Pirelli & C Spa Azioni

Ladies and gentlemen, welcome to Pirelli's conference call in which Pirelli Top Management will present companies first half 2024 financial results. A live webcast of the event and the presentation slides are available in the investor relations section of the Pirelli website. I remind you that the Q&A session will follow after the presentation. Now, I would like to introduce Mr. Marco Tronchetti Provera. Please go ahead, sir.

Good evening to all. The result for the first half of 2024 confirmed the effectiveness of our strategy. We strengthened our positioning on high value, now 77% of revenues, fully seizing growth opportunities across both channels and markets, and leveraging innovation and brand strength. We've increased profitability among the base in the industry thanks to the effectiveness of internal levels, price mix and efficiencies. Finally, we have improved the cash trend compared to the first half of 2023. A careful management of working capital is a result of structural improvements made over time to reduce the impact of external risks. Outlook for full year 2024 is confirmed. We expect a moderate economic growth in 2024. However, geopolitical uncertainties and fears of new international trade tension still persist. High value, our reference market, confirms its resilience with growth exceeding that of standard by about seven percentage points. In this scenario, thanks to the implementation of strategic programs, we confirm the guidance indicated last 6th of March targeting the upper end of profitability range. And now I'll turn the floor over to Mr. Casalucci, please.

Thank you. Thank you, Mr. Tronchetti. And good evening, everyone. Pirelli closes the first half of 2024 with a solid performance in line with the targets. plus 4.6% to the organic growth of the top line, thanks to a solid commercial performance. EBIT adjusted at 539 million euro, plus 4% versus last year, with plus 15.6% profitability, improving by half a percentage point year on year. A net result of 231 million euro discounting a non-monetary impact on financial charges of approximately 69 million euro connected with a hyperinflation accounting. A negative net financial position of approximately 2.98 billion euro in sharp reduction compared to June 2023. in spite of the payment of dividends for €415 million in the last 12 months, €218 million paid in the third quarter of 2023 and related to 2022 fiscal year, and €197 million paid in the second quarter of 2024 and related to 2023 fiscal year. the first six months of 2024 net cash absorption before dividends was 519 million euro in line with the seasonality of the business and including the impact from the acquisition of heavy attack roughly 23 million euro on the sustainability side we achieved important results that confirmed pirelli's leadership and strong commitment in implementing the plans People are our priority. In the first six months, we have reduced the frequency index of accidents at work by 35% compared to last year, thanks to actions on prevention and awareness. We launched the Pirelli Manufacturing Excellence Program, in which skill development plays a central role and will progressively involve all factories. The decarbonisation plan continues in line with all expectations. We have reduced our CO2 emissions by 18% compared to the first half of 2023, thanks to our energy efficiency and machinery electrification projects in our factories. The involvement of our suppliers allowed us to gain lifecycle assessments covering 60% of the emissions related to purchased raw materials. By the end of 2024, over 90% of the electricity purchased by the group will be from renewable sources, compared to 80% at the end of 2023. As to product sustainability, in the next few slides, we will comment the latest news introduced at the Tire Column 2024, at the goodwood festival of speed as well as on the introduction of fsc certification in formula one and cycling finally as part of the nature program reducing dependence on water resources is playing a primary role in the first half of the year pirelli recorded a 15 reduction in specific water withdrawal at the group level compared to the first half of 2023 let us now analyze in detail our operating performance with our commercial program we have further strengthened our positioning in the high value segment and over perform at the market in the car 18 inches and above strengthening on high rim sizes on innovation we have increased our original equipment portfolio with approximately 150 new homologations, mainly in the electric vehicle segment and bigger rims. We launched six new products in the car segment, of which one global, the P0 Winter II, and five which met specific regional requirements in terms of performance, mileage, and seasonality. On the operations program, We achieved gross benefits worth 71 million euro, which fully compensate for the inflationary impact. We implemented actions to mitigate the impact of the Red Sea crisis through alternative roads and means of transportation, as well as supplies of raw materials from new South American and African suppliers. Finally, We are working together with our suppliers to guarantee the availability of natural rubber in compliance with the new European deforestation regulation. Let us now analyze each program in more detail. We further reinforced our positioning in the high value segment and achieved in both quarters a plus 7% growth. More specifically, in the second quarter, we overperformed the market In the regional equipment, Pirelli plus 4% versus market plus 3%, thanks to the growth of demand in the Asia-Pacific region. And in the replacement channel, Pirelli plus 8% versus a market plus 7%, where we gained shares in the major regions, thanks to the strong pull-through of the regional equipment and renewal of product range. our exposure to the standard segment is being reduced volumes of pirelli cast 17 inches and below minus eight percent versus a minus one percent of the market we are counting to pursue our strategy based on a higher selectivity in the regional equipment channel and growing focus on higher rim sizes in the replacement channel The reduction of the standard channel was higher in the second versus the first quarter, also taking into account the weakness of South America, which is one of the Pirelli's major standard markets. Overall, in the second quarter, our performance was in line with the cartile market, which remained positive plus 1%. yet with a smaller growth than the first quarter, given the weakness of the standard segment I just mentioned. Talking now about our innovation program, we increased the range of our products with a high content of sustainable materials. After P0E, the new P0 Winter II has launched, which is the outcome of our collaboration with BMW. These winter ties stands out for its content of natural and recycled materials, which exceeds 50% of the total. It is the first of its category to be awarded with class A in terms of rolling resistance, which is a fundamental feature for electric vehicles that can therefore save energy and have a longer mileage with a battery charge. Furthermore, Our commitment in developing and supplying tires with FSC certified natural rubber contains. I wish to remind you that these certifications confirm that plantations are managed so as to preserve biodiversity and provide benefits to the locals who work in those areas. During the Festival of Speed in Goodwood in July, Pirelli announced its collaboration with Jaguar and Rover to supply tyres made of FSC-certified forestry materials on a wide range of luxury cars. This is a new achievement in the collaboration started in 2021. In the first half of 2024, FSC-certified tyres were introduced in the Formula One Championship. as well as in cycling with the new Pirelli P Zero Race RS. From 2026, 100% of the natural rubber used in the European factories will be FSC certified. As to connectivity, Pirelli's journey continues. After agreements with McLaren and Dodi, Pirelli has developed a new cyber tire solution with Pagani. presented in mid-July at the Goodwood Festival of Speed. This opens up a new phase in tire connectivity. For the first time, data collected by a sensor will be integrated directly with the vehicle's control systems to improve performance and safety depending on the tire fitted. This continuous dialogue between tires and vehicle is made possible by software developed by Pirelli and integrated into the car's electronic control system, representing a major improvement in terms of performance and safety. For example, when the car is fitted with winter tires, the ABS can modulate its action to minimize braking distance. Also, with the same slick ties, the stability and traction control systems can take advantage of the increased grip to ensure a higher performance. Finally, let's move to the efficiency program. 71 million euro were achieved in the first half, approximately 50 percent of the full year target, which fully compensated for inflation. The main contributions come from the product cost projects, more specifically through design to cost programs and efficiencies achieved with the virtualization of tile development. SG&A through the optimization of logistics and supply chain and the organization project, driving the digitization of internal processes and employee upscaling. Lastly, the manufacturing project is generating, as expected, most of the benefits in the second half of the year as a result of plant automation, curing electrification and reduction of energy consumption. And now leave the floor to Mr. Bocchio.