Pirelli reports stable revenues, high-value segment growth in Q1 2024

At a meeting held yesterday, the Board of Directors of Pirelli & C. Spa approved the company’s financial results to 31 March 2024. Pirelli says these results show a “solid operating performance” thanks to the implementation of “key programs” within the framework of its Industrial Plan, as outlined below.
The latest figures show revenues remaining substantially stable at 1,695.5 million euros, compared to 1,699.7 million euros in the first quarter of 2023. Excluding forex effects, revenue rose 4.6 per cent. Pirelli attributes this stability to various factors, including improved product and channel mix, resulting in a price/mix increase of 2.3 per cent.
One of the key highlights of Pirelli’s performance is its further strengthening in the high-value segment, with a notable increase in market share within the Replacement channel. This growth underscores Pirelli’s strategic focus on delivering premium products and services to its customers.
EBIT margin growth
The company’s adjusted EBIT grew 5.8 per cent compared to the first quarter of 2023, reaching 262.6 million euros. The tyre maker credits this positive trajectory to solid commercial performance driven by volumes and price/mix improvements, coupled with operational efficiencies. Pirelli’s adjusted EBIT margin also showed improvement, reaching 15.5 per cent, compared to 14.6 per cent in the same period last year, reflecting the company’s commitment to enhancing operational effectiveness and profitability.
Despite a slight decline in net profit, from 115.0 million euros in the first quarter of 2023 to 100.4 million euros in the current period, Pirelli anticipates a normalisation in the impact of hyper-inflation throughout the year.
In terms of financial position, Pirelli demonstrated resilience, with a net cash flow before dividends showing improvement at -673.4 million euros, compared to -691.4 million euros in the first quarter of 2023. Additionally, the net financial position stood at -2,935.1 million euros, compared with -3,244.0 million euros on 31 March 2023.
Pirelli confirms the targets it announced on 6 March 2024. These include targeted full-year revenue of around 6.6 to 6.8 billion euros (2023: 6.65 billion euros), adjusted EBIT margin of at least 15 per cent to 15.5 per cent (2023: 15.1%), investments of around 400 million euros or approximately six per cent of revenue (2023: 410 million, 6.1%), net cash flow before dividends of approximately 500 to 520 million euros (2023: 510 million euros), Net financial position of around -1.95 billion euros with NFP/adjusted EBITDA of about 1.32x to 1.26x (2023: -2.26 billion euros, 1.56x), post tax ROIC of approximately 21 per cent (2023: 20.3%).
Key programs:
Commercial Program
During the first quarter of 2024, Pirelli showcased a continued emphasis on enhancing its High-Value segment, with a particular focus on Car sizes ≥19’’ and Specialties. Notably, in the Car segment ≥18’’, Pirelli achieved significant volume growth of 6.8 per cent, slightly outperforming the market growth of 6.5 per cent. This growth was particularly evident in the Replacement channel, where Pirelli’s volumes surged by 11.4 per cent, surpassing the market’s 10.1 per cent increase. However, in the Original Equipment Car segment ≥18’’, Pirelli experienced a more modest volume growth of 0.9 per cent, slightly below the market’s growth of 1.5 per cent.
Pirelli’s strategic emphasis on larger rim sizes continued, with a notable increase in volumes for sizes ≥19’’, which now represent around 85 per cent of Original Equipment volumes ≥18’’. Additionally, there was a positive shift towards Specialties, with their weight increasing by 1 percentage point and now accounting for 82 per cent of Original Equipment volumes ≥18’’. Conversely, Pirelli exhibited a further reduction in exposure to Standard sizes, with volumes for Car sizes ≤17’’ declining by 3.8 per cent, while the market saw a modest increase of 0.8 per cent. The different dynamics of High Value and Standard led to a growth of Car volumes of +2.7 per cent, outpacing market growth of 2.1 per cent.
Innovation Program
In the first quarter of 2024, Pirelli achieved significant milestones in terms of technical homologations, securing a total of 84 new approvals from leading Prestige and Premium car manufacturers, predominantly focusing on rim sizes ≥19” and Specialties. Particularly noteworthy is Pirelli’s success in the electric vehicle segment, where it boasts a robust portfolio of approximately 550 homologations globally, commanding a notable 30 per cent market share in Premium Original Equipment. The company’s commitment to innovation is evident through ongoing homologations with key Premium and Prestige car makers, as well as collaborations with prominent Chinese Premium electric vehicle producers. In terms of product innovation, Pirelli reinforced its presence in the Car All-Season segment with the European launch of the Cinturato AS SF3, while globally introducing the Pirelli Scorpion Trail III for Moto enthusiasts, showcasing its dedication to delivering high-performance solutions across diverse automotive segments.
Operations Program
In the first quarter of 2024, the group demonstrated its commitment to operational excellence, registering gross efficiencies of 32 million euros, equivalent to 23 per cent of the annual target. This achievement aligns with expectations and project development timelines. Moreover, proactive measures were implemented to address the crisis in the Red Sea, aiming to bolster the resilience of the value chain. At the industrial level, factory saturation remained robust at around 89 per cent, with High-Value segments reaching 97 per cent. Pirelli continued its plant decarbonization efforts, leveraging renewable energy sources and energy efficiency programs. Additionally, a roadmap was defined for the development of a platform supporting emissions reduction and the digitalization of sustainability processes. Notably, the company extended its adoption of Industrial Internet of Things technology (IIoT) across main factories, underscoring its commitment to enhancing production efficiency and sustainability practices.
Read or download further information about Pirelli’s Q1 2024 financial results here
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