to the last section dedicated to the Pirelli Calendar 1964-2017” with pictures by the greatest names in photography.

The most recent was German master Peter Lindbergh, who took a number of enthralling and powerful photographs in the factory in Settimo in preparation for the 2017 Pirelli Calendar. Those pictures have become a project in their own right and are presented in preview to the general public.

The Pirelli industrial Hub of Settimo Torinese

Pirelli has been present in Settimo Torinese since the 1950s. Today’s industrial site was added to the original factory purchased from Ceat in 1984 and was the object of major investments over the following two years. The idea of the new Pirelli industrial Hub of Settimo Torinese came in 2007. The project consisted in integrated the two Pirelli plants already present in the area in a single area: works started in June 2009 and production was kicked off in May of the following year.

The Hub is also the result of profitable collaboration with local organizations and the Turin Polytechnic for research and innovation matters. It is the most technologically advanced and efficient Pirelli plant in the world in terms of product innovation, manufacturing processes and working environment quality. World-renowned architect Renzo Piano was called to design the “Spina”, as the central body is named, which houses the R&D labs and many services for employees. As a result, this part of the plant has naturally became the keystone for supporting production and fostering fraternization among workers.

Renzo Piano also designed the landscape projects that immerse the factory in 500 cherry trees, in addition to the on-site road network and the lighting. With an initial investment of 150 million Euro, which was increased to 300 million following the total refocusing of the plant on Premium and Prestige segment car tyres, some of the most advanced Pirelli technologies are implemented in the plant, like the Next Mirs robotized system, the new compound production system (PTSM) and the most recent PNCS-Pirelli Noise Cancelling System.

Production in the Hub, focused on low-environmental impact High-Performance and Ultra High-Performance tyres, totals over 4 million parts. Part of the investments was destined to the training over 1,200 workers focusing on skills aimed at achieving technological excellence, adding up to over 221 thousand hours in total, that is equal to 25 days per person over the 2009-2015 period.
President of the Republic Giorgio Napolitano visited the Settimo Hub on 19 March 2011 during the celebrations for the 150th anniversary of Italian unity organized by the local authorities of the city of Turin.

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PIRELLI IN 100 PICTURES. BEAUTY, INNOVATION, MANUFACTURING
Settimo Torinese, Archimede Library Piazza Campidoglio 50
18 January 2017 – 1 May 2017

Opening times:
Monday-Saturday 9 am – 7 pm
Sunday 3.30 pm- 7.00 pm

Free admission


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