Pirelli, operating profit rises. Growth estimates for 2024

Pirelli closed the third quarter with growing revenues, confirmed its targets for the end of 2024, and focused increasingly on increasing its share of high value and reducing that in the standard segment.

In detail, the Bicocca-based group reported revenues up 0.8% to EUR 1,737 million, volumes up 3% thanks to the strong growth in High Value, and an operating profit of EUR 276.8 million (+4.4%). Net profit was EUR 139.8 million, down from EUR 168.4 million in the same period last year, which however included positive impacts of EUR 40 million related to the Patent Box for the three-year period 2020-2022. Looking at the nine months, revenues came in at EUR 5.18 billion, compared to EUR 5.16 billion in the same period of 2023, up 0.5% including the exchange rate effect and up 4.9% (without the exchange rate effect of about -4.4%). Net profit fell to EUR 371.1m, compared to EUR 411m for the first nine months of 2023, but was higher than the consensus of EUR 368m and revenues of EUR 5.17bn.

The tyre group confirms 2024 targets. The forecasts for 2024, Pirelli recalls, are revenues of around 6.7 billion euro with volumes growing by around 2% and an expected exchange rate impact of around -3.5/-4%. Confirmed pre-dividend net cash generation is expected to be between about €500 million and €520 million "thanks to operating performance and working capital management". Capital expenditure is confirmed at about EUR 400 million (about 6% of revenue), and finally the net financial position is confirmed at about EUR -1.95 billion, with a ratio to ebitda of between 1.32 /1.26 times.

"The scenario that is unfolding for the sector is highly challenging. Trade tensions between North America, China, and Europe risk impacting economic growth and, more specifically, the auto industry," said Marco Tronchetti Provera, Pirelli's executive vice president, during the results conference call, adding that the main European and American carmakers "are facing a phase of restructuring and a review of development plans for electric and hybrid vehicles, while competition from new Chinese players is increasing. Pirelli 'will continue to leverage its business model and competitive advantages', Tronchetti added, saying he was confident of achieving the plan's objectives with a performance 'superior to peers'. Pirelli aims in particular to "gain share in the high value segment and reduce exposure in the standard segment," explained CEO Andrea Casaluci, confirming the group's strategy. In particular, one of Pirelli's priorities is 'to grow productivity in North America', the ceo stressed..

The presentation of the quarterly figures comes after the news that Palazzo Chigi has opened an investigation into Cnrc, the Chinese shareholder of Pirelli, for a possible violation of Golden Power. The Italian government, Pirelli has announced, has initiated an administrative procedure and, according to what has been reconstructed in financial circles, the object of the measure would be the double role of some Pirelli directors who would also hold managerial roles in companies that control the Pirelli group. A dual role that, precisely, would now be under scrutiny by the measure to ascertain violations of Golden Power. In this regard, the number one of Pirelli, Marco Tronchetti Provera, during yesterday's conference call, merely observed, that the proceedings "have been initiated to verify a violation of Cnrc of Golden Power and therefore to ensure the absence of links between Pirelli and Cnrc. The outcome is in the hands of the Golden Power commission,' Tronchetti concluded. On the stock market, the share rose 0.9%.