A meeting of the Board of Directors of Pirelli & C. SpA today reviewed and approved the group’s results for 2010, a year which saw significant growth at the operating level and all targets set on 14 October 2009 beaten.
The positive operating performance was underpinned by the core tyre business which accounts for 98.4% of Group sales. Pirelli Tyre registered sales growth of 19.5% (+16.2% net of exchange rate effects) sustained in particular by price/mix effectiveness (8.9%) and volume growth (+7.3%).
Pricing actions compensated for increased production costs, in particular raw material costs. The progressive and strategic shift of the mix towards Premium products, increased volumes and constant attention to improving company efficiency all contributed to the significant increase in Pirelli Tyre’s profitability: in 2010 Ebit before restructuring charges reached 10% of sales for the first time (8.7% in 2009), while Ebit after restructuring charges rose to 9.5% of sales from 7.7% in 2009. The Consumer division contributed to the result with a post-restructuring-charges margin of 9.6% (7.4% in 2009) while the Industrial division’s was 9.2% (8.5% in 2009).
With reference to group targets, where the activities of Pirelli Re and Pirelli Broadband Solutions are considered discontinued operations and contribute only to the net result (2009 data were reclassified to enable like-for-like comparison):
- revenue: 4,848.4 million euros (+19.2% from 2009) compared with “approximately 4.8 billion euro” target. Of this, 37% stemmed from “green” activities (25% at end 2009) compared with a 36% target
- Ebit margin after restructuring charges: 8.4% compared with “over 7.5%” target
- Net financial position: negative 455.6 million euros, significantly better than “under 700 million euro” target
Pirelli Tyre, ended the year with:
- Revenues of 4,772 million euros (+19.5% from 2009) compared with “above 4.7 billion euro” target
- Ebit margin after restructuring charges: 9.5% (7.7% in 2009), compared with a “greater than 8.5%” target
The focus on core tyre sector industrial activities and the transformation of Pirelli into a pure tyre company was completed during the year with the separation of Pirelli RE from the Pirelli & C. group (finalized on 25 October 2010 with the attribution of Pirelli RE shares to Pirelli shareholders and the voluntary reduction of company capital) and the disposal of Pirelli Broadband Solutions. Despite the negative 223.8 million euro impact of these discontinued operations, the total consolidated net profit on 31 December 2010 was 4.2 million euros compared with a loss of 22.6 million euros in 2009, while the net attributable result was a positive 21.7 million euros, substantially in line with 22.7 million euros of 2009. The net consolidated result excluding discontinued operations was a positive 228 million euros, almost three times the 2009 result of 77.6 million euros.
The consolidated operating result, after restructuring charges of 24.7 million euros compared with 55.2 million euro in 2009, was 407.8 million euros compared with 249.7 million euro in 2009, equal to 8.4% of revenues compared with 6.1% in 2009. Revenues in 2010 were 4,848.4 million euros, an increase of 16.0% on a like-for-like basis and net of exchange rate effects (4,067.5 million euros in 2009).
The consolidated net financial position on 31 December 2010 was negative 455.6 million euros (after dividend payments of 81 million euros) compared with negative 528.8 million euros on 31 December 2009, thanks to inflows from the disposal of non-strategic assets and, above all, the positive contribution of net operations inflows from Pirelli Tyre, a positive 167.7 million euros (395.4 million euros in 2009), notwithstanding investment that nearly doubled from 2009 (405.0 million euros in 2010 compared with 217.4 million euros), particularly aimed at the increase of production capacity.
It is with noting that in 2010, the value of investments in research and development remained at around 3% of sales, one of the highest levels in the sector. This enables the company to continually enrich its patents’ portfolio (today numbering over 4,500) and renew its offering of Premium products, as well as continually innovating material-mixing and tyre-building processes in all product segments, and developing alternative materials with lower costs and lower environmental impact…