Pirelli SpA, Europe’s third-largest tiremaker, fell the most in almost four months after cutting its profit target for this year because of a weaker Russian market.
Pirelli dropped as much as 4.4 percent to 9.58 euros, the steepest decline since April 8, and was trading down 3.3 percent at 11:02 a.m. in Milan. Volume was 93 percent of the three-month daily average. The stock has gained 12 percent this year, valuing the company at 4.69 billion euros ($6.22 billion).
Earnings before interest and taxes in 2013 will reach 810 million euros, the lower end of a previously forecast range of 810 million to 850 million euros, the Milan-based manufacturer said in a statement yesterday. The economy and “market dynamics” are weighing on earnings, with the Ebit margin at the Russian business now seen as “slightly negative” versus an earlier prediction of “mid-single-digit growth.”
The maker of high-performance tires also narrowed its global revenue forecast to 6.3 billion to 6.35 billion euros from an earlier expectation of as much as 6.4 billion euros.
The forecast is a “clear disappointment” amid Pirelli’s prediction that the benefit of lower raw-material costs will be consumed by higher spending on opening factories in Mexico and Russia and on marketing, Gaetan Toulemonde, a Paris-based analyst at Deutsche Bank AG with a hold recommendation on the stock, wrote in a report to investors today.