Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.
24 to 28 January was a shaky week on the international markets: Milan -0.3%, London -0.3%, Frankfurt +0.6%, Paris -0.4%.
The most affected sector was banking, which closed 1.3% down, due also to significant profit-taking after the rally at the start of the year (YTD performance +8.8%).
The European tyre sector was down, after the Goldman Sachs downgrade due to the continual rise in the cost of raw materials. Pirelli closed the week at € 5.610, a fall of 3% with an average of approximately 4 million trades.
Different trends in European stockmarkets (Milan +3%, Paris +0.9%, Frankfurt -0.2%, London -1.8%). The industrial sector rotation favouring bank stock continued (DJ Stoxx Banks 1.5%) while the sectors and stock that outperformed in 2010 saw the highest sales: this was the case in the Auto & Parts segment, for which the sector index fell –4.2% over the week (+44.5% in the 2010 FY)
Pirelli fell 1.6% to close the week at €5.8, outperforming the European Auto&Parts index by 2.6pp.
The market reacted positively to the announcement of price increases (+3% on Passenger, +7% on Industrial in EMEA and Asia from the beginning of March). For analysts (Unicredit, Chevreux, Banca IMI, etc.) this increase is likely to success, given the strong demand; moreover, Pirelli’s solid track record on the price/mix will allow it to minimise/offset the steep increase in the cost of raw materials.
The RBS valuation of Pirelli shares was revised upward, bringing the TP to €8.0 (from €7.0) For the broker, the focus on the premium and emerging markets will be effective growth levers in the coming years.
The BUY view was confirmed by Equita and Interomonte.
The consensus target price was €7.1, and the recommendation is primarily Buy (63% of analysts’ coverage).
Pirelli, the official tyre supplier to Formula One for the next three years, will get the 2011 season underway in the United Arab Emirates with an unprecedented test. Never before in single-seater history has a test been organised at night and on an artificially wet track to recreate the conditions experienced in a typical rainy grand prix.
The Abu Dhabi test will take place a few weeks before the Valencia test, the first official group session of the 2011 season. The Yas Marina Circuit is one of the most fascinating venues on the Formula One calendar, a perfect setting for this extraordinary event that will call a halt to the development phase for Pirelli’s Formula One tyres. For the first time in the history of Formula One, the 5.55-kilometre Yas Marina track will be coated in water to create a unique 12-hour night test.
Abu Dhabi testing wets and intermediates This is the last round of private tests for Pirelli, with the wet and intermediate tyres solely in use. Today’s session will start at 1800hrs and continue until midnight, with same schedule for tomorrow. Within the range of 2011 compounds, these rain tyres have been specifically designed for wet or damp conditions. In line with current FIA regulations, Pirelli dry tyres comprise four different compounds that have already been successfully tested.
Test driver Pedro de la Rosa will be at the wheel of a Toyota TF109, chosen by Pirelli to try out the entire new range of Formula One tyres. The TF109 was the last car to be developed by the Japanese manufacturer before it withdrew from the championship at the end of 2009, winning five podiums over its last season of competition. The test car will cover more than 1,000 km in extreme driving conditions with the rubber having to deal with severe stresses on a tricky wet and hot tarmac.
Paul Hembery, Pirelli Formula One Team Director said: “This is a unique opportunity to witness a Formula One test car on track at night in the wet and on hot tarmac, in an entirely floodlit setting. We decided to do it this way because we want to challenge our rain tyres with the most difficult and demanding of all situations. And who knows, perhaps it could be a good idea for a future grand prix? These tests will provide us with useful information to finalise our tyre development process for Formula One. It is seven months since we started developing our tyres and five since we started with the actual testing. We are very satisfied with the results so far and we have also collected very positive feedback from the teams. Soon it will be time to get started in Spain where the first official test of the season will take place. We will use this opportunity to gather more feedback from teams and drivers and be ready for the Bahrain Grand Prix in March.”