Pirelli & C SpA 2005 Results Show Double Digit Growth

In 2005 Pirelli & C SpA achieved double digit growth in revenues (+14.6%), operating profit (+32%) and net profit (+31.3%) compared with the previous year. Publishing its 2005 full-year results, the group explained that it had reduced net debt to 1,177 million euros at the end of 2005. At the consolidated level, group revenue totalled 4,546 million euros, an increase of 14.6 per cent from 3,967 million euros in 2004. EBITDA totalled 568 million euros (12.5% of sales), an increase of 21 per cent from 470 million euros in 2004 (11.8% of sales).

The Pirelli Tyre division also achieved strong results in 2005 and reached its the profitability target (9% return on sales) one year earlier than expected, despite the increase in raw material costs. Revenues on 31 December 2005 amounted to 3,633 million euros, an increase of 11.7 per cent compared with 2004. EBITDA was 518 million euros (14.3 per cent of sales), an increase of 14.6 per cent from 452 million euros in 2004. Pirelli is predicting still higher sales in 2006, due to the company’s focus on premium products.

Operating income amounted to 329 million euros, an increase of 19.6 per cent over 2004, with a return on sales of 9.1 per cent. The net financial position on 31 December 2005 was negative 237 million euros, including the 59 million euros impact of the joint-venture in China.

Pirelli’s board of directors, also decided to launch the plan to float Pirelli Pneumatici SpA on the Milan Stock Exchange, while continuing to maintain the majority stake of the company in the possession of Pirelli & C SpA. The control of the international affiliates now under Pirelli Tyre Holding NV will be transferred to Pirelli Pneumatici SpA. Market conditions permitting, completion of the project is expected by summer 2006.

Pirelli Tyre’s consumer segment (cars and motorbikes) saw a rise in volumes and sales, particularly in North America. In the commercial segment, 2005 saw positive growth especially in OE. Pirelli’s new truck radial production facility in Yanzhou, China, will serve the Chinese, South East Asian and Australian markets and is designed to help continue this positive trend.

Group headcount on 31 December 2005 stood at 26,827 against 24,790 at the end of 2004 up 2,037. According to the company 381 of these were on temporary contracts. The increase is said to come mainly from the company’s tyre activities and are the result of expansion in China and Romania.