PIRELLI RE: BOARD OF DIRECTORS APPROVES FIGURES AT MARCH 31ST, 2010 THE COMPANY CONFIRMS ALL ITS FULL YEAR TARGETS
EBIT1 SHOWS STRONG IMPROVEMENT COMING IN AT A POSITIVE €10.3 MILLION COMPARED WITH A LOSS OF €6.2 MILLION IN FIRST QUARTER 2009
NET RESULT AT BREAKEVEN: +€0.4 MILLION COMPARED WITH A LOSS OF €15.8 MILLION AT MARCH 2009
NET FINANCIAL POSITION, EXCLUDING SHAREHOLDER LOANS GRANTED: -€458.6 MILLION (-€445.8 MILLION AT DECEMBER 31ST, 2009); GEARING2 STABLE AT 0.7
THE SERVICE ACTIVITIES3 REPORT A POSITIVE EBIT OF SOME €5 MILLION VERSUS A LOSS OF €1.3 MILLION IN FIRST QUARTER 2009, IN LINE WITH THE RANGE EXPECTED FOR FULL YEAR 2010 OF BETWEEN +€20/+30 MILLION
REAL ESTATE SALES AT APRIL 30TH AMOUNT TO APPROXIMATELY €401 MILLION WITH POSITIVE MARGINS. FULL YEAR TARGET OF BETWEEN €1.3 AND €1.5 BILLION CONFIRMED.
FIXED COST SAVINGS OF MORE THAN €14 MILLION ALREADY ACHIEVED IN THE QUARTER, ABOUT HALF THE FULL YEAR TARGET (BETWEEN €25 AND €30 MILLION)
BOARD OF DIRECTORS HAS ALSO FAVOURABLY ACKNOWLEDGED PIRELLI RE’S SEPARATION PLAN APPROVED BY BOARD OF DIRECTORS OF PIRELLI & C. (SEE JOINT PRESS RELEASE PUBLISHED TODAY)
Milan, May 4th, 2010 – At today's meeting, the Board of Directors of Pirelli & C. Real Estate examined and approved the interim management statement at March 31st, 2010.
In light of the first quarter performance, the Company confirms the EBIT and other financial targets for full year 2010 already announced. All the Group's key performance indicators at March 31st, 2010 are significantly better with respect to the same period in 2009, confirming the soundness of the business model and the actions taken up until now. After seven consecutive loss-making quarters, the attributable net result returns to the black in the first quarter of 2010, with net profit of €0.4 million (-€15.8 million in March 2009).
Group performance in first quarter 2010
Consolidated revenues amount to €51.7 million at March 31st, 2010, basically in line with the €53.8 million reported at the end of March 2009.
EBIT4 is €10.3 million, showing strong improvement with respect to the loss of €6.2 million reported in first quarter 2009.
Service activities5 report a positive result of €5.0 million, marking a major improvement on the negative result of €1.3 million in the same period of 2009, thanks to continuous action to reduce costs. On the basis of this result, the Company confirms the full year target range of between +€20 and +€30 million.
The result for investment activities at March 31st, 2010 is also positive at €5.3 million versus a negative €4.9 million in March 2009. This improvement is attributable to a lower impact from hedging derivatives and the disposal of non-strategic equity investments which had generated losses in the past.
The consolidated net result shows significant improvement with respect to the negative €15.8 million reported in the same period last year, reaching breakeven at +€0.4 million. No provisions for restructuring charges were made in either of the two periods. Please also note that property values are appraised every six months.
Real estate sales amount to approximately €401 million at April 30th, 2010 (€242.9 million at April 30th, 2009)6 . On the basis of the current trend, the Company confirms the previously announced target for real estate sales in 2010 of between €1.3 and €1.5 billion. Sales amounted to €146.5 million at March 31st, 2010 (€174.8 in the same period of 2009). Assets Under Management at this date amount to a total of €16.4 billion (of which €14.9 billion7 in real estate and €1.5 billion in NPLs8 ) compared with €16 billion at December 2009, also thanks to acquisition of management of a new third-party portfolio worth some €0.6 billion.
With regard to the cost-saving plan, the Company has already achieved fixed cost savings of approximately €14 million in first quarter 2010, almost half the top end of the announced full year target range (€25-€30 million).
Group net equity is €655.6 million at March 31st, 2010 (€653.4 million at December 31st, 2009).
The net financial position reports net debt of €55.3 million at March 31st, 2010 (net debt of €41.3 million at December 31st, 2009). The net financial position, excluding shareholder loans granted, reports net debt of €458.6 million, basically unchanged with respect to the €445.8 million recorded at December 31st, 2009.
Gearing (given as the ratio between net financial position, excluding shareholder loans granted, and net equity) is stable with respect to December 31st, 2009 at 0.7.
Divisional performance
Please note that the results reported in this paragraph exclude general and administrative expenses (G&A/holding).
ITALY
Real estate sales amount to approximately €320 million at April 30th, 2010. Sales amounted to €124.8 million at March 31st, 2010 compared with €144.8 million in the same period of the previous year.
EBIT9 is a positive €9.8 million at March 31st, 2010 compared with a loss of €3.3 million March 31st, 2009. EBIT comprises €8.4 million in net income from services (an improvement on €4.9 million in 2009) and €1.4 million in net income from investment activities (-€8.2 million in 2009).
GERMANY
Real estate sales amount to approximately €63 million at April 30th, 2010. Sales amounted to €4.9 million at March 31st, 2010 compared with €15.3 million in the same period of the previous year.
EBIT is a positive €1.4 million at March 31st, 2010, an improvement on the loss of €1.0 million reported at March 31st, 2009. EBIT comprises €0.9 million in net income from services (€1.3 million in 2009) and €0.5 million in net income from real estate vehicle companies (-€2.3 million in 2009).
POLAND
Real estate sales amount to approximately €18 million at April 30th, 2010. Sales amounted to €16.8 million at March 31st, 2010 compared with €14.7 million in the same period of the previous year.
EBIT is €0.2 million at March 31st, 2010, compared with €1.1 million at March 31st, 2009. EBIT comprises -€0.3 million in net losses from services (€0.5 million in 2009) and €0.5 million in net income from real estate vehicle companies (€0.7 million in 2009).
NPL
Collections of non performing loans amount to €66.1 million at March 31st, 2010, compared with €81.7 million in the same period of the previous year.
EBIT is €2.9 million at March 31st, 2010, compared with €2 million at March 31st, 2009, thanks to the results obtained by the vehicle companies (€4.9 million in 2009), while service activities reported a breakeven (-€2.9 million in 2009).
Events subsequent to March 31st, 2010
Restructuring of the Arcandor Group
Progress is being made in the restructuring of the Arcandor Group, to which Karstadt, the Highstreet tenant, belongs. In February the owner companies reached an agreement with the financing banks, being an essential condition for being able to support the Arcandor Group's restructuring plan, which the committee of liquidators has submitted to the creditors' meeting. The restructuring plan includes the sale of the Karstadt operating company, for which purchase offers should have been presented by the end of April. The committee of liquidators has extended the purchase offer presentation deadline to the end of May 2010: at this point the Essen Court will review whether the restructuring plan's conditions precedent have actually been satisfied, including the presence of binding purchase offers.
Board examination of Pirelli RE separation plan approved by Pirelli & C.
The Board of Directors of Pirelli RE, meeting after that of Pirelli & C., has also favourably acknowledged the separation plan approved by Pirelli & C. As a result of this operation, Pirelli RE will change its name, which will be examined in a forthcoming board meeting.
All the details about this operation can be found in the joint press release published today by Pirelli & C. and Pirelli RE.
The results for the quarter ended March 31st, 2010 will be presented tomorrow, May 5th, 2010 at 12.00, in a joint conference call with Pirelli & C, and in which Marco Tronchetti Provera, the Company's Chairman, and top management will be taking part. Journalists may follow the presentation telephonically by dialling +39.06.3348.5042 but will not be allowed to ask questions. The presentation will also be available real-time in webcasting at www.pirelli.com in the Investors section, where the slides may be viewed.
This press release contains references to the following principal alternative performance indicators for the purposes of better evaluating the Pirelli RE Group's results: EBIT including net income from investments before restructuring costs and writedowns/revaluations is calculated as EBIT plus net income from investments less restructuring costs and writedowns/revaluations; EBIT also including income from shareholder loans is determined as above but also includes interest income from financial receivables due from associates and joint ventures; net financial position, which is represented by gross financial debt less cash and other cash equivalents and other financial receivables.
Gerardo Benuzzi, Pirelli RE's Financial Reporting Officer, attests - pursuant to para. 2, article 154-bis of the Financial Markets Consolidation Act (Decree 58/1998) - that the accounting information contained in this press release corresponds to the Company's underlying documentary records, books of account and accounting entries.
Reclassified, condensed versions of the consolidated income statement, balance sheet and cash flow statement are all appended to this press release. In compliance with CONSOB Communication 6064291 of July 28th, 2006, you are advised that these tables have not been audited by the independent auditors Ernst & Young S.p.A..
The Interim Management Statement at March 31st, 2010 will be made available to the public by May 14th, 2010 at the Company’s registered office in Milan, Viale Piero e Alberto Pirelli 25 and at Borsa Italiana S.p.A.. The same document will also be made available on the Company’s website, www.pirelli.com.
For additional information contact: Pirelli RE Press Office Tel. +39/02/6442.4270 Pirelli RE Investor Relations Tel. +39/02/6442.4057 www.pirellire.com
1 Includes results from service and investment activities, and income from shareholder loans which includes interest income on financial receivables from associates and joint ventures
2 Gearing: the ratio between net financial position, excluding shareholder loans granted, and net equity
3 Includes asset & fund management, agency, property management, facility services (only in Germany and Poland) and credit servicing (only in Italy), inclusive of general and administrative expenses (G&A/holding).
4 Includes results from service and investment activities, and income from shareholder loans which includes interest income on financial receivables from associates and joint ventures
5 Results from service activities mean the net income generated by the Company from its fund and asset management activities and specialized real estate services (agency, property management, facility services, only in Germany and Poland, and credit servicing, only in Italy), inclusive of general and administrative expenses (G&A/holding).
6 Includes Italia Turismo's real estate portfolio and the Grosse Strasse complex in Osnabruck, Germany
7 Market value determined by the Company based on appraisals at December 2009, as adjusted for sales, capitalizations and acquisitions in the first quarter of 2010.
8 Stated at book value
9 Includes results of service activities, investment activities and income from shareholder loans