SEARCH

RSS

Share to Facebook Share to Twitter Share to Linkedin More...

Preliminary first half financial results


Meeting of Board of Directors of Pirelli
SpA

PRELIMINARY RESULTS AS OF 30 JUNE 2003
EXAMINED

  • EBIT EXCEEDED THE VALUE OF THAT FOR THE WHOLE OF 2002
    AND ROS ROSE TO 3.9% DESPITE CONTINUING DIFFICULTIES IN THE
    TELECOMMUNICATIONS AND ENERGY COMPONENTS MARKETS

  • REVENUES: 3,022 MILLION EUROS, COMPARED TO 3,352
    MILLION EUROS IN THE FIRST HALF OF 2002; NET OF EXCHANGE RATE
    EFFECTS, METAL PRICES AND CHANGES IN THE CONSOLIDATION AREA, GROWTH
    OF 3.3% WAS RECORDED

  • EBITDA: 287 MILLION EUROS, COMPARED WITH 278 MILLION
    EUROS FIRST HALF 2002

  • OPERATING INCOME: 131 MILLION EUROS, INCLUDING THE
    ATTRIBUTION OF THE MERGER SURPLUS (APPROXIMATELY 13 MILLION EUROS)
    +41% COMPARED TO 30 JUNE 2002

  • NET DEBT: 1,540 MILLION EUROS, COMPARED TO 1,469 AT THE
    END OF 2002 AND DOWN COMPARED TO 31 MARCH 2003

    FOR 2003 THE FORECAST IS CONFIRMED OF GROWTH IN
    OPERATING INCOME IN THE TYRE AND ENERGY CABLES AND SYSTEMS SECTORS
    AND OF ACHIEVING BREAKEVEN FROM OPERATIONS IN THE
    TELECOMMUNICATIONS CABLES AND SYSTEMS SECTOR DURING THE LAST
    QUARTER.


Milan, 31 July 2003 The Board of Directors of
Pirelli SpA met today and examined the preliminary, unaudited
results from operations for the half year ended on 30 June
2003.

Following figures do not include eventual accounting effects of
merger of Pirelli Spa into Pirelli & C., which will be
effective next 4 August with retroactive accounting from 1 January
2003.

Pirelli Spa Group performance in first half
2003


The performance of the Groups businesses in the first half
of 2003 saw an increase in operating income, albeit against a
background that was still negatively influenced by the trend in
demand in telecommunications infrastructure where volumes remain
low and with further price reduction pressures. In the Energy
sector there persists the stagnation in investment by utilities,
especially in Europe in the Low and Medium Voltage segments, and
pressure on prices on the general market. The tyre sector continues
to record increasingly good results.

In the first six months of 2003 Group sales totalled
approximately 3,022 million Euros, down by 9.8%. On a constant
basis (net of exchange rate effects, metal prices and changes in
the consolidation area), sales increased by 3.3% largely because of
the growth in the tyre sector.

EBITDA in first half 2003 totalled approximately 287 million
Euros, compared to 278 million Euros of first half 2002.

Operating income (EBIT) of these businesses in the first half
was approximately 118 million Euros, surpassing the value recorded
in the whole of 2002; the ROS (return on sales) rose to 3.9% from
2.8% in the first half of 2002, whose EBIT was 93 million
Euros.

The improvement in operating income confirmed the continuing
growth in profitability underway in the Tyre sector (+14.4%) and
the positive effects of the actions undertaken to regain efficiency
that were timely launched by the Group management in the Energy
Cables and Systems and Telecommunications Cables and Systems
Sectors and which both continue to be affected by the poor economic
situation of the market. In particular the value of the gross
efficiency gains achieved in the first half of 2003 exceeded 100
million Euros. These measures also enabled the negative impact of
exchange rates, assessed at over 20 million Euros, to be
absorbed.

Free cash flow was positive at 89 million Euros compared to 59
million at June last year, and reached 2.9% of Group turnover, up
compared to the 1.8% achieved in the first half of 2002.


Industrial sectors performance

Tyres Sector

In first half 2003, sales were 1,509 million Euros, up 1.4% when
compared to 1,488 million Euros in first half 2002. Growth, net of
exchange rates effect, was positive by an extent of 14.4% (8%
attributable to volumes and 6.4% to prices/mix).

EBIT in first half totalled 127 million Euros, against 111
million Euros is first half 2002, while ROS was 8.4% (7.5% at June
30th 2002). Business volumes and efficiency measures positively
impacted on this figure and offset an increase in unit costs and
the negative exchange rates effect (approximately 20 million
Euros).

Energy Cables and Systems

In first half 2003, sales were 1,312 million Euros, down 18.7% when
compared to 1,614 million Euros in first half 2002. On a homogenous
basis, the difference is negative by an extent of 4.3% (3.2%
attributable to volumes and 1.1% to prices/mix variation).

EBIT was 26 million Euros, in line with first half 2002, and was
negatively impacted by exchange rates effect for 5 million Euros,
while efficiency measures more than offset fall in demand. ROS grew
to 2% from 1.6% same period last year.

Telecom Cables and Systems

In first half 2003, sales were 228 million Euros, down 19.5% when
compared to 284 million Euros in first half 2002. Net of exchange
rates effect, fall is 13.2% and is fully attributable to
prices/mix.

EBIT was negative by 28 million Euros against a negative figure
of 20 million Euros same period last year. In particular, drop was
registered in first quarter only, while EBIT improved in second
quarter, following the trend which should see the sector breaking
even in last quarter 2003.

In line with forecasts revealed in the Three Year Plan, at 30
June 2003 net debt totalled approximately 1,540 million Euros
compared to 1,469 million Euros at the end of 2002, and down
compared to 1,646 at 31 March this year.

The Groups major commitment to technological research and
innovation, despite the poor economic situation, was also confirmed
in the first half of 2003 with research and development investments
of approximately 104 million Euros or 3.4% of sales, in keeping
with the previous year.

Group headcount at 30 June 2003 was 34,827, compared to 36,079
at the end of 2002 and compared to 38,043 at the end of June
2002.


Outlook for 2003

In a market situation still marked by uncertainty, the results
achieved in the first half allow the present confirmation of the
objective for the year of an increase in operating income for the
Tyre and Energy Cables and Systems sectors and an improvement in
operating income in the Telecom Cables and Systems sector, where
the achievement of break-even is forecast during the final
quarter.

Download the Press Release (PDF,
20Kb)