Milan, Italy – Pirelli & C. SpA has reported a 6% year-on-year increase in earnings (adjusted EBITDA) to €1.3 billion, on 2.5% higher sales of €5.3 billion, the company announced 19 Feb.
Adjusted Ebit was down 3.9% to €917.3 million, with the adjusted Ebit margin down to 17.2% compared to 18.4% in 2018.
The company said “internal levers” such as price/mix, efficiencies and its cost reduction programme helped contain the impact of production cost inflation, weak demand and pressure on prices.
In particular, a €123 million improvement of the price/mix more than offset the €67 negative impact of higher raw material prices and the €45 million effect from decline in volumes, Pirelli said.
In addition, the company achieved €70 million through “efficiencies”, which it said “substantially compensated” for costs’ inflation of €77 million.
The tire maker also achieved €50 million through its cost reduction plan, which helped limit the €81-million impact of ‘high value’ tire expenses and €20-million costs linked to the reduction of standard tire volumes.
In terms of sales, Pirelli consolidated its position in high value – higher rim sizes and speciality tires – and reduced its presence in the standard segment.
High value sales grew 5.2% to €3.54 billion, contributing to 66.5% of total sales.
Here, Pirelli said it achieved its forecasts despite “unpredictable elements” such as the weakness of the automotive sector in 2019.
The standard tires segment, however, saw sales decline 3.2% to €1.78 billion, amid ‘worse than expected’ market trend.
This, according to Pirelli, was due to the unexpected continuation of the economic crisis in the Latin America (LatAm) region, and the weakness of the market in Europe and Russia.
To contain these impacts, Pirelli said it accelerated the reduction of exposure in this segment.
The company cut the production of standard passenger car tires to 77 million units in 2019, 10 million units beyond the 86 million estimate formulated in its IPO phase.