ERJ staff report (TP)
Milan, Italy − Pirelli, Europe’s third-largest tire maker, cut its profit target for 2013 the second time this year because of slower demand in Russia and exchange-rate volatility, reported Tommaso Ebhardt for Bloomberg.
Earnings before interest and taxes are expected to be about €790m, the Milan-based company said in a statement on 5 November. That compares with a previous forecast of €810m outlined in August, when Pirelli scaled back from a predicted earnings range of €810m to €850m. Third-quarter operating profit rose to €201m from €195m a year earlier.
Pirelli is pushing sales of its high-end products to make up for a contraction in Europe’s mass-market car sales to a two-decade low. The tire maker plans to expand into markets outside Europe, in addition to focusing marketing in the region on its premium brands, Chairman Marco Tronchetti Provera said in an interview in March.
Pirelli also cut its forecast for revenue this year to €6.2bn from a range of €6.3bn to €6.35bn. Third-quarter revenue fell to €1.52bn from €1.55bn mainly because of the “negative impact of exchange rates on Latin American, Turkey, Egypt and Japan currencies,” it said in the statement.
Michelin, Europe’s largest tire maker, forecast in October that full-year operating profit will rise by €150m before one-time items and currency effects, which will be “more deeply negative” than anticipated earlier in 2013. Nokian Renkaat Oyj, the biggest tire producer in the Nordic region, cut sales and profit forecasts because of slowing Russian sales and the rouble’s decline against the euro.
Pirelli’s eight main shareholders dissolved an agreement on 31 October that protected the Italian company from takeovers, six months before the pact’s expiration in April 2014. The move frees the investors to sell Pirelli stock.
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Full story from Bloomberg