Pirelli expects sharp H2 decline in raw materials costs

Milan, Italy – For the first half of 2023, Pirelli reported a €99-million year-on-year increase in its raw materials costs, with a lesser impact of €22 million in the second quarter.

The level on increase meant that raw material costs represented 34% of the Italian tire maker's sales over the first six months – down from 36% in the first quarter alone.

But, according to Andrea Casaluci, general manager operations (GMO), Pirelli now expects raw materials prices to decline sharply in the second half of 2023.

“We had a negative headwind of €100 million roughly in the first half, and will have a positive impact of around €100 million in the second half,” Casaluci said on a 9 Aug results call.

For 2022, Pirelli reported costs for ‘raw materials and consumables used' at €2,419 million, compared to €1,821 million the previous year.   

That raw materials costs now look set to finish 2023 near last year's level “is 100% related to the commodity markets,” Casaluci explained to investment analysts.

Asked about the impact on Pirelli’s tire pricing, the GMO said: “We don't plan any price reduction and we will keep our price positioning” in the replacement market.

“Also, we don't have any more opportunity to increase pricing in this environment, both because of raw material [price trends] and the reduction in demand.”

In the OE market, meanwhile, Pirelli expects price-reductions of between 1% and 2% percent, in-line with supplier contracts with vehicle manufacturers, said Casaluci.