Italy’s Pirelli & C. SpA has announced net sales of €3.0 billion during the six months to 30 June 2016. This is 6.6 per cent lower than the net sales achieved by the Pirelli Group in the first half of last year, yet the company says the result represents a year-on-year organic growth of 5.9 per cent (with the same perimeter and net of an 8.8 per cent negative foreign exchange effect). Sales within Pirelli’s Consumer business (car, light commercial and motorcycle tyres) amounted to €2.5 billion, including €1.6 billion of premium products, while Industrial business sales totaled €497.3 million.
Operating income, at €405.6 million, was 9.2 per cent lower than the Pirelli Group figure from a year earlier, and net income plummeted from €196.5 million to €8.1 million. This 95.9 per cent decrease in net result reflects, beyond the negative results from equity investments, €167.4 million in additional net financial charges that were mainly incurred due to bank debt resulting from the merger of Pirelli with Marco Polo Industrial Holding (which took effect 1 June 2016) as well as the ahead of schedule repayment of a US$150 million US Private Placement bond loan.
The aforementioned increase in organic revenues was underpinned by 7.4 per cent organic growth in Pirelli’s Consumer business thanks to the performance of the premium segment and in mature markets. The Industrial business was impacted by the weakness of the tyre market in South America and other emerging markets, and only managed organic growth of 0.4 per cent.
Tyre unit volumes were largely unchanged compared with the same period of 2015 and influenced by a 1.9 per cent increase in volumes within the Consumer business – which were in turn driven by a 13.4 per cent growth in premium product volumes – and a 7.3 per cent decline in Industrial volumes due to weak demand in South America and the slowdown of demand for original equipment tyres in China.
Upon releasing its financial results for the first half of 2016, Pirelli & C. SpA confirms that both Pirelli and new sister company Aeolus have both approved Pirelli’s transfer of ten per cent of Pirelli Industrial to Aeolus and Aeolus’ transfer of 80 per cent of its car activities to Pirelli. The two companies have also approved the merger of two assets held by ChemChina holding company China National Tire & Rubber Co., Ltd (CNRC) into Aeolus, as well as the formalisation of a license contract between Pirelli Tyre and Aeolus for technology pertaining to the Industrial segment. These deals are expected to close in the coming months once, among other things, the necessary government authorisations have been obtained.
Pirelli also announced the successful conclusion of a €6.4 billion debt refinancing with a pool of 19 primary Italian and international banks. The refinancing operation – carried out for a total cost of below 3.5 per cent – will permit the repayment of maturing debt and the optimisation of debt structure.
Category: Company News