Pirelli upgrades earnings forecast after solid first-half

Milan, Italy – Pirelli has reported a 6.4% year-on-year rise in second quarter earnings (adjusted EBIT), to €269.3 million, on sales up 3.7% at €1,737.8 million.

Excluding a negative currency effect, the sales increase equated to 9.1%, said Pirelli, which linked the earnings gains to "price increases and improved mix."

First half revenues came in 7.5% higher year-on-year at €3,437.5 million, or 10.4% higher excluding currency factors.

Adjusted EBIT for the first six months totalled €517.4 million, an increase of 7.4% compared with the same period in 2022.

Pirelli's 27 July financial statement went on to highlight a strengthening of its position in high-value tires, including 5.7% growth in 18-inch-plus car tire volumes – outpacing the market by around 1%.  

The Italian group was also buoyed by an improvement in price/mix as well as efficiencies, which more than offset negative raw materials, inflation and forex effects.

Based on its first half showing – particularly on price-mix – Pirelli upgraded is full-year forecast for adjusted EBIT margin to between around 14.5% and 15%, from around 14-14.5% previously.

Revenues, however, are now projected to come in slightly lower than previously forecast, at between around €6.5 billion and €6.7 billion.

The downgrade, from the previous forecast of between around €6.6 billion and €6.8 billion, was linked to volumes and forex developments.

Volumes are estimated to decline by between around 2% and 1%, compared to Pirelli's previous indication of stable to around +1%.

Amid a "volatile" market outlook, Pirelli foresees "mild economic growth due to uncertainty regarding Europe, penalised by monetary tightening, and China, which is experiencing a slower than expected recovery."

Given the weaker-than-expected market performance in the second quarter, it forecast global car tire demand to dip by around 2%, compared with a previously estimated “flat” market.

On the other hand, demand for high-value tires is expected to grow by 3% year-on-year, according to the Milan-based group.

This, forecast Pirelli, will include growth of around 5% in 'OE ≥18’’ volumes’ – below the 7% growth previously indicated due to lower demand in China.

Meanwhile, 'replacement ≥18’’ volumes' are expected to grow by around 2%, compared to a previous indication of +3%.

The revision reflected "a more cautious view regarding demand in Europe - seen recovering in the second half of the year following the weak trend of the first half and in China."