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Press Release

  • PIRELLI TO INVEST A FURTHER 200 MILLION DOLLARS IN MEXICO OVER NEXT 3 YEARS, INVESTMENT SINCE 2012 RISES TO OVER 600 MILLION DOLLARS

  • NEW INVESTMENT WILL CREATE 400 ADDITIONAL JOBS

  • PRODUCTION CAPACITY WILL INCREASE TO AROUND 7.5 MILLION TIRES ANNUALLY

Pirelli to strengthen its position in Mexico by investing an additional 200 million dollars in a new factory, in addition to the existing car tire plant in Silao. The announcement – which comes four years after the inauguration of the Pirelli factory within the Silao “Puerto Interior” industrial hub, in Guanajuato state – was made on the occasion of Italian Prime Minister Matteo Renzi’s visit to the President of Mexico Enrique Pena Nieto, during celebrations at the Palacio Nacional, the presidential headquarters in Mexico City.

The new 200 million dollar investment will begin in 2016 and will be in addition to the 360 million dollars invested to date and the 50 million already earmarked for the 2016-2017. At the end of 2018, Pirelli’s total investment in the two plants in Silao will be above 600 million dollars.

The new plant, where production is scheduled to begin in 2017, will from the beginning employ the group’s most advanced technologies and processes. The Silao plant, built in 2012, has been focused from the start on the Premium segment, with production centered on High Performance and Ultra High Performance tires for cars and SUVs, for the local and all Nafta area markets.

Pirelli’s production hub in Silao, which covers 140,000 square meters, with an annual output at the end of 2015 of around 3 million tires, will boast an annual production capacity of five million pieces at the conclusion of the initial phases of investment. Thanks to the new 200 million dollar investment, which will permit the production of about 2.5 million tires, Silao’s total production capacity will reach 7.5 million pieces by the end of 2018. Further, with this additional investment the workforce, which today stands at 1,400 employees, is forecast to grow to over 1,800, beyond the already existing 400 ancillary workers. The hub is distinguished by its high standards in terms of processes and products, as well as its environmental sustainability and technical training, destined also for the other automotive facilities present in the Guanajuato area thanks to the support provided by the Instituto Piero Pirelli.

The new investment confirms the importance of Mexico among Pirelli’s international operations, also thanks to its strategic position which has made it in recent years the ideal base to significantly develop Pirelli’s presence in the Nafta area, a market which has been confirmed as one of the most promising for the success of the Premium strategy. In 2015, Premium sales in the region grew by 24.3% and accounted for 90% of the total at the local level. Overall, last year the area registered sales of 861 million euro, an increase of 21.7% (+4.1% net of forex effects) and representing 13.7% of total group sales, up from 11.8% the prior year, levels above the forecasts contained in Pirelli 2013-2017 industrial plan.

In Nafta area the Mexican plant supports the production hub Pirelli has had since 2002 in the USA in Rome, Georgia. Pirelli aims to strengthen its collaboration with its main original equipment partners, to support the launch of new lines especially developed for clients in the area – like the Cinturato P7 All Season Plus, the Scorpion Verde All Season Plus and the Pzero All Season Plus – and to increase the weight of sales in the Replacement channel also thanks to the expansion of the FasTrack network, the growth of retail and geomarketing, capable of optimizing the management of customer inventories.

Pirelli

Founded in 1872, Pirelli is one of the world’s major tire operators in terms of sales. With a commercial presence in more than 160 countries, the group counts 20 production sites in the world and employs about 37,000 people. Pirelli is also a leader in the production of high and very high end tires, thanks to its commitment to R & D, an area in which is annually invests about 3% of revenues, one of the highest levels in the tire sector, with the goal of constant improvement of performance and safety and the containment of environmental impact. Present in sporting competitions since 1907, Pirelli is the exclusive supplier for the World Superbike championship and many prestigious single marque championships, but above all of the Formula 1 championship for which it has been the sole supplier since 2011.

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The Board of Directors of Pirelli & C. Spa approves results for the year to 31 December 2015

-      Operating results in line with targets

-      Premium performance above expectations, revenues equal to 60% of Consumer business

-      Strong price/mix growth:  +7.1% thanks to price increases and better sales mix

-      Operating result (Ebit before non-recurring and restructuring charges): +5.7% at 918.5 million euro

-      Consumer business profitability markedly improved, at 16.2% in  2015

-      Apac and Nafta areas with greatest revenue and profitability growth

-      Venezuelan unit deconsolidated

-      Board renewed, Ren Jianxin confirmed as Chairman and Marco Tronchetti Provera as CEO and Executive Vice Chairman

The Board of Directors of Pirelli & C. SpA, today reviewed and approved the group’s results for the year ended on December 31st, 2015. Pirelli’s 2015 operating performance was in line with targets and characterized by:

-       Revenue growth of 4.8% to 6,309.6 million euro, above the 2015 target of “over 6.25 billion” euro, thanks to the great improvement in the price/mix component (+7.1% compared a target of  “equal to or above” +5.5%) as a consequence of price increases, greater sales in the Replacement channel, diverse geographic and product mixes. This performance more than offsets the decline in volumes (-1.6%, mainly in emerging markets and the Industrial business) and forex volatility (-0.6%);

-       Premium segment performance above all forecasts, with an increase in volumes of +12.7% (target “equal to or above” +10%) and grew as a percentage of Consumer revenues to 60% from 55% at the end of 2014;

-       Ebitda before non-recurring and restructuring charges grew 6.4% to 1,242.7 million euro (1,168.0 million euro in the same period of 2014);

-       Ebit before non-recurring restructuring charges grew by 5.7% to 918.5 million euro (2015 target 925 million euro, 869.2 million euro in 2014), with a margin of 14.6% (14.4% in 2014). This result benefits from the achievement of efficiencies of 94.4 million euro in implementation of the 350 million euro 4-year 2014-2017 plan (92 million euro of efficiencies in 2014);

-       At the geographic level, Apac is confirmed as the area of greatest growth both in terms of revenue and profitability (revenues +26.4% and Ebit margin above 20%), followed by the Nafta (revenues + 21.7%, Ebit in the low twenties);

-       Research and development expenses totaled 214.4 million euro, equal to 3.4% of total sales, of which 176.5 million euro for activities linked to Premium products, approximately 6% of segment sales;

-       Significant progress towards the Group’s sustainability targets. In 2015, Green Performance tyres accounted for 48% of Tyre sales.

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PIRELLI SIGNS COMPETITIVENESS AGREEMENT WITH LOMBARDY REGIONAL GOVERNMENT FOR “TOTAL SAFETY SYSTEM” PROJECT

The Lombardy Regional Government and Pirelli today signed a competitiveness agreement which calls for a free grant regional contribution of 1.9 million euro for the “Total Safety System” R & D project conducted by Pirelli at its research centre in Milan.

The project, which is being developed by Pirelli Tyre and will last 24 months, has a total cost of 5.35 million euro and is part of the activities linked to the development of a new generation of tyres based on the concept of “total safety”. The research activity, therefore, will extend to all phases of product conception and planning: from the use of new materials, to the development of new fully automated finished product checking, to the implementation of new application safety systems based on tyre sensors.

The high level of innovative content in the “Total Safety System” project will allow, in addition, a further improvement in the level of productivity, quality and efficiency, as well as the know-how for the various technologies.  The project will allow Pirelli to study new product mixes oriented towards segments with higher value added, anticipating market demand and this maintaining the level of competitiveness. From this project, Pirelli expects, also, positive results in the environmental and social arena with regard to road safety, through the continual reduction of vehicular fuel consumption and raising the number of kilometres in a tyre’s life.

The agreement – which is part of the programme of the Lombardy Regional Government aimed at developing and enhancing the value of human capital also through training courses, as well as production, environmental and infrastructure resources and with the goal of strengthening local employment generating ancillary employment along related supply chains – favours further growth in the group’s R & D at Pirelli’s Milan headquarters, where the group’s main R & D centre is located employing 400 people. The contribution from the Regional Government will facilitate the employment of 12 new R & D staff members between 2015 and 2017, who will be in addition to the 130 already involved in the activities linked to the project’s implementation.

“The competitiveness agreement with Pirelli demonstrates how the synergies between the public and private sectors bring concrete results here in Lombardy,” said the President of the Regional Government Roberto Maroni. “Our goal is to raise investment in research and innovation up to 3% of the region’s GDP, a figure which is now close to 2%. These are two strategic which represent a natural vocation for our territory as well as a great opportunity for growth”, he explained. “The Lombardy Region invests resources in technological development also as a way of creating employment”, Maroni continued. “We want to move forward on this road”.

“The centre in Milan – said Marco Tronchetti Provera, Executive Vice Chairman and CEO of Pirelli – represents the main driver of our Research and Development and enables Pirelli to compete and continue to grow on international markets. The contribution of the Regional Government is an important recognition on the part of the institution of the work conducted until now and will enable the launch of a project aimed at the creation of tyres that are always safe and environmentally sustainable, able to offer clients not only safety and high performance, but also solutions that respect the environment”.

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