Pirelli to accelerate conversion to premium products

ERJ staff report (TB)

Milan, Italy - Pirelli & C. S.p.A. expects sales this year to rise about 17 percent over 2011 to more than $8.5 billion as it accelerates its plan to convert its product mix more heavily to premium tyres.

At the same time, Pirelli expects its pre-tax operating income to outpace sales growth, rising to about 12 percent of sales/revenue from 10.3 percent in fiscal 2011, Pirelli executives told analysts today in a conference call.

Pirelli said its decision to accelerate the pace of its 2012-14 industrial plan is based on a general slowdown in demand for tyres, which reflects the global macro-economic crisis.

Pirelli's revenue growth is based almost entirely on higher selling prices and the improved product mix as management has revised downward the firm's consumer tyre volume projection to flat or perhaps even dropping 1 percent and the commercial tyre segment volume to a decline of 2 to 4 percent.

Pirelli last November disclosed plans to shift its product mix steadily toward the premium segment. In fiscal 2011, premium segment sales increased 27.3 percent, vs. overall sales growth of 17.4 percnet, raising the premium segment to one-third of the firm's annual revenue.

From Tire Business (A Crain publication)