Pirelli releases 2014 Annual Report

Pirelli has published its 2014 Annual Report. The 389 page tome can be downloaded from Tyrepress.com’s company profiles section.

Within the document, the tyre maker reports that its consumer tyre production capacity last year amounted to approximately 72 million pieces, 50 per cent of which were classed as ‘premium’. These premium products accounted for 55 per cent of car business revenues during the year, and this is expected to grow to 60 per cent in 2016. Pirelli believes that premium will account for 25 per cent of the total passenger car tyre market worldwide in 2015, one percentage point ahead of 2014. Nevertheless, non-premium segments also remain important to Pirelli, and the company intends to to extend products such as run-flat and winter tyres into the non-premium area.

The number of points of sale within Pirelli’s retail network is also on the rise; the company expects total point of sale numbers to grow from 6,000 in 2013 to 9,000 this year, with Russia and the Asia Pacific region accounting for a greater share of this business. Five per cent of retail outlets will be based in Russia by this year, up from three per cent in 2013, while APAC points of sale will rise from 26 per cent to 35 per cent of the total. Pirelli also anticipates adding a further 500 points of sale in 2016. “To achieve this, Pirelli will invest more in its partnerships with dealers, rewarding successful operators, targeting independent tyre specialists and moving towards greater retail integration with its whole production and sales operation,” states the tyre maker.

Pirelli says investment made up to 2013 have enabled it to achieve an “optimal plant set-up”. This has invoved the opening of plants in Mexico, China and Romania. Production is now mainly located in countries with low industrial costs; 100 per cent of industrial tyre production and 78 per cent of consumer production capacity is located in these regions. The tyre maker’s current industrial plan provides for investments of up to €1.6 billion between 2014 and 2017, an amount that will account for five per cent of revenues in 2017 compared with seven per cent in 2013. Through these investments, the overall capacity of Pirelli’s consumer business will grow from 70 million units in 2013 to 81 million in 2017, with products Pirelli identifies as premium accounting for 63 per cent of total production. Capacity in the industrial business will grow from 6.2 million units in 2013 to 6.8 million in 2017.

Priorities for 2015

This year, Pirelli intends to continue increasing its market presence in the replacement channel, however it says a ‘selective strategy’ will be followed: “We want to reduce business with generalist wholesalers and grow in car models where the company does not have homologated products.”

In the medium market segment, Pirelli plans what it calls a “significant product renewal” with ranges such as the Cinturato All Season, a product that targets a “but growing market niche.” Moto business activities this year include the start of production at the joint venture Pirelli-Astra Otoparts plant in Indonesia and the supply of products from here to the Asia Pacific region.

For truck and agricultural tyres, Pirelli says that starting in the core South American market, its business model will become more ‘fleet-centric’ and benefit from a value proposition that focuses on tyre efficiency, retreads and services. These will be delivered through owned dealers, independent trade partners, retread specialists and truck vehicle dealers.

“Pirelli’s ambition remains the same: to lead the high-end tyre market and capture high-margin markets around the world for many years to come,” writes the tyre maker. “We will do that through our unrivalled technology, the best talent and a relentless global outlook, creating value in a responsible and sustainable way.”