Over 450 million euros of investment by the group in the country between 2005 and 2014
The Prime Minister of Romania, Emil Boc, inaugurated the extension of the tyre factory in Slatina, accompanied by the Chairman of Pirelli, Marco Tronchetti Provera, and the Italian ambassador in Bucharest Mario Cospito. At the inauguration, along with the Romanian government delegation, composed of Secretary of State for Finances Bogdan Dargoi, Secretary of State for the Economy Karoly Borbely, regional prefect Olt Leonid Moisiu and the mayor of Slatina Darius Valcov, the event also saw the participation of Pirelli Tyre CEO Francesco Gori, director of operations Giovanni Pomati and director general of Pirelli Tyres Romania, Giuseppe Cangelosi.
Between 2005, the year of its arrival in Romania, and 2010, Pirelli invested 300 million euros, which will climb to over 450 million euros by 2014, in the industrial hub at Slatina which includes a factory for car tyres and a factory for the production of steelcord (the metallic ribbon used in radial tyres) and in Bumbesti Jiu-Gorj where there is a factory for anti-particulate filters for diesel engines.
Of the investment, 160 million euros are destined to the planned extension of the tyre factory – begun in 2008 and to be concluded in 2013 – with the aim of increasing production capacity and enhancing Pirelli overall competitiveness in Europe. The extension project received the support of of the Romanian government through funding of approximately 28 million euros, as foreseen by the governmental order HG 1165/2007 within the context of Pirelli’s cooperation with the Romanian government.
Thanks to additional investments, the car tyre factory in Slatina will see its annual production rise from the 7 million pieces expected at the end of 2011 to 10 million pieces by the end of the extension project and the extension of its area, initially 100,000 square metres and already today grown to 160,000 square metres, will increase to 175,000 square metres. The Slatina tyre factory, already one of the most modern car tyres factories, will become Pirelli’s biggest car factory. It has been equipped with the highest non-robotic production technology for the production of premium tyres, the segment in which Pirelli is a leader: Winter, Uhp Winter, High-Performance, Ultra-High-Performance, Runflat and SUV.
Today the Slatina hub employs 2,400 people between tyre and steelcord activities, and this is destined to grow to 2,700 by the end of the project thanks to 1,000 new hires, of which 70% have already been made, linked to the extension investment.
Beginning from 2005, the Italian group has made industrial investments in different provinces of Romania and has signed agreements in scientific research, professional training and the social development of the territory.
During today’s conference, chairman Tronchetti Provera illustrated for prime minister Boc the numerous social and cultural activities launched by Pirelli in Romania, from the partnership with the University of Craiova in the area of technological innovation, to the project for the dissemination of Italian culture in Slatina, from support for the cooperation between Milan’s Niguarda hospital and Slatina’s to the InterCampus initiative with FC Internazionale Milano, a project dedicated to children from different social backgrounds.
“Prime Minister Boc’s visit is for Pirelli a source of pride and shows the deep relationship that exists between our group and the government and local institutions. From 2005 to today, Pirelli has become a significant presence in Romania, which for Pirelli is an important source of productive processes and products of excellence not only for the local market but also for the emerging markets of Eastern Europe”, said Pirelli chairman, Marco Tronchetti Provera.
“Romania, where we are already well established on both the industrial and social levels, is a key country for Pirelli’s worldwide growth. The car tyre and steelcord factories in Slatina constitute a point of strength in the group’s industrial strategy. The tyre facility is one of the biggest car tyre factories in the world and allows Pirelli to satisfy the market’s demands in the premium segments, which are growing at a fast pace both in Europe and the rest of the world”, added Giuseppe Cangelosi, director general of Pirelli Tyres Romania.
Pirelli & C. SpA. announces that, at the expiry of the terms set by law, there is no opposition from the company’s creditors to the operation, decided on 21 April 2011, to voluntarily reduce the company’s share capital by 32,498,345.12 euro, in accordance with article 2445 of the civil code, to attribute to net equity.
This reduction, which represents the natural completion of the operation of assignation of Prelios SpA shares (formerly Pirelli RE SpA) carried out in 2010, does not entail any reduction of company assets, as the amount of the reduction is applied to net assets with the aim of eliminating the negative reserve generated with the conclusion of the operation of assignation.
At the level of taxation, this capital reduction will not have any economic effects on shareholders.
From today, the company share capital of Pirelli & C. S.p.A. stands at 1,345,380,534.66 euros, divided into a total of 487,991.493 shares, without indication of nominal value, of which 475,740,182 (1,311,603,971.79 euros) are ordinary shares and 12,251,311 (33,776,562.87 euros) are savings shares.
PIRELLI & C. SPA BOARD APPROVES RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2011:
FIRST HALF OPERATIONAL RESULTS NOTABLY IMPROVED COMPARED WITH THE SAME PERIOD OF 2010: CONSOLIDATED NET PROFIT MORE THAN DOUBLED ON MATCHING PERIMETER, FURTHER PROFITABILITY GROWTH
2011 PROFITABILITY TARGETS RAISED
2012-2014 INDUSTRIAL PLAN PRESENTATION IN NOVEMBER
PIRELLI & C GROUP
REVENUES: +17.7% TO 2,789.3 MILLION EUROS (2,369.0 MILLION EUROS ON 30 JUNE 2010)
OPERATING RESULT: +51.2% TO 290.1 MILLION EUROS (191.9 MILLION EUROS ON 30 JUNE 2010), WITH PROFITIABILITY (EBIT/SALES) GROWING TO 10.4% FROM 8.1%
CONSOLIDATED NET RESULT POSITIVE 158.8 MILLIONEUROS, MORE THAN DOUBLED FROM 77.0 MILLIONEUROS IN FIRST HALF 2010 (BEFORE DISCONTINUED OPERATIONS)
INVESTMENT IN THE FIRST HALF GREW TO 234.1 MILLION EUROS (135.4 MILLION IN FIRST HALF 2010)
NET FINANCIAL POSITION NEGATIVE 778.9 MILLIONEUROS (-712.8 MILLION ON 31 MARCH 2011) , AFTER DIVIDEND PAYMENT OF 82.8 MILLIONEUROS
PIRELLI TYRE
REVENUES: +18.7% TO2,760.9 MILLION EUROS(2,325.3 MILLION IN FIRST HALF 2010); OPERATING RESULT: +43.8% TO 312.5 MILLIONEUROS(217.3 MILLION IN FIRST HALF 2010), WITH PROFITABILITY RISING TO 11.3% FROM 9.3%
SECOND QUARTER REVENUES: +13.3% TO1,376.4 MILLION EUROS(1,215.3 MILLION IN SECOND QUARTER 2010); OPERATING RESULT: +31.4% TO160.1 MILLIONEUROS(121.8 MILLION IN SECOND QUARTER 2010), WITH PROFITABILITY RISING TO 11.6% FROM 10%
2011 TARGETS
PROFITABILITY TARGETS RAISED: GROUP EBIT MARGIN AFTER RESTRUCTURING COSTS BETWEEN 9.5% AND 10.0%, PIRELLI TYRE BETWEEN 10% AND 11%, TAKING INTO ACCOUNT THE POSITIVE EFFECTS OF THE FOCUS ON THE PREMIUM SEGMENT AND LOWER RAW MATERIAL COST INCREASES THAN ESTIMATED IN MAY
CONSOLIDATED REVENUE TARGET CONFIRMED AT “ABOVE 5.85 BILLION EUROS” AND PIRELLI TYRE AT “ABOVE 5.8 BILLION EUROS”
ESTIMATED NET FINANCIAL POSITION AROUND NEGATIVE 700 MILLION EUROS, EXCLUDING THE INVESTMENT IN RUSSIA
Milan, 27July 2011–A meeting of the Board of Directors of Pirelli & C. SpAtoday reviewed and approved financial results for the six months ended 30 June 2011.
In a market displaying a positive overall demand trend in the Tyre sector, which as indicated in the industrial plan accounts for 99%of group sales,the results of the first half demonstratecontinuous growth and improvement of all economic indicators.These results were obtained as a consequence of the positive effects of continuing efficiency actions and above all the effectiveness of price/mix actions with sales increasingly concentrated in the Premium segment and with the price component able to offset increases in raw material costs.
At the group level, the net result on 30 June 2010 was 158.8 millioneuros, more than doubled from the 77 million posted in first half 2010 applying a matching perimeter (before discontinued operations). In the second quarter, Pirelli Tyre, in particular, re-affirmed the positive performance already evident in the first quarter, both in terms of sales, which in the first half rose 18.7% to 2,760.9 millioneuros,and profitability, which improved by two percentage points, rising to 11.3% from 9.3% in first half 2010. In line with the development plan outlined in the industrial plan, the first half saw a decided increase in investments, increasing in total to 234.1 million euros from 135.4 millioneuros.The net financial position on 30 June was negative 778.9 millioneuros compared with negative 712.8 million euros at end March 2010.
Pirelli & C. SpA Group
The 2010 data have been reclassified to show the assets relating to Pirelli RE and Pirelli Broadband Solutionsamong the discontinued operations following their sale in 2010.
At the consolidated level, Pirelli closed the first halfwith revenues of 2,789.3 millioneuros, an increase of 17.7% from 2,369.0 million in the same period of 2010, and an operating result (Ebit)after restructuring costs of 290.1millioneuros, with an increase of over 50% (+51.2%) from 191.9 millioneuros in the same period of 2010.Profitability–expressed as the operating result over sales – reached 10.4%, with an improvement of over two percentage points from 8.1% in first half 2010.
The second quarter, in particular, saw revenues increase by 12.5% to 1,388.4 million euros and theoperating result (Ebit) improve by 40.7% to 146.8 millioneuros, with profitability of 10.6% (8.5% in the same period of 2010).
Consolidated net profit was158.8 million euros on 30 June 2011, more than doubled from the 77 million posted in the first half 2010 on a matching perimeter (before discontinued operations). In the first six months of last year, the net result was negative 175.6 millioneuros because of the 252.6 millioneuro impact of discontinued operations linked to the operation of assignment of Preliosshares (formerly Pirelli RE).The net result attributable to Pirelli & C. Spa on 30 June 2011 was positive 161.7 millioneuros compared with negative 165.5 million euros in first half 2010.
Consolidated net assetson 30 June 2011 stood at2,047.2 million euros compared with 2,028 millioneurosat the end of 2010. Consolidated net assets attributable to Pirelli & C. SpA amounted to 2,013.6 million euros (4.126 euros per share) compared with 1,990.8 million euros at end 2010 (4.080 euro per share) and 2,004.9 million euros at the end of first half2010.
The group net financial positionon 30 June 2011 was negative 778.9 millioneuros compared with negative 712.8 millioneuros on 31 March 2011 (-455.6 million at end December 2010). In the second quarter, dividends of 82.8 millioneuros were paid (of which 81.1 million euros by the parent company) and investments of 137.2 million were made (85.2 million in the same period of 2010).
Pirelli Tyre
Therevenues ofPirelli Tyreon 30 June 2011 amounted to 2,760.9 million euros, with an increase of 18.7% compared with 2,325.3 million euros of the same period in 2010. On a like-for-like basis, growth in the first half was 19.4%, with a positive contribution from the volume component (+3.5%), and the price/mix component (+15.9%)against the negative impact of 0.7% from the exchange rate component. Thegross operating margin (Ebitda)before restructuring chargeswas 427.9 million euros, an increase of 32.1% compared with 323.9 million euros in first half 2010, growing as a percentage of sales to 15.5% from13.9% on 30 June 2010.
The operating result after restructuring chargesamounts in the first half to 312.5 million euros (320.2 millioneuros before restructuring costs), an increase of 43.8% compared with 217.3 million euros on 30 June 2010, growing as a percentage of sales to 11.3% compared with 9.3% in first half 2010. The improved result was achieved thanks to the positive impact of the commercial variables, in particular the price/mix component, and the continual optimization of efficiency of the industrial activities, which saw, among other things, an increase in production capacity. These elements more than offset the negative impact of increased raw material costs, approximately 212 million euros, of which 130 million solely in the second quarter.
Net profiton 30 June 2011 totaled 162.8 millioneuros (after financial charges of 47.7 millioneurosand tax charges of 102.0 millioneuros), an increase of 47.5% compared with 110.4 million in first half 2010 (after financial charges of 38.3 million euros and tax charges of 68.6 million euros).
In the second quarter, in particular, sales totaled 1,376.4 millioneuros, with an increase of 13.3% compared with 1,215.3 million euros in the second quarter 2010. Over the period, the organic increase was 17.0%, with volumes increasing 1.2% and the price/mix component rose15.8%against a negative exchange rate effect of 3.7%.Ebitdabefore restructuring charges amount to 218.4 millioneuros, with a growth of 23.0% compared with 177.5 millioneuros in the second quarter 2010. The operating result after restructuring charges of 160.1 million euros (164.6 millioneuros before restructuring charges), with a growth of 31.4% compared with 121.8 millioneuros in the same period in 2010 and rising as a percentage of sales to 11.6% from 10% in the second quarter 2010.
In the Consumer (Car and Mototyres), revenuesin the first half were 1,942.2 millioneuros, an increase of 20.1%from 1,616.7 million euros in first half 2010, to which sales’ volume increases contributed 5.7% and the price/mix component 15.4% (-1.0% exchange rate effect). The operating result was 241.1 millioneuros, an increase of 63.7% from 147.3 million euros in first half 2010and equal to 12.4%of revenues (9.1%in the same 2010 period). In the second quarter, Consumer revenues amounted to 958.9 millioneuroswith an organic growth of 18.8% (14.7% net of exchange rate effects). The 16.2% increase in the price/mix component reflects in particular the determined focus on sales in the Premium segment (an increase of 30% in the quarter) and the effectiveness of price increases, while the dynamics of the volume component (+2.6%) was linked, among other things, to the dedication of some production to winter products in preparation for expected strong demand in the second half. These dynamics resulted in a marked improvement in profitability both with respect the same period a year earlier and the first quarter 2011: the operating result amounts to 124.3 millioneuros (80.3 millioneurosin the same 2010 periodand 116.8 million in first quarter 2011), equal to 13% of revenues (9.6% in second quarter 2010 and 11.9% in first quarter 2011).
In the Industrial (Industrial Vehicle tyres and Steelcord)i businesstotal revenues were818.7 millioneuros, an increase of 15.5% from 708.6 million eurosin the same 2010 period, while the operating result totaled 71.4 millioneuros (70 million in first half 2010), equal to 8.7% of sales (9.9% in first half 2010). In the second quarter, in particular, sales rose 10% to 417.5 million euros, with an operating result of 35.8 million euros (41.5 million in the same 2010 period)and equal to 8.6% of sales, down from 10.9% in the second quarter 2010.
The result was affected by a combination of lower sales volumes – linked to a slowdown of activity in Egypt and in the countries of North Africa as a consequence of the geopolitical crisis and a decrease in sales in the conventional segment in Mercosur – and the increasing cost of natural rubber, which has greater impact on this business and reaches the year’s cost peak during this quarter.
On June 30, the number of employees stood at 30,973 compared with 28,865 on December 31st, 2010.
