Pirelli raises sales forecast following strong first half

Milan, Italy – Pirelli & C SpA has reported a strong first half and is raising its sales outlook for the year for a second time as it expects price/mix improvements to drive growth.

The Italian tire maker now anticipates revenues to be between €6.2 billion and €6.3 billion, up from previous estimate of €5.9 and €6.0 billion announced in May.

In a results statement on 2 Aug, Pirelli said due to additional price increases, the price/mix impact for the year was expected to improve to 13.5% - 14.5% this year, up from previous indications of 10%-11%.

For the first half of 2022, Pirelli reported a 77% rise in net profit to €233 million while adjusted earnings (EBITDA) rose 21% to €695 million.

Revenue for the first six months of the year grew 24.6% to €3.2 billion, driven by the 20% impact of increased prices and mix improvement and a 5% positive foreign currency effect.

The growth was achieved amid a 1% decline in overall volumes, as demand for standard tires fell 8.8%. The ‘high value’ big-rim-sized tires continued to strengthen with a 5.8% growth in volume.

In sales, Pirelli said replacement market for 18” and bigger tires was “solid” particularly in the EU and North America. Furthermore, the company witnessed a market rebound in the second quarter within the OE market, with strong focus on 19’’ and electric vehicles.

During the period, Pirelli said it continued with its efficiencies plan and achieved €52M gross savings, or 35% of full year target.

In terms of production, Pirelli said capacity deployment during the first half was “in line with full year target” but production saturation stood at 90% due to Covid shutdowns in China and production woes in Russia.

The tire maker said it was implementing Industrial IoT in major plants to improve production efficiency and had launched programmes across the EU to control energy consumption.

Risks of Russian gas shortage, Pirelli said, was concentrated to Germany and Italy, where the tire maker said it had taken measures to mitigate the potential effects.

As a result, Pirelli said there were ongoing preparation to switch to alternative energy source as operational back-up plan for German and Italian factories, which together produce 8 million pieces of tire equivalent to 11% of total capacity.

Furthermore, the company is deploying an energy efficiency programme, which will involve production peak management and heat recovery.