Pirelli tyre H1 results suffer from IPO costs

Milan, Italy - Pirelli Tyre reported a good first half with sales and earning up strongly over figures from a year ago. The improvement in earnings was reduced due to costs of some €6.5 million attributed to the failed stock market launch in June.

Net sales for the six months were up by 12.4 percent, to €2018 million while earnings (EBIT) were up 7.5 percent on the previous year at €201 million, excluding the costs of the IPO. When the IPO costs are taken into account, EBIT declined to €194.6 million, still up by over 4 percent on the first half of 1995.

The company said the results were especially strong when increases in raw materials in the first half were taken into account. The company allocated €98 million to depreciation and amortisation in the first half.

Net debt was up slightly at €740 million euros compared with €720 million on 31 March 2006, while headcount rose by 1500 or so to 25 214. Pirelli said the increase was due to expanded operations in China and Romania.

Pirelli said margins declined in its industrial tyre business, but rose in consumer side of its activities.

In a statement, Pirelli said, "In the Consumer business, the first half saw overall growth in revenues and profitability compared with the same period of 2005, due to greater volumes and a better price/mix. In particular, revenues amounted to 1403 million euros (+11 percent compared with first half 2005) and the operating income from ordinary operations was 140.7 million euros (+18 percent), with ROS at 10%.

"In the Industrial business the first half closed with revenues of 616 million euros, an

increase of 16% compared with the same period in 2005. The operating income from

ordinary operations was 60.4 million euros, a decrease of 10% from first half 2005 due

to higher than expected increases in cost factors, in particular natural rubber and energy.

ROS was 9.8%. Overall market demand was positive in Europe, while it decreased in

South America." the company continued

For the group as a whole, tyres remain by far the most important activity, contributing €2018 million of the group's total €2446 million income. The group confirmed its expectations of improved results for the full year.

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Download statement from Pirelli (244kb .PDF file)

http://www.pirelli.com/en_IT/browser/attachments/pdf/comunicato_H1_120906.pdf

Web page of results meeting (at Pirelli.com)