Pirelli releases Q3 results, tweaks full-year guidance

Although profits are up at Pirelli so far this year and revenues are down, during the third quarter of 2014 the situation reversed itself. Revenues grew 3.0 per cent to €1,541.8 million in the three months between 1 June and 30 September; highlights of the quarter include a continuation of top-line growth continued in Europe and the NAFTA regions, and an acceleration in Asia Pacific. With year-on-year growth of 17 per cent, the Italian tyre maker outperformed the market’s 12 per cent growth. EBIT increased 1.9 per cent during the third quarter to €203.5 million, with 0.1 per cent shaved off the EBIT margin, which was 13.2 per cent for the period. Net income declined 1.7 per cent year-on-year to €106.2 million.

Revenues in the first nine months of 2014 amounted to €4,528.7 million, 1.3 per cent less than in the corresponding period last year. EBIT to 30 September was €629.7 million, up 8.9 per cent on the first nine months of last year, and the EBIT margin rose 1.3 per cent to 13.9 per cent. Net income increased 16.2 per cent year-on-year to €300.0 million. Tyre activities accounted for 99.8 per cent of Pirelli’s total business and generated revenues of €4,520.0 million, EBIT of €640.3 million, with an EBIT margin of 14.6 per cent.

Pirelli notes that its premium segment growth in the first nine months of the year was “strong”, and it expects volumes to rise 20.1 per cent this year, an amount surpassing expectations. Premium segment sales accounted for 56 per cent of consumer business net sales between 1 January and 30 September 2014, compared with 51 per cent a year earlier.

A further highlight of the nine-month period was a reported turnaround of Pirelli’s business in Russia; the company says this has been “characterised by a decisive improvement in product mix and positive high single-digit EBIT margin.” A negative EBIT margin was experienced in Russia a year earlier. In other regions, positive performances of Pirelli’s businesses in Europe (+8% YoY), Asia-Pacific and Nafta (+4%) have attenuated the effects of the slowdown in the South American market (-12%). Pirelli stated upon releasing its nine-month results that it considers Europe one of its “principle growth areas.”

While claiming to be “on track to deliver 2014 targets,” Pirelli has lowered its expected full-year volume target from +4.5 per cent (as stated in August 2014) to a maximum of +2.5 per cent and full-year revenue target (previously €6.2 billion) to between €6.1 billion and €6.2 billion. Price/mix is confirmed between +4.5 per cent and +5.5 per cent, and EBIT after restructuring charges is expected to reach €850 million.

Full financial details for Pirelli can be found in our company profiles and reports section.

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