financials

Results as of September, 30 2011

Pirelli closed 9M2011 with improved yoy results due to the solid performance of its core business:

  • Revenues grew by 18% as the outcome of the continued strengthening on the Premium segment (+21.5% the growth of Premium volumes) and of an effective pricing policy with a consequent improvement of price/mix (+16.8%);
  • Record profitability, with a 10.8% margin before restructuring costs for Pirelli & C. (11.7% for the Tyre business) despite the impact of raw material costs (347 € mln, 135 € mln in the 3Q 2011) largely offset by price/mix (+459.8 € mln the price/mix effect on Ebit in the first 9 month of 2011);
  • Remarkable tax rate optimization and reduction to 35.6% (40.8% in 9M2010) due to the improvement of results in countries with a lower tax regime and a lesser impact of the results from Other Businesses;
  • Net Income amounted to 251 € mln with a 56.8% growth yoy;
  • Acceleration of investment in Premium capacity expansion: 396 € mln investments in 9M2011, 162 € mln in the 3Q2011;
  • Net Financial Position negative for 983.3 € mln (+159 € mln vs 1H2011) after greater investments in the third quarter of the year and the growth in absolute value of the working capital associated with the increase in business activities also in relation to the growing sales of winter products compared to the previous year, and the respective collection is foreseen in the fourth quarter of the year.

2011 Outlook

As a result of the success of the Group’s strategic focus on the Premium segment and continuing efficiency actions, Pirelli expects to end 2011 with profitability at the higher end of the targets announced in July with the presentation of the first half results. The Ebit margin is expected to be approximately 10% at consolidated level (target between 9.5% and 10%) and at approximately 11% for Pirelli Tyre (target between 10% and 11%).
The negative impact of exchange rate fluctuations (-3.7% in the second quarter, and - 2.7% in the third quarter) and the slowdown in demand for truck products in some markets (particularly in the Emea region) leads Pirelli to forecast revenues of below euro 5.8 billion at consolidated level (target announced in July: above 5.85 billion euros) and of approximately 5.7 billion euros for Pirelli Tyre (target announced in July: above euro 5.8 billion), with growth in the volume component of around 3% (previous estimate: above 5%), reflecting strong growth in Premium volumes (+23%) and a rationalization of standard volumes. The price/mix component is expected to grow by around 18% (previous estimate: above 16%).
The net financial (liquidity)/debt position estimate is confirmed at approximately negative euro 700 million, excluding the investment in Russia.

Last Revised: 17 Nov 2011