Pirelli reports 31% increase in profits, but reduces expectations

Pirelli & C. SpA has reported sales revenues of 4,574.1 million euros in the first nine months of 2012, up 7.2 per cent from 4,265.8 million on 30 September 2011. Pre-tax profits (EBIT) are up 31 per cent to 592.8 million euros (compared with 451.2 million euros on 30 September 2011). During the same period EBIT margin grew to 13 per cent from 10.6 per cent on 30 September 2011. However the company also revised down a number of key projections.

Pirelli has highlighted the acceleration of its so-called premium-isation plans as a key reason for the company’s continued profitability, pointing out that it has also invested 320 million euros in expanding premium output in developing countries. Pirelli reports that premium segment sales continues to grow, with revenues in this stream up 23.5 per cent at 1,612.3 million euro on 30 September 2012 and a volume increase of 13.5 per cent.

Tyre activities continue at a similar pace, with pre-tax profits (EBIT) in this division up 26.4 per cent at 612.3 million euros compared with 484.4 million euros 30 September 2011.

EBIT margin here grew 13.5 per cent from 11.5 per cent on 30 September 2011. When you look at the two largest segments the consumer business remains the most profitable with EBIT margin at 14.5 per cent compared with 12.5 per cent on 30 September 2011. On the other hand the industrial business reported and EBIT margin of 10.5 per cent compared with 9.1 per cent during the same period in 2011.

The less positive news is the fact that the company now expects revenues of approximately 6.15 billion euros. The original target was approximately 6.4 billion euros. According to the company this takes a total volume reduction of 5 – 5.5 per cent into account (originally a reduction of 3-4 per cent had been anticipated ); lower premium growth projections – 20 per cent down to 17-18 per cent and slightly reduced benefits of price/mix into account.

New board member

The board of directors also reported that they have proceeded with the co-option of Mario Greco to take the place of Giovanni Perissinotto who resigned from the post on 23 July 2012.