Pirelli the 6th largest tyre manufacturer in the world operates two plants in Russia which accounts for around 3% of Pirelli’s revenues and around 11% of its total car tyre capacity, especially in the standard segment, with about half of that intended for export.
Earlier on March 17, Pirelli halted all its investment in Russia excluding those linked to security. To mitigate the Russian impact Pirelli said it had sought alternative suppliers, increased stocks and shifted its production of standard tyres for European export to low cost plants in Romania and Turkey.
Pirelli has also taken measures to include a new credit line with a local bank to ensure financial continuity for its operations in Russia and diversification of logistic service providers.
Despite an outlook darkened by geopolitical tensions, inflation and falling demand in China due to lockdown measures, Pirelli’s adjusted earnings before interest and tax (EBIT) were 228.5 million euros ($241 million) for January-March, exceeding a company-provided analyst consensus of 217 million euros.
Pirelli said that increasing inflation and raw material costs were more than offset by price-mix and efficiencies, while a lockdown-led drop in Chinese demand was partly offset by a better business performance expected in North and South America.
But the manufacturer of tyres for Formula One and high-end carmakers such as BMW and Audi, trimmed its forecast for this year’s margin on its adjusted EBIT to around 15%, after previously guiding between around 16%-16.5%.
“Further actions are being planned to improve this profitability target,” it said.
However Pirelli slightly raised its forecast for its full-year revenues, allowing it to confirm a target first given three months ago for adjusted EBIT of 890 million euros.