Presentation of 2016 integrated report
The Pirelli 2016 integrated report (Annual Report 2016) aims to provide a comprehensive overview of the process of creating value for the Company's Stakeholders, as resulting from the integrated management of the financial, productive, intellectual, human, natural, social and relational capitals. Reporting reflects the business model adopted by Pirelli, which is inspired by the United Nations’ Global Compact, the principles of Stakeholder Engagement set forth by the AA1000, and the Guidelines of ISO 26000.
The financial capital, which comprises the company’s financial resources, drives the sustainable management of the other capitals and is in turn influenced by the value created by the latter. In 2016, business operations generated an adjusted EBIT (before non-recurring and restructuring expenses and before amortization of intangible assets related to assets recorded as a result of the Business Combination) equal to 896.6 million euro (14.8% the EBIT Margin), up 4.2% from the previous year on a like-for-like basis.
In turn, the Company's productive capital, which includes 19 tyre factories in four continents, is managed in a perspective of reducing environmental impacts, with targets by 2020 in terms of an increase in waste recovery and a reduction of the specific indices of energy consumption, emissions and water withdrawal. In this regard, the company's efforts in 2016 led to a decrease in water withdrawal and specific CO2 emissions, also thanks to the continuation of investments in renewable energy, with a substantial stability of specific energy consumption and a waste recovery equivalent to 92%. All this has helped to achieve efficiencies on costs amounting to 90.5 million euro in total.
The research and development activities, which have always been at the heart of Pirelli's strategy, contribute substantially to the improvement of environmental efficiency along the entire product life-cycle, from the innovative raw materials to the process, distribution, use and up to the end of life of tyres. In 2016, Pirelli invested 228.1 million euro in research and development, i.e. 5.9% of premium revenues and 3.8% of total revenues. In turn, Pirelli’s Green Performance products, which combine performance and respect for the environment, at the end of 2016 represent 63%1 of total tyre turnover (56% in 2015 and 54% in 2014).
The strong investment in innovation also supplies Pirelli’s intellectual capital, which comprise a total portfolio of approximately 5,000 patents concerning innovations of product, process and materials, as well as a brand recognised worldwide.
The evolution of the cited capitals is closely related to human capital, at the heart of the Company’s growth. Merit, rules, ethics and sharing of strong values and clear policies, attention to welfare and diversity are accompanied by advanced instruments to attract and retain the best talent. The investment in the “culture of health and safety at work” and in training is fundamental, with an accident frequency index that in 2016 decreased by 15% compared to 2015 and an investment in training that reached 9.8 average days per employee, a further increase compared to 8.6 of the previous year, thus surpassing for the fourth consecutive year the target of 7 average-per-capita days as envisaged by the Industrial Plan only as from 2015.
1Figure obtained by weighing the value of sales of Green Performance tyres on the total value of sales of Group tyres. Green Performance products identify the tyres that Pirelli produces throughout the world and that fall under rolling resistance and wet grip classes A, B, C according to the labelling parameters set by European legislation. In 2016, new data were acquired that required a restatement on previous years.