Milan, Italy – Pirelli’s first quarter results were strongly impacted by the outbreak of Covid-19 as the company’s production underwent “significant discontinuities” during the period.
Revenue fell 20% to €1.0 billion year-on-year due to weak demand for both OE and replacement tires, Pirelli announced 13 May.
Sales in the “high value” segment came in at €732.2 million, down 18.2% year-on-year due to a general fall in demand and Pirelli’s exposure in Asia Pacific.
In terms of volumes, total unit sales fell 17.2% in the first quarter reflecting a 20.2% decline in the standard segment and a 14.2% drop in high value tires.
Earnings (adjusted EBITDA) came in at €244.2 million, down 22.6% compared with €315.6 million registered during the first three months of 2019.
To limit the effect of the production suspensions and weak demand, Pirelli said it launched a Covid cost-cutting plan in April, in addition to its two-year industrial programme introduced in February.
The Covid action plan, Pirelli said 13 May, targets short term saving of €120 million for the year through reducing discretionary costs (SG&A), revising marketing and communication activities, renegotiation of contacts with suppliers and prioritising R&D investments.
The savings, Pirelli noted, enable the offsetting of costs stemming from the production slowdown, estimated at around €90 million in 2020.
In the first quarter, Pirelli said it achieved a total of €33 million from the two programmes: €16 million from the two-year competitiveness plan, and €17 million from its Covid action plan.