Pirelli & C Spa Azioni

Ladies and gentlemen, welcome to Pirelli's conference call in which Pirelli top management will present companies first quarter 2026 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 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 for the first quarter of 2026 confirm the resilience of Pirelli business model in a highly challenging environment. In line with the strategic priorities, we consolidated the position in the high value segment, leveraging our brand strength technological leadership, and a broad and distinct in-product portfolio. By doing so, we gained market share in both the car and motorcycle business. Profitability remains among the best in the industry, the highest among Tier 1 players, with just a dividend margin of 16%, despite the negative impact of exchange rates, inflation, and U.S. tariffs. Thanks to the rigorous financial management, we closed the first quarter with a cash flow trend in line with last year and with the usual seasonality of the business. External environment remains complex and characterized by the high uncertainty. The crisis in the Middle East is a significant macroeconomic risk with growing pressures on input cost inflation. The closure of the Strait of Hormuz is already impacting energy and logistic prices with effects that are gradually spreading the value chain and economic growth. In this context, demand in the high value segment is proving resilient, with growth expected to be in the mid-single digits. In response to this scenario, we acted promptly by implementing a mitigation plan based on price increase already communicated to the market and cost reduction. This plan enabled us to safeguard companies' results and in particular, cash generation, which remains our priority. Finally, an update on the recent decision taken under the Golden Power Regulation. Under the new provisions, which will remain in force for as long as Sinochem holds a stake of more than 9.99% in P. Regis capital, Sinochem may participate in an appointment of up to three directors, two of whom must be independent. The directors nominated by Sanokin may not hold executive or senior positions, chairmen by chairman, chief executive officer, nor chair board committees. Any transfers of shares by Sanokin must be notified in advance to the Ministry of Enterprises and made in Italy and cannot be made to parties linked to SASAC. These provisions are confirmed by statements from both the Minister for Enterprises and Made in Italy and the Minister for Foreign Affairs. I'm sure Pirelli's provisions full compliance with U.S. regulations and connected breakers. And now I give the floor to Mr. Casalucci. Please, go ahead.

Thank you, thank you, Mr. Tronchetti, and good evening, everyone. In a demanding macroeconomic environment, Pirelli closed the first quarter of 2026 with solid results. Revenues were approximately €1.7 billion, with organic growth of 3.5%, driven by the continued strengthening of the high-value segment, which now accounts for 82% of revenues and an improvement in price mix. Adjusted EVs stood at €277 million, with profitability at 16%, a slight improvement year on year, thanks to the contribution of internal levers, which offset the negative impact of external factors, amounting roughly to €81 million. Net profit rose by 23% year on year, benefiting from lower financial expenses, linked to debt reduction and a greater contribution from the results of equity investments. The net financial position stands at approximately €2 billion and includes the impact of the consolidation of the Chinese JV Shuxian Tile, debt amount to €210 million. The cash-out relating to the exercise of the call option to increase the stake to 70% expected in the second quarter and amounts to approximately 40 million euro in the first quarter of 2026 cash absorption before dividends and prior to the conservation of the chinese jv amounted to 704 million euro in line with the last year and reflects the usual seasonality of the business finally we continue to strengthen our commitment to sustainability, a strategic lever for innovation, growth, and competitiveness. Our leadership has been recently reaffirmed by the Dow Jones Best-in-Class Sustainability Index, where Pirelli ranked first in the auto components and automobile sector, and is the only tile company included in the index. Let us now review the operating performance of the first quarter. In line with the strategic priorities, we gained market share in the high value segments for both car and motorcycle business by leveraging technological innovation and capitalizing on market opportunities. On the innovation front, we are continuing to expand the range of homologations and products. As for cyber tire, we are developing strategic partnerships with leading companies in the fields of connectivity and autonomous driving with the aim of further strengthening our technology platform. At the same time, the efficiency plan is proceeding as expected, generating gross benefits of approximately 43 million euros in the first quarter, equivalent to around 29% of the annual target. Finally, as already communicated on April 16th, to address the crisis in the Middle East, we implemented a mitigation plan worth $80 million, which includes price increases and cost containment measures, in addition to the aforementioned efficiency plan. Let's start with the Q1 performance in the high-value segment. which now accounts for 82% of revenues, also thanks to a 4% increase in volumes at group level. We gained market share in both car and motorcycle as a result of growing demand for Pirelli high-tech products, such as specialties and tires for electric vehicles in the car market, and hypersport and custom touring in motorcycle. the expansion of partnerships with leading OEMs, and the strengthening of geographical positioning, both in the car segment, where we are sizing business opportunities in the United States and Asia Pacific through a dedicated offering, and in the motor segment, where we are consolidating the leadership in Europe and expanding the presence in the other high-value regions. Let's now turn to product innovation. In the first quarter of 2026, we obtained approximately 120 new homologations, of which 90% were for ties 19 inches and above, 80% for specialties, including run-flat, run-forward and Pirelli noise-canceling system, 65% for electric vehicles, mainly in Europe and China. Product innovation continues to leverage Pirelli experience in motorsport. One example is the partnership with ODI. The RS5 and RS3 competition models will be fitted with the T0R and Trofeo R sport tires designed for both road and track use. Development took place in close collaboration with ODI, also through an advanced virtual simulation approach based on artificial intelligence. In replacement, the product portfolio is expanding across all segments. For the car, the third generation of Scorpion was launched for SUV models. In Moto, sales of Mercedes Sport X01 started for high-sport segments. For cycling, the P0 SLR was launched for road racing applications. Finally, Tirelli's technological leadership was further confirmed by comparative tests on car tires in which the group achieved six victories. The development of CyberTire continues through strategic partnership with leading organizations in the fields of connectivity and autonomous driving, with the aim of further strengthening CyberTire technology platform. We acquired a 30% stake in Universys, a Swedish company specializing in advanced AI-based image and video processing technologies. The integration of Universys' 3D AI computer vision with a server tile enables the combination of data from sensors installed in tiles with information derived from video analysis. offering an even more accurate understanding of road conditions. This integration opens up to high-value applications in terms of safety and autonomous driving, and also provides infrastructure managers with real-time data for more efficient maintenance and a lower risk of accidents. We also consolidated the partnership with RideSense, a spin-off of the University of Naples, in which we hold the stake of approximately 25%. The aim is to enhance the performance of the cyber-tire through technologies based on virtual sensors. RightSense has over 10 years experience in real-time simulations applied to tires and motorsports, key expertise for accelerating the development of the platform. Finally, We joined the board of New Links, an Italian startup originating from Milan Politecnico that develops the entire technological system enabling autonomous driving from environmental perception to road planning and from vehicle control to remote fleet management. New Links is testing an innovative car sharing model using autonomous vehicles. and this collaboration is an opportunity for Pirelli to strengthen its position in the autonomous driving ecosystem. CyberTire is evolving from a product technology into an integrated digital platform, at the heart of the future mobility ecosystem. This is happening also thanks to targeted partnerships that accelerate its innovation with strong technological value. These partnerships anyway have a negligible financial impact already factored in our figures. I now hand over to Mr. Bocchio.