Milan, Italy – Pirelli & C. SpA expects a considerable decline in first quarter sales from its Asia-Pacific (APAC) region following the outbreak of Covid-19 (coronavirus) in China, the company announced 19 Feb.
The Italian tire maker’s February sales figures are currently down 80% in the region, and the company anticipates its sales in March to be 30% lower than “normal business” situation.
As a result, Pirelli is set to report a €30-million decline in first quarter sales for its APAC operations, but expects the impact on its earnings will be offset during the year.
With more than €900 million of annual sales, China contributes to 12% of Pirelli’s overall sales, and has a “high teens” weight on the company’s earnings.
Pirelli employs 4,000 people across its operations in China, which includes three production plants in the cities of Yanzhou, Jiaozuo and Shenzhou.
Of the three factories, two are were temporarily closed down in response to the outbreak of the virus, while the Yanzhou facility is running at low capacity utilisation.
The company has also shut down its Asia-Pacific (APAC) headquarters in Shanghai, and the operations are run by offices in Tokyo and Singapore.
However, with the stabilisation of the virus in different regions of China, Pirelli expects to return to normal condition in the coming weeks, according to executive vice-chairman and CEO Marco Tronchetti Provera.
Expatriates were returned to their homeland upon the outbreak of the disease, but Pirelli now expect them to start going back to China “end of this week”, said Tronchetti, presenting the company’s Industrial Plan 2020-2022 on 19 Feb.
“We have set up a task force for the region and we are taking all the measures needed to protect our employees and the workplace,” said the company CEO.
As part of the measures, travels to and from China are blocked and all travels to the APAC region are discouraged.
“If things proceed [to improve] this way, we will start sending our expats to China end of this week… and in the following weeks the situation should improve,” Tronchetti added.
