Pirelli Forecasts Little Growth in 2008

This year’s outlook for Pirelli & C SpA, according to a March 26 forecast, is one in which very little growth is expected. The company predicts its results will remain flat, and Pirelli further announced the postponement of its new three-year business plans, anticipated to be made public in May. The company has blamed volatile markets for this decision. “We confirm business operating results in line with 2007 not withstanding a continuous pressure and volatility on raw material costs in the tyre business,” said Pirelli chairman Marco Tronchetti Provera during a conference call on Pirelli’s 2007 results. “By the end of September to mid-October, we should have a better vision of future results.”

For Pirelli, core business – tyres and real estate – is the current focus, and Tronchetti Provera dismissed Italian media speculation on a possible spin off of one of the company’s core businesses in order to further simplify corporate structure. “There is no plan of a spin off of the real estate or spin off of tyre,” he said.

On March 26 Pirelli announced a regular dividend 0.0160 euros per share — the first in two years — and plans to seek shareholder approval to renew a share purchase programme of up to 10 per cent, however Tronchetti Provera pointed out this does not mean Pirelli will purchase 10 per cent of its shares.

In 2007 Pirelli’s tyre business, earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2.8 per cent to 548.6 million euros, with a 5.4 per cent increase in revenue to 4.2 billion euros. Pirelli’s total annual earnings before interest, tax, depreciation and amortisation (EBITDA) fell 5.4 percent to 580.9 million euros ($914 million). Attributable net profit totalled 164.5 million euros against a loss of 1.167 billion euros the previous year, the result of a write down of Telecom Italia parent company Olimpia. Total revenues increased 34.4 per cent to 6.5 billion euros.