Pirelli eyes profit improvements through 2017

ERJ staff report (BD)

Milan, Italy – Pirelli & C SpA hopes to improve its operating earnings margin to 15 percent by 2017 based on increased sales of premium tires, lower debt, improved cash flow and additional efficiencies, according to the firm’s latest five-year strategic plan.

Pirelli said the operating margin should improve two percentage points over the coming four years, with the return on investment improving to 28 percent from 20 percent.

Contributing to the improvement will be an increase in the share of sales from premium products to 60 percent by 2016 from 56 percent in 2013, Pirelli management said.

Pirelli also said it intends to invest $2.3bn (€1.7bn) through 2016, although management didn’t specify the nature of the investments. The company did say, though, it expects to achieve about $500m (€369.7m) in efficiencies and cut debt by nearly two-thirds to about $715m (€528.7m).

Included in the sales projections are goals to “consolidate” leadership in Latin America and Middle East/Africa, strengthen its position throughout Asia/Pacific and increase profitability in Europe, including reinforcing the firm’s role in Russia.