Pirelli & C.

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Business outlook

In 2010 the Group will concentrate further on its core business, increasingly becoming a ‘Pure Tyre Company’ with an absolutely leading position in 'Green Performance'.

  • In the “Tyre and Parts” area (tyres and filters) further strengthening is expected, on the basis of the results achieved in 2009. For the Tyre business, in particular, ongoing growth is expected with an approach differentiated between Consumer and Industrial, further improvement of competitiveness on costs and an acceleration of investments, in order to increase manufacturing capacity in particular in emerging markets that present higher growth rates and lower industrial costs. During the financial year investments of more than 300 million euro are planned with a ratio of investments to depreciation of 1.6 (up from 1.1 in 2009). On the cost front the continuation of the efficiency plan, already launched in the previous year, has the aim of achieving savings in 2010 of more than 60 million euro (before the effect of raw material price increases). The signs of market recovery, above all in the Consumer segment, enable us to forecast an increase in revenues of between 6% and 8% and an EBIT margin roughly in line with that of 2009, taking into account the impact of increases in the prices of raw materials, especially natural rubber. For the Filters business (Pirelli Eco Technology) the geographical diversification and above all the application of stricter laws on the limitation of traffic pollution are good grounds for aiming at double-figure growth in revenues, break-even at the operating level (EBIT) and positive cash generation.
  • For the “other businesses”, mainly Pirelli Ambiente and PZero, we plan to seize new growth opportunities. In particular, the PZero project offers the opportunity to increase further the value of the brand. For 2010 these businesses aim to reach their break-even point at the level of operating income.
  • Pirelli Real Estate expects in 2010 to further consolidate its leadership in Fund Management in Italy, to continue focusing on services in order to increase recurrent revenues and to maintain careful financial discipline. For service activities an operating income of between +20 and +30 million euro is expected. The target envisaged for sales of properties by the end of 2010 is between 1.3 and 1.5 billion euro, maintaining total assets under management substantially stable. The 2011 targets are also confirmed and in particular the achievement of net income of 50 million euro from the service businesses.

At the group level the forecast for revenues is approximately 4.7-4.8 billion euro and the EBIT margin is expected to come out at between 6.5% and 7%. The actions taken to rationalize and simplify the corporate organizational structure, announced last September, will also enable the achievement of savings of approximately 10 million at the level of gross operating margin (EBITDA), after the financing of the already announced management bonus plans. The target for consolidated net indebtedness at the end of 2010 is approximately 700 million euro after payment of 81.1 million euro for dividends payable on financial year 2009.

Pirelli will present the new 2011-2013 three-year plan to the financial community by the end of 2010.