Pirelli Reports Reports Strong 1H, Ups Targets
Pirelli Spa has reported that the firm closed the first half of 2010 with revenues of 2,426.5 million euros (1H 2009: 2,026.2 million euros), up 19.8 per cent. Pre-tax profits (EBIT) grew 62.8 per cent to 193.4 million euros (2009: 118.8 million euros). Net income of continuing operations more than doubled to 80.8 million euros, compared with 30.3 million euros in the first half of 2009. Such was the success of the tyre business in the first half, the company raised its revenue target. Executives now expect revenues to rise 15 per cent organically compared with the target of more than 10 per cent organic growth estimated in May. Pirelli also announced that it will present its new 2011-2013 three-year plan to the financial community in November.
The strong results of Pirelli Tyre were said to be largely behind the group’s impressive figures. Here revenues grew 21.4 per cent to 2,325.3 million euros (1H 2009: 1,915.9 million euros), up 21.4 per cent. The tyre division’s operating income grew nearly two thirds (+59%) to 217.3 million euros (1H 2009: 136.8 million euros), with EBIT margin just shy of double digits at 9.3 per cent, up from 7.1 per cent.
According to the company, on a like-for-like basis, revenue grew 18.2 per cent in the first half, with a positive contribution both in volumes (+12.3%) and in price/mix (+5.9%). Exchange rate effects determined an increase of 3.2 per cent, mainly due to strengthening of the Brazilian currency compared with the average of the first half of 2009, and, in the second quarter, due to strengthening of the dollar against the euro.
In the second quarter, in particular, sales stood at 1,215.3 million euros, up 22.9 per cent compared with 989.0 million euros in the second quarter of 2009. In that period, the organic increase was 17.6 per cent, with volumes up 7.5 per cent and price/mix up 10.1 per cent. The positive contribution of the exchange rate in the quarter amounted to 5.3 per cent.
Pirelli Tyre’s Consumer business (car/light truck and motorcycle tyres) saw first half revenues total 1,616.7 million euros, up 17.8 per cent compared with 1,372 million euros in the first half of 2009. Operating income from ordinary business before restructuring charges stood at 154.2 million euros (96.4 million euros in the first half of 2009), or 9.5 per cent of sales (7 per cent in the corresponding period of 2009). This was off the back of 10.5 per cent increase in sales, while Pirelli reports there was a positive variation in the price/mix component of 5.0 per cent. Consequently the firm reported 15.5 per cent organic growth of sales revenue.
Pirelli is said to have experience this growth across both the Original Equipment (OE) and the replacement channels, with the firm reporting particular growth in OE sales across all markets: “there was growth in all areas of reference, with Europe up 22 per cent, Nafta +73 per cent and Mercosur +17 per cent,” the results statement read, adding that the replacement channel grew 11 per cent in Europe, 8 per cent in Nafta and 20 per cent growth in Mercosur.
Targets up following strong performance
As a result of the positive performance of Pirelli Tyre in the first half of the year, along and the current market scenario, Pirelli executives expect to outperform their own predictions during the rest of the year: “If the markets maintain their positive trend, it is possible to forecast organic growth of sales revenue of up to 15 per cent, improved over the organic growth of more than 10 per cent foreseen in May, and EBIT in absolute value of at least 360 million euros, compared with 320-330 million euros previously forecast.”