Pirelli Tyre Due 100 million Raw Material Effect, Say Analysts
Pirelli Tire achieved a high 7.7 per cent operating profit margin in first half 2009. The figures come despite a negative raw material impact (-19 million euros) and despite a 16 per cent drop of volumes and a low capacity utilisation rate of 75 per cent.
Pirelli Tyre CEO, Dr Francesco Gori made the remarks at a presentation given during the Frankfurt motor show. And the good news left analysts predicting the company’s financials should improve significantly in the coming quarters due to an estimated 100 million euros positive raw material effect; a recovery of volumes with capacity utilisation reaching 90-95 per cent; and “the full payback of restructuring measures.”
Reporting on the presentations, Deutsche Bank analysts observed that Pirelli’s tyre business should benefit from the Brazilian government’s recent decision to impose import tariffs Chinese made tyres. The tariffs of US$0.75/kg are seen a significant plus for the company, in a market where the group already enjoys 30 per cent market share and “above average operating profit margin.”
Chinese imports are said to represent approximately 10 per cent of the Brazilian market.
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