Pirelli & C Spa Azioni

Ladies and gentlemen, welcome to Pirelli's conference call in which Pirelli top management will present the company's nine-month 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.

Thank you, and good evening, ladies and gentlemen. The results of the first nine months confirmed the effectiveness of our strategy. We strengthened our high-value presence thanks to the solid volume growth. The effectiveness of the internal levers, price mix, and efficiencies led to an improvement in profitability the highest among Tier 1 players. Finally, we reduced our debt and recorded positive cash generation in the third quarter as a result of efficient working capital management. This scenario remains uncertain and characterized by continuing geopolitical tensions, slowing demand from car makers, and volatility of raw materials. Despite these headwinds, we confirm all 2024 targets. due to our positioning in high value, market segment with a mid-single-digit growth, and thanks to the resilience of our business model. Connectivity and sustainability are the challenges on which we are building our future. Through our partnership with Bosch, we will bring the talent to the era of connectivity and artificial intelligence, while on sustainability we aim at consolidating our leadership. Our ambition decarbonization plan was validated last September by Science Based Targets Initiative, an international organization that defines and promotes best practices in this field. And now I give the floor to Mr. Casalucci.

Thank you, Mr. Tronchetti, and good evening, everyone. Pirelli's performance in the first nine months of 2024 confirms the effectiveness of our business model. plus 4.9% the organic growth of our revenues, driven by solid commercial performance with high value at 76%, an improvement of 2 percentage points compared to the same period of 2023. Adjusted EBIT at 816 million euro, plus 4.3% year-over-year. with profitability at 15.7%, improving year on year. Net profit of 371 million euros, stable compared to the same period of 2023, excluding 2020-2022 patent box benefits accounting in Q3 2023. Negative net financial position of 2.82 billion euros, down €322 million compared to September 2023. In the first nine months of 2024, net cash absorption before dividends amounted to €357 million, an improvement compared to the same period of 2023 and in line with the usual seasonality of the business. The results achieved reflect the implementation of the key programs in the industrial plan. On the commercial front, we further strengthened our positioning in high value as we will see in the next slide. In the innovation program, we expanded the original equipment portfolio mainly in electric and hybrid vehicles and higher rim sizes. We launched five new products for the car and two for the motor and cycling segment. And we are partnering with Bosch for cyber tire development. As for the operations program, we achieved around 80% of the planned efficiencies for the year, offsetting the impact of inflation. In a scenario of general slowdown in the original equipment demand, we kept a careful inventory management. Finally, we are progressing on our decarbonization journey, and our targets were validated by science-based target initiative. Let us now look at the single programs in more detail. Let's start with the commercial program. Our distinctive positioning high value allowed us to outperform the car market in the first nine months of the year and the third quarter. More specifically, in the third quarter, growth in car above 18 inches, Pirelli Plus 7 versus a Market Plus 3, was sustained in both channels. In original equipment, Pirelli Plus 10 and Market Flat, our outperformance was driven mainly by China. where we benefit from a favorable comparison base and by the broadening of our exposure to Chinese premium manufacturers of electric vehicles. Thanks to this exposure, we were able to offset the weakness of the demand from European premium carmakers in China. In the replacement channel, Pirelli Plus 6% versus Market Plus 5%, Growth was sustained also by the good performance of winter saline in Europe. Exposure to standard was reduced. Pirelli car volumes below 17 inches is minus 5% versus a basically flat market, where we are following a selective strategy. Within a general weakness of original equipment demand, Pirelli benefits from the diversification of its customer base in China. Over the past three years, we have enlarged exposure to local premium EV car makers, which currently account for approximately half of our original equipment sales in China. We implemented a differentiated strategy. With premium EV car makers such as Lyoto, ZEC, and NIO, we aim to size the opportunities of strong market expansions in the high rims and develop market tiles. With other Chinese EV manufacturers, including AITO and GNBYDE, we follow a more selective approach, positioning ourselves in the high-end models. Pirelli's success lies not only in the strength of the brand, but also in its ability to meet the increasingly challenging demands of these car makers in terms of project lead times and product characteristics, such as low rolling resistance even at low temperatures to reduce the vehicle energy consumption, longer mileage performance, and extremely high braking performance. In the innovation program, we continued to upgrade the regional product lines to meet different consumer needs. In Europe, we launched the PowerG Winter and PowerG All-Season SF, two products designed for everyday mobility that guarantee high-quality standards for safety and driving comfort. In Asia, on the other hand, we launched the Scorpion MS, an all-season tire for premium and prestigious SUVs that offers high durability and comfort, also suitable for off-road use and driving on snow. In addition, Pirelli's commitment to continuous product improvement was acknowledged by several specialist magazines such as AutoBuild, Tire Review, and Alvolante. which awarded Cinturato Old Season SF3 as the best Old Season 2024. Comparative tests highlighted the excellent driving performance in all weather conditions, as well as the safety and comfort features. Let's now move to the partnership with Bosch, which is an important step in the development of CyberTire, as it enables... the integration of tire sensors directly into the control systems of the car. The cooperation combines the cyber technology developed by Pirelli and the experience and technology of Bosch, the world's largest player in car control systems, with the aim of improving vehicle performance and safety. The tires, the only point of contact between the vehicle and the ground, provide data at all times on the condition of the road surface, the driver's driving style, the type of tire, if winter, summer, or all season, and its trade wear. All this data, based on software created by Pirelli and integrated with a control unit developed by Bosch, are processed in real time and transformed into commands that interact with vehicle dynamics, ABS, ESP, traction control. These commands make it possible to improve performance, safety, and reduce environmental impact. With this collaboration, Pirelli and Bosch bring the tire into the era of connectivity and artificial intelligence. Currently, the CyberTire technology integrated with the cars' control systems, is used on the Pagani Utopia Roadster, and we are working with other prestige and premium carmakers. Now let's look at the efficiency program, which in the first nine months of the year generated benefits of €108 million, in line with expectations and equal to about 77% of the annual target, allowing us to offset inflation. In detail, the efficiencies come from the product cost, thanks to the adoption of new design programs, such as Design to Cost, and to virtualization, which allowed us to reduce development time by 30%. The SG&A project, based on the rationalization of the supply chain, overheads, and optimization of logistics. The organization project, whose benefits come from the digitization of internal processes and upskilling of personnel. And finally, from the manufacturing project, which, in line with expectations, generated half of the benefits expected in the year, with the factory automation projects, electrification of the vulcanization phase, and energy consumption efficiency. Finally, our decarbonization journey continues. The targets announced last March with industrial plan update were approved by the Science-Based Targets Initiative, the international organization that defines and promotes best practices for reducing emissions. SBTI validated the long-term target of net zero to 2040. the most challenging among tire makers, in line with the Paris Agreement to keep global warming within 1.5 degrees Celsius. SBTI validated also the short-term decarbonization targets, which include by 2030 the reduction compared to 2018 of absolute greenhouse gas emissions scopes 1 and 2 by 80%. and of emissions from the purchase of raw materials, services, and transport, scope 3, by 30%. And I'll give the floor to Mr. Bocchio. Thank you.