Pirelli 9 Month Results Expected to be Flat or Lower

Analysts expect the nine-month operating results released by Pirelli & C SpA to be flat or slightly lower due to the mixed performance of the company’s various divisions. Analysts have predicted a net profit of between 91 and 114 million euros compared with a loss of 1.411 billion euros in same period last year, an EBIT of 280 to 297 million, down from 300 million last year, an EBITDA of 441 to 462 million, against last year’s 462 million, and sales of 3.856 to 3.929 billion.

Pirelli Tyre is expected to benefit from volume increases in emerging economies, offsetting the impact of higher raw material prices. However, margins are expected to be particularly hard hit by higher raw material prices, one analyst commented. A second Milan based analyst noted that Pirelli has little exposure to the US market, and is thus in part insulated from the weaker dollar’s negative impact on sales. “The US represents 8 per cent of sales. They are more present in Latin America that is going very well,” he said.

Much analyst attention is focused upon how Pirelli will spend the 3.3 billion euros the company received from the sale of Olimpia, the unit holding an 18 per cent share in Telecom Italia. “I don’t expect any very big surprises in the results. Attention is more on the discussion of the Olimpia proceeds rather than the results,” commented an analyst from a leading Milan bank. Industry sources report that Pirelli will most likely discuss the proceeds from the Olimpia sale but may not take a final decision at this time.