- RESULTS IN LINE WITH 2013 TARGETS
- PROFITABILITY 13%, ROI 20%
- 2013 REVENUES +8.4% EXCLUDING EXCHANGE RATE IMPACT
- PREMIUM VOLUMES +15.3% IN 2013, BETTER THAN TARGET OF “ABOVE 13%”, +27.5% IN Q4
- ELEVATED NET CASH GENERATION, 232.4 MILLION IN 2013 (TARGET OVER 200 MILLION), IN Q4 NET CASH GENERATION 648.5 MILLION EURO
PIRELLI & C. SPA
- REVENUE 6,146.2 MILLION EURO (+1.2% COMPARED WITH 6,071.5 MILLION IN 2012), AN INCREASE OF 8.4% EXCLUDING EXCHANGE RATE IMPACT
- PREMIUM REVENUE 2,210.0 MILLION EURO (+6.5% COMPARED WITH 2,075.4 MILLION IN 2012)
- TOTAL VOUMES +5.7%, PREMIUM VOLUMES +15.3%, INDUSTRIAL VOLUMES +8.7%
- EBIT 791.0 MILLION EURO (IN LINE WITH 792.5 MILLION IN 2012)
- EBIT MARGIN 12.9% (13.1% IN 2012)
- NET PROFIT 306.5 MILLION EURO (391.5 MILLION IN 2012) DISCOUNTS SHAREHOLDING RESULTS AND NET FINANCIAL CHARGES
- NET FINANCIAL POSITION NEGATIVE 1,322.4 MILLION EURO (1,970.9 MILLION EURO ON 30 SEPT. 2012 AND 1,205.2 MILLION EURO IN 31 DEC. 2012), ACHIEVES TARGET OF LEVEL BELOW 1.4 BILLION EURO
- REVENUES 6,115.8 MILLION EURO (+1.4% COMPARED WITH 6,031.3 MILLION IN 2012), AN INCREASE OF 8.6% EXCLUDING EXCHANGE RATE EFFECT
- EBIT 822.0 MILLION EURO (820.8 MILLION IN 2012), EBIT MARGIN 13.4% (13.6% NEL 2012)
- CONSUMER EBIT MARGIN 13.3% (14.5% NEL 2012), INDUSTRIAL EBIT MARGIN 13.8% (11.1% A YEAR EARLIER)
Fourth quarter results
- REVENUES 1,490.0 MILLION EURO, IN LINE WITH 1,488.4 MILLION A YEAR EARLIER, AN INCREASE OF 9.2% WITHOUT EXCHANGE RATE EFFECT
- EBIT 222.2 MILLION EURO (+10.8% COMPARED WITH 200.5 A YEAR EARLIER), EBIT MARGIN 14.9% (13.5% IN 2012)
- CONSUMER EBIT MARGIN 15% (13.8% IN 2012), INDUSTRIAL EBIT MARGIN 14.7% (12.6% IN 2012)
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- THE BOARD ON JUNE 12 WILL PROPOSE TO SHAREHOLDERS THE DISTRBUTION OF A DIVIDEND OF 0.32 EURO PER ORDINARY SHARE (0.32 THE PRIOR YEAR) AND 0.39 EURO PER SAVINGS SHARE (0.39 THE PRIOR YEAR), AND THEREFORE UNCHANGED FROM THE PRIOR YEAR
• CONSOLIDATED EBIT CONFIRMED AT AROUND 850 MILLION EURO AFTER RESTRUCTURING COSTS OF 50 MILLION EURO
• IMPROVED PRICE MIX (+4%/+5% FROM +3%/+4%) AND RAW MATERIAL SCENARIO OFFSET IMPACT ON EBIT OF GREATER EXPECTED EXCHANGE RATE VOLATILITY
• CONSOLIDATED SALES AROUND 6.2 BILLION EURO (FROM 6.6 BILLION) ESSENTIALLY BECAUSE OF WORSENING EXCHANGE RATE EFFECT -9%/-10% (-2%/-3% INDICATED LAST NOVEMBER)
• INVESTMENTS CONFIRMED AT UP TO 400 MILLION EURO
• CASH GENERATION CONFIRMED AT ABOVE 250 MILLION EURO AND NET FINANCIAL POSITION APPROXIMATELY NEGATIVE 1.2 BILLION EURO
* * *
Following the coming into effect from January 1°, 2013 of the new principle IAS 19 revised “Employee Benefits”, the data relative to 2012 have been restated. In the present document, comments of variation compared with December 31, 2012 are always refer to the restated data, unless otherwise indicated.
* * *
Milan, 27 March 2014 – The Board of Directors of Pirelli & C. SpA today reviewed and approved results for the year ended December 31st, 2013.
The 2013 operating results of the Pirelli group show revenue growth and stable profitability, regardless of exchange rate volatility and the difficult macro-economic context, which affected Europe in particular. The positive performance of emerging markets more than offset the weakness of mature markets, with an increase of revenues of 4.3% compared with a reduction of sales in Europe (-2.2%) and in the Nafta area (-1.5%). There were particularly positive performances in South America (+5.2%) and Apac (+14.5%), while Russia remained substantially in line with the previous year and the Middle East Africa area saw a decline of 5% compared with the prior year, impacted by elevated exchange rate volatility.
Notwithstanding the unfavorable exchange rate impact, linked in particular to the devaluation of Latin American currencies, revenues saw growth of 1.2% to over 6.1 billion euro, which adjusted for the exchange rate effect is 8.4%, while Ebit was in line with 2012 levels and 2013 targets. In the fourth quarter alone, in particular, profitability improved markedly when compared both with the same period a year earlier and the preceding quarter thanks to a better product mix, as can be seen in the strong growth of Premium volumes. Tyre Ebit in the last quarter was 222.2 million euro, an increase from 200.5 million euro a year earlier and equal to 14.9% of sales, up from 13.5%. Profitability improved in both the Consumer business, which saw a fourth quarter Ebit margin of 15% (13.8% in the same period of 2012) and the Industrial business (Ebit margin 14.7% from the prior 12.6%).
Total volumes grew 5.7% in 2013, thanks to the favorable performance of both business segments: +4.6% in Consumer thanks to sales’ increases in emerging markets, where volumes grew by 9.7%, and the good performance of Premium above all in Asia, South America and Nafta, while in Industrial volumes grew 8.7%, centred mainly in South America.
The Premium volumes, in particular, confirmed a rate of growth over three times greater than that of the entire Consumer segment and particularly favourable dynamics in emerging countries. Premium volumes grew by 15.3% in 2013, with a particularly positive performance in the fourth quarter, which saw an increase of 27.5%.
The commitment to Research & Development activities, fundamentally aimed at ensuring the constant product innovation which typifies Pirelli, was positioned among the highest levels of the sector. In 2013 Pirelli invested a total of 199.2 million euro – equal to 3.2% of sales – of which 163.3 million euro for activities linked to Premium products – equal to 7.4% of revenues in the segment.
Pirelli & C. SpA
Consolidated revenues on December 31st, 2013 stood at 6,146.2 million euro, an increase of 1.2% from 6,071.5 million euro a year earlier. Excluding the negative 7.2% impact linked to exchange rates, total revenues grew 8.4%. In the fourth quarter, in particular, revenues totaled 1,496.3 million euro, steady compared with 1,497.4 million euro in the corresponding prior period. Excluding exchange rate effects, which had a negative impact of 9.1%, revenues in the quarter grew 9%.
The gross operating margin (Ebitda) before restructuring costs was 1,105.4 million euro, in line with 1,102.9 million euro in 2012. In the fourth quarter, in particular, the gross operating margin was 292.0 million euro, an increase of 2.4% compared with 285.0 million euro in the same period of 2012.
The operating result (Ebit) was 791.0 million euro, in line with 792.5 million in 2012, even with a negative exchange rate impact of 62.7 million euro. The results were positively impacted by the contributions from volumes (+98 million euro) and price/mix (+47 million euro), the lower cost of raw material (+136 million euro) and gross efficiencies (+74 million euro), which covered higher production costs, including amortizations. The operating result was further impacted by restructuring charges of 25.5 million euro (39.1 million euro on December 31st, 2012) linked to the ongoing rationalization of structures.
The Ebit margin – expressed as a percentage of sales – in 2013 stood at 12.9% compared with 13.1% the prior year.
In the fourth quarter, Ebit was 209.3 million euro (+9.1% compared with 191.7 million in the fourth quarter of 2012), with an Ebit margin of 14.0%, an improvement from 12.8% in the same period of 2012.
On December 31st, 2013, the result from shareholdings was negative 78.3 million euro (-52.2 million in the same period of 2012) mainly as a consequence of:
- 44.3 million relative to the fair value adjustment of the Prelios convertible financial instrument;
- 12.8 million due to the consolidation with the net equity method of the Prelios affiliate;
- 21.2 million relative to RCS Mediagroup (-4.9 million) which following the dissolution of the shareholder pact was reclassified as a financial activity affiliate available for sale; Mediobanca (-10.4 million), Fin.Priv (-1.3 million) and Alitalia (-4.9 million)
The total consolidated net profit was 306.5 million euro, a decrease of 21.7% from 391.5 million in 2012. The total was impacted by the results of shareholdings and the increase of approximately 45 million euro in financial charges (which amounted to 195.8 million euro) as a result of higher average level of debt above all in the first six months of 2013 and the diverse geographic mix of financings, the negative 8.3 million euro effect deriving from the devaluation of the Venezuelan currency on the local operations. In 2012 there was a benefit from financial gains deriving from the financing to Prelios S.p.A. of about 13 million euro and one-time income on exchange rates of 8.7 million euro linked to the launch of the activities in Russia.
In the fourth quarter of 2013 net profit was 48.4 million euro, a decrease of 45.1% from 88.2 million euro in the fourth quarter of 2012 essentially due to the Prelios impact (55.4 million euro).
Consolidated net profit attributable to Pirelli & C. Spa on December 31, 2013 amounted to 303.6 million euro compared with 387.1 million euro in the same period of 2012. Mainly following the impact of Prelios (-57.1 million euro).
Consolidated assets on December 31, 2013 stood at 2,436.6 million euro compared with 2,389.4 million euro on December 31, 2012. Net consolidated assets attributable to Pirelli & C. SpA amounts to 2,376.1 million euro compared with 2,337.4 million euro on December 31, 2012.
The consolidated net financial position was negative 1.322,4 million euro, in line with the target of below 1.4 billion euro announced last November, compared with 1,970.9 million euro on 30 September 2013 and 1,205.2 million euro on December 31, 2012. The variation from December 31, 2012 reflects, among other things, the dividend payment to shareholders in the second quarter of approximately 159.8 million euro, material and immaterial investments of 413.1 million euro, the conversion of a financial credit towards Prelios into shares and equity instruments following the closing of the real estate company’s debt restructuring process and capital increase, with a total impact on the net financial position of 193 million euro, including the capital increase carried out through the company Fenice Srl of about 23 million.
The total net cash flow, before the effects of the financial reorganization of Prelios and the parent group’s dividend payment, was positive 232.4 million euro (-335.8 million in 2012), in line with the target of over 200 million euro.
The net cash flow from operations’ management in 2013 was positive 720.1 million euro, in marked improvement from the 281.1 million of the corresponding year earlier period, essentially due to the better management of working capital above all in the second quarter.
The Group headcount was 37,979 on December 31st, 2013 compared with 37,338 at the end of 2012.
The parent group Pirelli & C. SpA closed the year with a net profit of 191.9 million euro (234.4 million euro in 2012) after receiving dividends from unit Pirelli Tyre S.p.A. of 310 million euro and the adjustment of the values of activities which had a negative impact of 126.7 million euro.
The Board will propose to shareholders the distribution of a dividend of 0.32 euro per ordinary share (0.32 the prior year) and 0.39 euro per savings share (0.39 the prior year), equal to a total dividend payout of 156.7 million euro.