Pirelli & C Spa Azioni

Good evening, ladies and gentlemen. The results for the first half of 2025 once again confirm the resilience of our business model, which continues to generate value in a complex and challenging external environment. We close the semester with strong results expected higher than our peers. We stand out for organic growth of... Grazie, ragazzi. It's okay? Organic growth of 4.4%, driven by solid commercial performance. Improved profitability thanks to the effectiveness of internal levers, which more than offset the negative impacts of the external environment. Solid cash generation, supported by the operational performance and disciplined working capital management. And finally, significant progress in sustainability a core element of our strategy. Geopolitical and trade tensions continue to wait on the outlook for 2025. Recent estimates point to a slowdown in global economic growth, which is even more pronounced in the United States. In addition, global inflation of 3.2% and 2.7% in the United States. High volatility is expected in exchange rates, concerns about U.S. economic outlook, uncertainties about Fed policies and high U.S. public debt pushed the dollar to its lowest level against the euro for years. This trend continues to be uncertain and The relation between the dollar and the different currencies remain volatile. We see now that there has been an evaluation of the dollars lately. The agreement on tariffs between the EU and the US, which is going to be ratified in the coming days, on the one hand reduces uncertainty and prevents a trade escalation, while on the other hand imposes significant costs on export and is expected to fuel inflationary pressures. In this context, the ability to react is crucial. As Minister Casalucci will illustrate, we are taking concrete measures to manage risks and seize opportunities. We are continuing with our commercial strategy focused on strengthening the high-value segment, which is proving its resilience with expected mid- to single-digit growth also for the second half of the year. The continuous improvement in price mix will allow us to offset the higher negative impact of exchange rates on profitability. While our tariff mitigation plan has already delivered positive results in the second quarter, and we expect further benefits in the second half of the year. Based on results achieved in the first half and considering the high volatility of the external scenario, we have updated our expectations for the year, confirming our targets. Profitability with an adjusted EBIT margin around 16% and cash with net cash flow before dividends of approximately €550 million. And now I give the floor to Mr. Casalucci, please.

Thank you, Mr. Tronchetti, and good evening, everyone. Pirelli closes the first half of 2025 with results among the best in the industry. Revenues of approximately 3.5 billion euro plus 4.4% excluding forex due to the success of the commercial strategy. Profitability at 16% up year on year supported by the effectiveness of internal levers with the tariff mitigation plan already in place from the second quarter. Net profit significantly improved to 14% thanks to lower financial expenses. The deleveraging process is progressing, with a year-on-year reduction in debt of €300 million, solid cash generation before dividends in the second quarter, €193 million stable year-on-year when we exclude the impact of the sale of Decia to CTS. Significant progress was also achieved in sustainability. The accident rate was reduced by 3% compared to the end of 2024, thanks to actions on prevent accidents and rise awareness about safety at work. The decarbonization plan contains, in line with the net zero target for 2040, energy efficiency and machinery electrification projects have led to a reduction in our absolute emission of 16.5 percent year on year the reduction of scope 3 emissions is in line with 2025 target in cooperation with jaguar and rover we developed the first tire with over 70 percent biobased and recycled materials finally still on the environmental front we reduced water withdrawal at group level by 7.2% compared to the end of 2024. These results confirm our global leadership in the sector, as recognized by the most important indices like Standard & Poor's Global Sustainability Yearbook 2025, where we are the only tiremaker ranking in the top 1%. Let us now take a closer look at our performance. As we will see in the next few slides, we strengthened our position in the high value segment. We consolidated the technological leadership, especially by introducing new products, enlarging the homologations portfolio, and accelerating the cyber tire development. At the same time, we continued with operational efficiency programs to support profitability. which is confirmed to be the highest in the industry among Tier 1. The first half of 2025 confirmed the effectiveness of our commercial strategy with growth in car 18 inches up, exceeding that of the market. We gained market share in both channels. In original equipment, particularly in Asia Pacific and North America, due to the strengthening of partnership with local car makers. In replacement, we outperformed the market in all regions, leveraging the effectiveness of our pull-through strategy and product innovation. In cars 17 inches and below, we continue to reduce our exposure, in particular in South America, where we accelerated our exit from less profitable distribution channels. Let's now move to the innovation programs that helped boost our technological leadership. In the first six months of this year, we got around 110 new technical obligations, focusing on 19 inches and above, specialties and EVs. These were obtained from leading premium and prestige OEMs like Ferrari, Porsche, BMW and Aston Martin, and pure electric vehicle car makers such as Tesla, ZEK, NIO, Aitoceres and Lucid. We have the broadest portfolio of market homologations, around 1,300 in car 19 inches and above, more than three times the average of our peers. These results lay the foundations for future growth in high value replacement due to a loyalty rate that remains around 80%. Let's move on product innovation on slide number nine. At the beginning of May, we presented the fifth generation of the P-Zero, a brand in brand that in the last 40 years has been a synonymous of ultra high performance. Developed from our experience in motorsport, P-Zero has always been able to anticipate the needs of the premium and prestige segments. The market has already responded positively. Over 150 homologations have already been obtained, more than 380 blended, and the product has been chosen by the most important premium and prestige car manufacturers. The most advanced artificial intelligence and virtual design techniques were used to develop the fifth generation. These allowed us to test every single detail of the product well in advance, optimize development times, and improve grip, braking, and handling, both on dry and wet roads. Tire reviews awarded the new P Zero best ultra-high performance tire, as it offers the highest level of performance and safety. Furthermore, as testimony of Pirelli's ongoing commitment to sustainability, The version of P-Zero developed for Jaguar and Land Rover is made from more than 70% natural and recycled materials. In the two-wheels business, our offering expanded with the launch of two motorcycle tires and four dedicated to cycling. For motorcycles, where Pirelli is the leader in the high-value segment, we expanded our range with Diablo Power Cruiser and Scorpion MX-32. both the results of our experience in racing, where we equip the best teams. In cycling, innovation continues with the launch of Cinturato Evo TLR, P Zero Race TLR Nero, and two new versions of the Scorpion XC. Here, too, the drive for innovation comes from the world of racing, where we collaborate with the best professional teams like Trek and Alpecin, And the success of Pirelli products is proven by recent wins in the most prestigious competitions, such as Paris-Roubaix, Milano-Sanremo, and several legs of the Tour de France. Finally, we accelerated the development of CyberTire by implementing several projects. The partnership with Bosch started in 2024, was renewed, and technological cooperation strengthened. Our cyber tire is already integrated in premium and prestige vehicles, and at the same time, further projects are being assessed. In addition, agreements and contracts were signed for infrastructure monitoring. The first agreement was signed with Movion, a company of the Autostrade per l'Italia group, for the mapping of motorway sections managed by IASPI. An agreement has been signed with the Puglia region to implement an innovative monitoring system for the regional road network. This system will combine data collection from tires processed by Pirelli's CyberTire hardware and software system, visual data collected with Universis technology using onboard cameras, and sensor fusion software and algorithms that will provide integrated mapping of asphalt and road signs, creating a detailed map of roads and their state of repair. In addition to innovation, our brand is one of the key factors driving the choice of high-value customers. Through new strategic partnerships, With major international sporting competitions, we are aiming to further increase the visibility of our brand. Formula One plays a key role in this, with a strong growth globally and especially in the United States. 2025 also saw the renewal and expansion of our partnerships in the world of sport, such as the 2026 Winter Olympics and Paralympics in Milano Cortina, MotoGP, where Pirelli will be the sole tire supplier from 2027, Luna Rossa, where we are continuing our collaboration as a sponsor and technical partner, and the Australian Open Tennis Championship. All this contributes to making the Pirelli brand increasingly distinctive, internationally recognized as synonymous of performance, sport, and high technology. Let's now move to the operations programs that have contributed to improving our profitability. In the first half of the year, they generated gross efficiency of 70 million, 45% of the full-year target. The greatest benefits come from the manufacturing product cost programs through increasing automation in factories, reduced energy consumption, and innovation in product design. Both programs are set to accelerate further in the coming months in line with projects development and will be the main sources of efficiencies gains in the second half of the year. The SG&A and organization projects are also making a positive contribution with benefits deriving from the rationalization of the supply chain and optimization of logistics and the digitization of processes and upskilling of personnel. Let's focus on the manufacturing program, which will continue to play a key role in future efficiency programs. We are paving the way for the factory of the future, making our plants increasingly competitive, efficient, and sustainable. Automation, digitization, and electrification will enable us to optimize production processes, reduce operating costs, and improve the group's profitability in the medium term. The transformation of our factories develops along four strategic axes. First, the smart manufacturing, which through the virtualization and digitization of control systems will enable real-time monitoring of the plant KPI, the optimization of processes, and the development of innovative solutions in a very short time. Second, energy efficiency. through the ongoing electrification of the curing phase and the adoption of continuous monitoring systems for intelligent consumption control. Third, process innovation through advanced technologies such as the Tired Effect Detection System, which uses AI and computer vision to identify and analyze defects with greater precision. And finally, automation, which we are adopting in the handling of products in the factory with benefits in terms of efficiency, traceability, but also safety. Last but not least, we are still working on making our supply chain even more resilient. We are developing an integrated planning system that goes from the raw material suppliers to the end consumer to ensure the faster response time. Our footprint is now 86 percent local for local, which helps us reduce logistics risks and response time. The U.S. remains the only area with a low local for local supply. We are promoting the transition to a sustainable value chain with the aim of reducing environmental impact and increasing transparency throughout the supply chain in line with our 2040 net zero targets. And finally, logistics excellence. We already guarantee 98% coverage of all requests within 24 hours, and we will continue to optimize flows to improve customer service and keep operating costs down. I will now hand over to Mr. Bocchi.

Thank you, Mr. Casalucci. Let's now turn to the dynamics that shaped our performance in the first half of 2025 compared to the same period of last year. Solid commercial performance resulted into an organic growth of 4.4%. Volumes were positive, plus 0.5%, with growth in the high value segment more than offsetting the reduction in exposure to standard. High value now accounts for approximately 80% of total sales, up 3 percentage points compared to previous year. The price mix improved. It was plus 3.9%, mainly supported by the product and region mix and marginally by the price component. The latter reflects the indexation of original equipment prices to raw material costs and the first commercial renegotiations in response to U.S. tariffs. On the other hand, the impact of exchange rates was negative 2.9%, affected by the sharp depreciation of the US dollar and the volatility of emerging market currencies against the euro. As shown in slide 17, in the first half, profitability improved by 0.4 percentage points year-on-year, reaching 16%. In the first half of 2025, adjusted EBIT was €558 million, up 3.6% due to the effectiveness of internal levers. More specifically, the positive contribution of price mix for €94 million more than offset the increase in the cost of raw materials for €51 million and the negative impact of exchange rates for €19 million due to the dynamics already described. The balance between efficiencies and inflation was positive, thanks to the acceleration of competitiveness programs in the second quarter. Finally, the contribution of volumes for €6 million limited the impact of depreciation and amortization, which were negative for €15 million, and other costs, negative for €4 million. It should be noted that on May 3rd came into force the U.S. tariffs of 25 percent on imports of car tires from Europe and Brazil, as well as universal tariffs on motorcycle and cycling tires with different percentages depending on the country of production. The overall impact of these tariffs in the first half of the year was 15 million euro. But thanks to the mitigation measures in place, the net impact was negative by €6 million. This figure is included in the bridge in this slide under the item Other. Let's now review the performance of net profit, which was €264 million, up from €231 million in the first half of 2024. This trend reflects the improvement in operating performance of €19 million, whose dynamics I've just described, a slight increase in non-recurring costs of €6 million due to higher lay-off and write-off charges, and a reduction in net financial expenses of €53 million, mainly attributable to a lower non-monetary impact related to hyperinflation accounting. Finally, the increase in taxes of €34 million, compared to the first half of 2024, is due to an unfavorable year-on-year comparison, as the value for the first half of 2024 included the benefits of the patent box and the impact of the positive settlement of tax disputes. Pirelli closed the first half of 2025 with a negative net financial position of approximately 2.68 billion euros. Operating net cash flow was minus €217 million in line with the seasonality of the business and improving by €62 million compared to the first half of 2024. This was mainly supported by the operating performance committed in the previous slides and lower working capital absorption due to the efficient inventory management and to the usual seasonality of trade receivables and trade payables which accounted respectively 13% and 23% of revenues. Net cash flow before dividends, at minus €504 million, was affected by the impact of tariffs and currency devaluation, as well as extraordinary transactions completed during the first six months of the year, plus €43 million from the sales of DECA, minus 19 million relating to other transactions, the main one being the capital contribution payment to the joint venture with the Public Investment Fund of Saudi Arabia. Net cash flow before dividends in the second quarter of 2025 was positive at 193 million euros. Excluding the aforementioned positive effect related to the sale of Dekia to CTS, it was essentially in line with the figure for the second quarter of 2024, which was €154 million. Let's now move to slide number 20. As of June 30, 2025, the gross debt of the group was approximately €3.87 billion. Considering financial assets of approximately €1.19 billion, the net financial position was therefore approximately €2.68 billion. The liquidity margin is at €2.4 billion, of which €1.5 billion in committed credit lines not drawn. This margin covers debt maturities for approximately three and a half years, that is until Q4 2028. The cost of debt calculated over the last 12 months stood at 4.88%, down from 5.06% at the end of last year. The reduction is attributable to the decline in interest rates in the Eurozone. Finally, at the end of last June, sustainable finance continues to account for approximately 70% of the group's gross debt, or 84.4%, if we consider the holding company's debt in line with the 100% target announced for the end of 2025. And I hand back over to Mr. Casalucci.