Pirelli Q1 results show European recovery, premium growth

Pirelli says its first quarter 2014 performance reflects the recovery in demand within Europe that was first witnessed in the final quarter of last year along with the good health of the premium segment, where the Italian tyre maker is focused. The company also points out the positive performance of its business in Russia, where revenues bucked market treads to increase 5.4 per cent (excluding exchange rate effects) and profitability stood at “high single digit levels.”

Consolidated revenues in the quarter amounted to €1,473.2 million, 2.7 per cent below the quarter result a year earlier; Pirelli points out that this figure incorporates organic growth of eight per cent that is countered by a negative exchange rate impact of 10.7 per cent. Gross operating margin, or EBITDA, before restructuring costs increased 9.6 per cent year-on-year to €277.3 million. Operating result, or EBIT, rose 12.6 per cent year on year to €201.0 million. EBIT margin rose from 11.8 per cent in the first quarter of 2013 to 13.6 per cent a year later. Before restructuring charges, profitability stood at 14 per cent, an increase of two percentage points compared with the corresponding period of 2013. Net profit rose 26.1 per cent year-on-year to €90.4 million.

In the Premium segment, Pirelli’s revenues totalled €639.9 million, an organic year-on-year increase of 16.4 per cent (+12.9 per cent including exchange rate impact, negative 3.5 per cent) and represented 56.7 per cent of Consumer sales (50.8 per cent in the first quarter of 2013). This business sector saw sustained growth both in emerging countries (+14.7 per cent) and also in mature markets (+12.4 per cent) thanks to the recovery in Europe.

Total volumes increased 3.8 per cent, with Consumer volumes rising 5.9 per cent and Industrial volumes decreasing 2.2 per cent. The latter figure also reflects the high level of growth in emerging markets in the corresponding period of 2013 (+15.3 per cent); Pirelli adds that it also reflects the “progressive reduction of the conventional business in South America.”