Pirelli earnings rise on “strong improvement” in price mix

Milan, Italy – Pirelli & C. SpA has reported an 8% year-on-year increase in first quarter earnings helped by a stronger price/mix.

For the three months to the end of March, the Milan-based tire maker posted earnings of €360 million , on sales almost 12% higher at €1.7 billion.

The Italian group linked the higher revenues to a 15% improvement in price/mix, which more than offset a 3% decline in volumes due to weaker demand.

Supported by higher sales and efficiencies, the earnings gains offset higher raw materials costs, inflation and exchange rates, added a Pirelli statement, issued 11 May.

During the quarter, Pirelli noted 5% increase in sales of large rim-sized tires with “solid replacement demand” and a strong OE focus on 19-inch and bigger tires.

Pirelli also lowered its exposure to standard tire markets by four percentage points to 36% of total production, the company stated.

In terms of capacity utilisation, the tire maker said it registered a 90% run-rate “discounting China and Russia lower production levels."

Utilisation rates for high-value, large tires, reached 96%, according to Pirelli.

In Russia, Pirelli said utilisation rate stood around 65% as the company operated “in compliance with international sanctions” and suspended investments.

For the first quarter of 2023, Russia accounted for 3.5% of turnover and about 8% of group production.

Production in the country, it added, was solely aimed for local consumption and exports were terminated in Russia.

For the full-year outlook, Pirelli confirmed its previous forecast, with sales set to remain fairly flat at €6.6-6.8 million.

Earnings (EBIT) margin is projected to come in slightly lower than last year’s 14.8%, in an estimated range of between 14.0% and 14.5%.

However, Pirelli went on to say that the 'external scenario' remaind “volatile with risk of recessions and inflationary pressures.”