Tyres Sectors

Pirelli Tyre is today the operational holding company for a group involved in the design, development, production and marketing of tyres destined for various types of vehicle: cars, light vehicles and motorcycles (Consumer sector, 70% of revenue), buses, trucks, agricultural and earth moving machinery, and the production and marketing of steelcord (Industrial segment, 30% of revenue).

Pirelli Tyre is the world's fifth largest operator in terms of turnover on the tyre market, with levels of profitability among the highest in the sector.
Within this market, Pirelli Tyre focuses in particular on the high-end segments characterised by elevated techno-logical contents and high performance. These are segments in which Pirelli has established itself in positions of leadership with regard to both its car and motorcycle tyres: Pirelli tyres are today seen as synonymous with quality, emotion and ultimate performance.
Drawing on its technological expertise, the group has consolidated working relationships with the world's leading car and motorcycle manufacturers; partnerships that have translated into a number of homologations for models from all the leading automotive firms.

Pirelli Tyre results overview

Revenues of Pirelli Tyre as of 31 December 2007 exceeded a ceiling of 4 billion euros and stood at 4,161.7 million euros, with an increase of 5.4% compared with 3,949.5 million euros at end 2006 (organic growth, net of exchange rate effects, was 6.5%). The increase in revenues was driven by greater volumes (+1.8%), despite the non-brilliant performance of the winter tyre segment in Western Europe in the fourth quarter, and especially by price/mix (+4.7%), thanks to the greater and greater focus on high value added segments. The exchange rate component was negative (-1.1%), mainly due to dollar depreciation.
EBITDA amounted to 548.6 million euros (13.2% of sales), up 2.8% compared with 533.7 million euros in 2006.
Operating income was 358.1 million euros, up 4.6% compared with 342.3 million euros in 2006, with a ROS of 8.6%, essentially in line with the previous year. The increase in volumes and in price/mix, combined with actions for greater productivity and cost containment, more than compensated, in absolute value, for the increase in price of production factors and the negative exchange rate effect. Despite efficiency actions taken, the company maintained a high level of investment in research and development.
Net income as of 31 December 2007 amounted to 210.5 million euros, up 5.6% compared with  199.3 million euros in 2006.
The net financial position was negative for 559.6 million euros, a reduction compared with the 601.5 million euros as of 31 December 2006 after the dividend payment of about 70 million euros, which shows the company's continuous attention to generation of liquidity even in the presence of a greater level of investments than in the previous year.
As of 31 December 2007, employees of Pirelli Tyre counted 27,224 (of which 13% temporary workers), compared with 25,169 (of which 13% temporary) as of 31 December 2006, thanks to growth of the businesses in South America and especially in the new industrial facilities in  Romania and China.
In the Consumer business (Car/Light Truck tyres and Motorcycle tyres), 2007 revenues  amounted to about 2,862 million euros (+4.6%), while operating income from ordinary business amounted to 252.5 million euros (+4.9%), with a ROS of 8.8%.
In the Car/Light Truck segment, Pirelli grew in North America, in a context of stable demand in replacement tyres and falling demand in original equipment, and benefited from an increase in demand in South America. In Europe volume growth occurred in original equipment and in premium segments, with the exception of winter tyres. There was also a significant improvement in Asia, Africa and the Pacific, coherent with the investments underway in those areas. In the car segment, in addition, the year was characterized by the previously mentioned investment in the new manufacturing unit in Yanzhou (China) and by the launch on the world market of PZero The Hero, the new high-performance tyre for "supercars".
In the Motorcycle segment, 2007 sales rose at a rate higher than the market average, which in any case represented an increase over 2006.
 In original equipment, the sales trend was positive particularly in South America and in Europe, while in the replacement segment the most significant growth occurred in the Americas, in Europe and in Japan.
In the Industrial business (tyres for Industrial Vehicles and Steelcord), revenues were equal to about 1,300 million euros (+7.1%) while operating income from ordinary business amounted to 105.6 million euros (+3.8%).
The ROS stood at 8.1%, slightly down (-0.3%) compared with 2006 mainly due to an increase in costs of natural rubber and of steel, not totally compensated by the price/mix trend.
In the segment tyres for Industrial Vehicles there was growth in European markets, in particular in original equipment and in premium lines, driven in part by development of Eastern European countries. Growth was even more significant in South America and China.
In the Steelcord segment, sales volumes grew 4% compared with 2006.


Pirelli Tyre