Pirelli posts higher sales and margins

Milan, Italy –Pirelli & C. SpA has reported a 5.9-percent rise in first-half revenues to €2,968.6 million, reflecting price increases in emerging markets, higher replacement sales and different geographic and product mixes.

Looking just at tire activities, sales to 30 June were €2,966.9 million, with organic growth of 6.0 percent due largely to a positive performance of the tire maker's Consumer business. This contrasted with flat sales-growth at Pirelli’s Industrial business due in part to a slowdown in South America.

Over the six months to 30 June, Pirelli’s Consumer business delivered 7.4-percent organic growth. This included a strong performance in the Premium segment and mature markets, which more than offset weakness in tire markets in South America and other emerging markets.

In the Premium segment, Pirelli reported volume growth of 13.4 percent – 15 percent in Q2 after and 11.7 percent in Q1. Organic revenues increased by 11.3 percent to €1,607.2 million – around 65 percent of total Consumer revenues compared to 62 percent a year ago.

Pirelli’s operating result (EBIT) before non-recurring and restructuring charges of €23.5 million in the first half of 2016 fell 1.9 percent to €430.2 million. The one-off charges were linked to the activities under way for the merger of Pirelli’s Industrial segment with the Industrial assets of CNRC (China National Tire & Rubber).

The EBIT margin before non-recurring and restructuring charges grew to 14.5 percent compared with the prior-year 14.2 percent. Pirelli benefited from efficiencies to the tune of €51.3 million – on top of €45.8 million in first half 2015) – taking it to 68-percent along the way to a target of €350 million set by a 2014-2017 corporate plan.

Regionally, profitability improved in Europe and NAFTA thanks to strong growth of the Premium segment. APac, though, was the most profitable area with an EBIT margin above 20 percent.

Overall, Pirelli linked the improved profitability to “the effect of internal levers of price/mix and efficiencies achieved to contrast forex volatility and the decline of some markets mainly in the Industrial segment.”

In the first half, Pirelli’s total Investments amounted to €156.0 million, mainly earmarked for the increase of Premium capacity in Europe, NAFTA and China, as well as mix improvements.

As of 30 June 2016, employees numbered 36,598 compared to 36,753 a year ago, the group also reported.