FAQ

After successfully completing a strategic shift towards becoming a pure Tyre company in 2010 by abandoning other non-strategic operations, Pirelli aims to:

- continue its focus on the Premium Tyre segment (currently growing at a faster rate than the market) and in which Pirelli holds a leadership position,
- redistribute production between rapidly developing economies (RDEs), Latin America and mature markets so that each geographical area will contribute 1/3 of the Group profitability by the year 2015,
- technological upgrading of the existing production plants and equipment (by 2015, 60% of all production will be in plants less that 10 years old).

This strategy and the associated activities will allow Pirelli to increase its revenue by 8% in the three-year period 2011-2013 and an progressive increase in its profitability margin (EBIT) in 2013 between 10.5%-11.5%.

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Pirelli will invest € 1.9 billion in the period 2011-2015 (1.2 billion in the period 2011-2013) destined mainly to increasing capacity in the Premium segment (+26 million pieces). From a geographical perspective, 17% of investments will be destined to improve the product mix and increase efficiency in mature markets, while 83% will be destined to increase the production capacity in Latin America and other rapidly growing economics such as China, Romania, MEA (Middle-East/Africa).
 

A constant increase in demand in the first months of 2011 and action on pricing aimed to compensate an increase in raw materials has brought the company to increase its 2011 sales target first communicated in the Industrial Plan 2011-2013 (4 November 2010).

Forecasted consolidated revenues greater than € 5.55 billion (increase of € 5.15 billion on the previous forecast), more that € 5.5 billion revenues from the Tyre segment with a growth in volume of at least 6% and an increase in the price/mix ratio of approximately 12%.

The consolidated profitability margin (EBIT) is confirmed as between 8.5-9.5% and from 9-10% for Pirelli Tyre).

Expected investments are over € 500 million and net debts for approximately € 700 million.
 

To face continuing increases in costs of raw materials, particularly natural rubber and oil, as a prime-operator in the industry, Pirelli has launched a policy of differentiated pricing depending on the reference market and the target product segment.
 

In line with the corporate strategy to focus on the Premium and Green Performance element of its products, Pirelli has always been proactive in R&D and conducts its operations with attention to quality, technological innovation and low environmental impact. In 2010 Pirelli invested 3.1% of its revenue in R&D, one of the highest rates in this industry.
 

As of 31 December 2010, Pirelli & C. holds financial participations in the following listed companies: Mediobanca (1.83%), RCS (5.34%) and ADB (7,2%), this last following the handover of Pirelli Broadband.
 

On the 29 November 2010 Pirelli & C. S.p.A. handed over 100% of Pirelli Broadband Solutions S.p.A. (PBS) to Advanced Digital Broadcast Holdings SA (ADB) . From this transaction, Pirelli received a corresponding sum of € 25.1 million in cash and 400 thousand listed shares of the company ADB, equivalent to approximately 7.2% of the total share capital of the company. Pirelli & C. also entered a lock up commitment for the first two months from closing and a put option agreement for Pirelli and a call option for ADB, both exercisable within two years.

The transfer of Pirelli Broadband Solutions was in line with the corporate strategy of Pirelli to focus on the core Tyre business. Furthermore, selling to a leading industrial group will ensure the further growth and development of PBS within the broadband access systems market.
 

This operation again was conducted in line with the corporate strategy outlined in the three-year industrial plan 2009-2011; to focus on the core Tyre business. After the separation on the 25 October 2010, those company shareholders already indirectly operative in the real estate sector undertook direct participations in Pirelli RE. From a financial perspective, the separation of Pirelli RE reduced the gross debt of the Pirelli Group by approximately € 400 million.


 

The operation took place by the proportional allocation of the shares to ordinary and savings shareholders of Pirelli & C. for a total number of 487,231,561 ordinary shares of Pirelli Re held by Pirelli & C. with a ratio of 1 ordinary share of Pirelli Re for every 1 ordinary or savings share of Pirelli & C. held by reducing the share capital by the sum of € 178,813,982.89 corresponding to the value of the Pirelli Re participation and determined on the basis of the official price of the Pirelli Re shares as of the 14 July 2010 (equivalent to € 0.367). Pirelli & C. has maintained 0.1% of the share capital (567.4 thousand shares) of Pirelli Re to avoid any fractioning of the shares.