Analysts: Pirelli to announce new ambitious targets
The day before Pirelli announces its latest financial results, financial analyst are predicting that the tyre manufacturer is planning to announce new, more ambitious fiscal goals. Pointing out their view that Pirelli's premium strategy will allow it to grow faster than its peers through to 2015, Morgan Stanley suggested the Milan-based would unveil a 2013/14 margin target of 12 per cent or more:
“Pirelli over delivered on its current industrial plan presented just last fall. 2013 targets of 10.5 – 11.5 per cent on reported margin could be approached already this year. While, amid current uncertainty we and consensus model margins just around 11 per cent from 2013, we believe Pirelli could surprise by aiming for 12+ per cent profitability in 2013-14.”
In addition to what will happen to future targets, the analysts pose two other key questions related to distinct international markets: Regarding Latin America, what decrease in profit and/or margin is expected? Michelin, Continental and others are increasing their focus on the region, with some significant capacity increases from 2012. What are the risks from increasing competition and potential demand slowdown? On the subject of Russia Morgan Stanley asks: is there room for Pirelli and how risky is it to achieve the company’s targets here?