Pirelli investment levels 'sufficent' to meet high-value market demand

Milan, Italy – Pirelli & C. SpA has dedicated around one fifth of its total capex to increasing its capacity to produce high-value, large rim-size tires.

That's according to group CEO Andrea Casaluci, who believes the current level of investment is sufficient to meet growing demand for those products.

Overall, the utilisation rate across Pirelli factories stands at about 90%, with a saturation rate of about 95% for high-value tires, Casaluci said on a 9 May earnings call.

The high-value rate is always above the average "because we use around 10 million of the high-value capacity to produce standard tires,” the chief executive explained.

This production set-up, he continued, allows Pirelli sufficient scope to “catch any further opportunity” from the market on the high-value side.

Therefore, according to the Pirelli leader, in the short term, the company does not need to accelerate investment in this regard.

Concluded Casaluci: “Today, around 20% of our total capex is dedicated to capacity growth in high-value [tire production], and this is enough to balance the expected growth in demand.”

In its guidance for the full-year, Pirelli forecast capex to reach €400 million or 6.0% of sales in 2024, down from €410 million or 6.1% of sales in 2023. 

For the first quarter of 2024, Pirelli reported a “further strengthening in high value” with  ≥18” car tire volume growth of 6.8% (market +6.5%).

Pirelli’s gain comprised: Replacement volumes +11.4% (versus +10.1% for the market overall); and OE volumes +0.9% (compared with +1.5% for the market overall).