Pirelli earnings grow but forex, 'hyperinflation' effects impact sales

Milan, Italy – Pirelli & C. SpA has reported stable revenues and a rise in adjusted earnings (EBITDA) for the first six months of the year.

First half earnings grew 4% year-on-year to €768 million, while sales held steady at €3.4 billion, the Italian tire group reported 1 Aug.

Adjusted EBIT rose 4.2% to €539 million, driven by “solid commercial performance and efficiencies”, while EBIT margin increased from 15.1% in 2023 to 15.6% in first half of this year.  

In terms of sales, Pirelli said 4.6% organic growth was almost entirely offset by the 4.3% negative impact of forex and “hyperinflation” in Argentina and Turkey.

Sales of high-value products, including large rim-sized tires, represented 77% of total sales, up from 74% in the first half of 2023.

The Italian tire maker noted the positive contribution of price/mix (€60.4 million) and volumes (€23.6 million) on EBIT.

Efficiencies delivered a positive contribution of €71.4 million which offset input cost inflation of €68.3 million during the six-month period.

A reduction in the cost of raw materials had a positive effect of €36.3 million, partially offsetting the negative €62.3 million forex impact.

Amortisations and other costs, mainly linked to marketing, R&D and inventory reduction activities had an overall negative impact of €39.4 million.

In the second quarter, sales came in at €1.7 billion, up 0.8% year-on-year.

Organically, revenue in the three months to end of June increased 4.5% but was offset by a 3.7% negative impact of forex and hyperinflation in Argentina and Turkey, Pirelli added.

On the full-year outlook, Pirelli said the global car tire market should stay “flat” this year, though the high-value segment is set for a growth of seven percentage points year-on-year.

In particular, in the 18-inch & larger tire market, OE volumes are expected to grow at “mid-single digit” levels, mainly due to demand in the APAC region.

Replacement volumes for the 18-inch and up segment are set to grow at “mid/high single digit” levels, mainly led by demand in “all high-value regions.”

In the standard segment, 17-inch & smaller, expectations are for weaker demand compared with the previous year.