Annual Report 2022
"Ma(n)chine Learning" is the title of the Annual Report 2022 in which four authors, both Italian and international, along with a generative intelligence chat, delve into the theme of the ability of humans and machines to learn from their mistakes.
The introduction is written by Giorgio Metta, the scientific director of the Italian Institute of Technology, who describes AI as "the new electricity", an invention that will have a strong impact on human habits and daily life.
In the text "Writing with artificial intelligence", Hanif Kureishi and his son Sachin discuss the use of AI-guided platforms for writing, highlighting their potential and the creative limitations they still possess.
In "To err is human, thankfully", written by Nicola Lagioia, practical and historical examples are presented to support the thesis that human minds are at the core of AI learning.
American author Peter Cameron, in his fictional story "Perfect Time", places humans at the center, exploring their evolving relationship with machines over time, even if they are sometimes bound by customs they are unwilling to let go of.
Read moreLetters to stakeholder
Li Fanrong
The Chairman
Dear Stakeholder,
In 2022, I became Chairman of Pirelli. Since assuming this role, I have had numerous occasions to appreciate the company’s good standing and admirable international reputation and have understood that its prestige is based on a long history of dedication to technological innovation and a proven ability to adapt to change.
In fact, the changes in the world and global economy in 2022 posed many challenges to businesses across the globe. From supply chain disruptions to inflation and geopolitical tensions, it was a difficult year for many. The automotive sector was particularly impacted, yet Pirelli’s focus on the high end of the market and its consolidated relationships with the key carmakers in the Prestige and Premium segments proved an effective defense. This could be seen in the Company’s solid results, once again underlying the resilience of the business model as well as the preparedness and dedication of its people.
In this challenging context, the Company managed to maintain and even strengthen its ongoing efforts to improve the business’s sustainability and was again recognized at the international level for its efforts in this area which are central to the company business model and key to the future. A future in which the quest for an ever more sustainable mobility is also driving a fundamental change in the automotive industry, that is the switch from combustion engine cars to electric vehicles. Pirelli was among the first companies to not only see this trend emerging but to act upon it, quickly establishing a significant position in this market.
None of these accomplishments would have been possible without the hard work and dedication of Pirelli’s employees. They deserve recognition for their efforts and their commitment to the group’s shared goals.
With this solid foundation, even with the complex landscape ahead, Pirelli is well positioned to weather the challenges of 2023 as it did those of 2022, which was also the year that the company achieved a great milestone, celebrating 150 years of activity and success.
Thank you again for your continued support.
Sincerely,
Marco Tronchetti Provera
Executive vice-chairman and CEO
Dear Stakeholder,
getting through the complexities of 2022 with positive results confirms Pirelli’s capacity to respond to challenging circumstances. In 2022, in fact, expectations of a full recovery after the pandemic came up against the Russia-Ukraine conflict and a slowdown of growth in a context of economic instability and pressure on prices.
Pirelli was able to contain these effects thanks to its significant exposure to High Value, the most resilient business segment, solid price discipline and the “local-for-local” approach which reduced the company’s exposure to increased logistics costs and interruptions along the supply chain. We ended the year with results above targets, which had been revised upwards several times during the year: revenues exceeded 6.6 billion euro, Adjusted Ebit was 977.8 million and net profit stood at 435.9 million, while net cash flow before dividends was above expectations at 516 million, thanks to an effective management of inventories.
Our technological competencies and constant commitment to research allowed us to accelerate the development of innovative, renewable, and recycled materials and further improve the stages tyre design and virtual development, with advantages in terms of time, costs, and environmental impact. In addition, Pirelli’s decarbonization plan continued, with 100% of the electrical energy acquired in North America and Europe certified from renewable sources. A goal to be extended worldwide by 2025, in line with Pirelli’s path to Carbon Neutrality by 2030.
The contribution of digitalization, which enables the sharing of data in real time in the factories, made our production processes even more efficient. The strategic role of data and Artificial Intelligence – themes of the 2022 Annual Report – also lead us to establish a new entity in Italy, in Bari, specialized in the creation of algorithms and strategic software for our business.
Our constant drive for innovation results in ever more evolved products, in the acquisition of market share in electric thanks to Elect technology and the further development of Cyber technology for sensor-fitted tyres which have a strategic role in driving safety. We also successfully launched the production of bicycle tyres at the Milan-Bollate plant, strengthened our leadership in moto and increased our global High Value production capacity in Mexico and Romania.
The Pirelli brand represents a fundamental lever for growth and its strength is constantly nourished by our sports’ sponsorships, such as our involvement in Motorsport where we continue to be protagonists in Formula 1, Superbike and over 350 auto competitions, as well as in the new adventure of Luna Rossa Prada Pirelli and the endeavors of “Alla Grande-Pirelli”. Making our brand more recognizable and original are the Pirelli Calendar, a powerful communication and brand enhancement tool, Pirelli HangarBicocca, a consolidated presence among the most esteemed museums of the world, and the Fondazione Pirelli, which develops its activities also in synergy with the foundations of other industrial groups through the Museimpresa project.
The year 2023 is unfolding as one characterized by instability because of the prolongation of the Russia-Ukraine conflict, persistent inflationary pressure in Europe and the USA, and the economic difficulties in Brazil and Argentina. Effects that are partially offset by the normalization of the Chinese economy following its post-Covid reopening. We will face it as we have faced our 150 years of history: with the passion and strength of our people and the trust of our stakeholders
My personal thanks to you all.
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full document
The authors
artificial intelligence
The technology supported by artificial intelligence is seen as a tool to support writing activities by Hanif Kureishi and his son Sachin. Despite their profession, the two British authors do not demonize the use of AI-guided platforms for composing texts; instead, they emphasize with great clarity the potential and objective creative limitations that these technologies present. "The future offers great opportunities," they write. For example, a copywriter could be supported in their work, finally being able to handle a dozen projects and becoming the creative supervisor of them. However, ChatGPT is still an author full of clichés and stereotypes, certainly not capable of writing novels that can be considered bestsellers. The perspective of the individual will always be needed, at least until the machine reaches a level of abstraction comparable to that of humans, and that still seems far off, although perhaps not so far. And it is precisely this that worries the two authors.
Time
An elderly lady from Baltimore is the protagonist of Peter Cameron’s short story, an acclaimed American novelist whom Pirelli asked to respond with his own text to the concept that gives the title to the company’s consolidated balance sheet for 2022. "Ma(n)chine Learning" aims to depict artificial intelligence and its recent exponential learning curve, which seems to almost overshadow the human being, their history, and their apparent inability to learn from their mistakes.
Cameron’s story is a gentle one that unfolds over the course of an evening, as Mrs. Wendall and her grandson tidy up her household finances. Her choice is not to delegate to technology, to continue paying bills and obligations with handwritten checks instead of automatic payments, to do calculations in her worn-out notebook rather than with a smartphone calculator. And it doesn’t matter much if bank tellers seem to make more errors than automation: "I don’t trust machines," the woman concludes with a hint of pride, "I would miss the ritual of filling out my checks."
"Perfect Time" - this is the title of the short and intimate story - illuminated by the dim light of the evening, returns to focus on a machine again towards the end, this time a pendulum clock that has been passed down in the family for generations. Like any machine that will likely be invented, it needs a human being to periodically wind it up and continue to be impeccable, marking, every hour, that perfect time which gives the story its title.
It’s a small (yet significant) ritual that Mrs. Wendall, and all of us, proudly refuse to give up.
thankfully
Artificial intelligence learns from its mistakes much faster than humans and builds its progress precisely on this, but it is not infallible. In fact, its blind infallibility could potentially have catastrophic effects. Writer Nicola Lagioia seeks to provide practical and historical examples to support his claims, arguing that the basis of AI learning lies in the human mind. Machine learning systems draw from our experiences and behaviors, optimizing, refining, and enhancing them, attempting to overcome our distortions and flaws, although they do not always succeed. They then become faulty machines, even more dangerous, and that is why we should fear their infallibility.
electricity
Let’s talk about a new electricity. Just as electric current revolutionized the world two hundred years ago, today artificial intelligence is invading our lives, learning from our own mistakes and its own. But what is the future of a technology that evolves at an extraordinary speed, where what is innovative now is almost obsolete tomorrow? Giorgio Metta, the current Scientific Director of the Italian Institute of Technology, provides two different and complementary perspectives to discuss AI: one more philosophical and related to human-machine interaction, particularly on how the former tends to attribute intentionality to the behaviors of the latter with the development of interactive technologies, and another more practical that tells the role of the scientist and his research.
The author’s conclusion is that artificial intelligence is somehow much more than the electricity invented two hundred years ago. It is not just technology, but something that changes the perspective in which humans conduct science and develop new technology. Generative models are shaping a new scientist who carries out experiments with parsimony, because most of them are already simulated within a high-performance computer.
A Journey through the Human Mind and Artificial Intelligence
The human interviews the machine, or rather interviews ChatGPT, an AI-based chatbot that specializes in conversing with human users. During this dialogue, the software found itself responding in a particularly rational (and politically correct) manner to questions that sought to investigate the reasons behind both human and machine errors. "Human beings are emotional creatures. Even though they can intellectually understand the consequences of their actions, they can be driven by immediate desires, emotional needs, or ingrained habits," explained ChatGPT. On the other hand, "When an AI algorithm makes a mistake, the data from that mistake is used to adjust the algorithm so that it doesn’t repeat the same error in the future. This process is called ’supervised learning’." The interview concludes with a reflection from the machine on how AI in the future will help humans reduce margins of error in many areas, but completely eliminating the possibility of making mistakes will be impossible: "Errors are an integral part of the human experience and learning."
Cartoons by Liza Donnelly
She is an award-winning cartoonist and writer for The New Yorker Magazine and is a contributor to The New York Times, Washington Post and others. Author of 18 books for adults and children, Women On Men was a finalist for the Thurber Prize for American Humor.
Artificial Intelligence and Pirelli
For 150 years, Pirelli has placed innovation and progress at the core of its company, and it continues to do so with the development and support of artificial intelligence within its factory and team. Since 2018, Pirelli has been applying AI and its algorithms in production, sales, supply, and R&D processes, with the goal of coordinating and merging technology, business, and people with the common objective of maximizing efficiency within the company and continuously renewing itself in a future where humans are the creators, leaders, and integrators of technological progress.
To support the text that narrates the use of artificial intelligence within the company, five Pirelli employees have responded to five questions (each employee answered only the questions relevant to their area of expertise) to provide a more operational perspective on the subject.
Read moreInterviews with Pirelli’s employees
Fathallah
Senior Data Scientist
AI assists the Data Science team in working faster and more efficiently by supporting humans in repetitive tasks and allowing them more space for creative and decision-making work.
Galantina
Senior Vice President Supply Chain
The ability to respond quickly to a given problem is certainly the advantage that the supply chain can derive from AI. Luca Galantina emphasizes the importance of establishing connections and responding promptly to various external factors, while also highlighting how this technology leads to the sharing of knowledge that is useful for staying one step ahead of competitors.
Stefanini
Material Compound Technologist
In the R&D sector (recipes and compounds of materials), AI is employed to carry out activities focused on performance prediction, thereby enabling savings in terms of resources, costs, and time. However, Veronica Stefanini believes that for all of this to happen, the machine still needs to be instructed by humans, with the human-machine combination becoming an opportunity for improvement and evolution.
Scurati
Polo* R&D Director
The advantages and speed gained are significant with an immediate sharing and extension of know-how. Alberto Scurati describes the direction to be taken with AI in the company so that humans and machines do not become extreme opposites but integrate seamlessly.
* Polo Industriale Pirelli – Settimo Torinese – Italy
Mortarino
Manufacturing & Improving Quality Director
The combination of AI and humans is fundamental in the industrial field, as the former assists the latter in performing tasks faster and more accurately. Massimo Mortarino sees AI as an additional tool in the hands of humans to enhance their own level of knowledge.