Pirelli Cuts 2013 Profit Target for Second Time on RussiaTommaso Ebhardt
Pirelli SpA, Europe’s third-largest tiremaker, cut its profit target for 2013 the second time this year because of slower demand in Russia and exchange-rate volatility.
Earnings before interest and taxes are expected to be about 790 million euros ($1.06 billion), the Milan-based company said today in a statement. That compares with a previous forecast of 810 million euros outlined in August, when Pirelli scaled back from a predicted earnings range of 810 million euros to 850 million euros. Third-quarter operating profit rose to 201 million euros from 195 million euros a year earlier.
Pirelli is pushing sales of its high-end products to make up for a contraction in Europe’s mass-market car sales to a two-decade low. The tiremaker plans to expand into markets outside Europe, in addition to focusing marketing in the region on its premium brands, Chairman Marco Tronchetti Provera said in an interview in March.
Pirelli also cut its forecast for revenue this year to 6.2 billion euros from a range of 6.3 billion euros to 6.35 billion euros. Third-quarter revenue fell to 1.52 billion euros from 1.55 billion euros mainly because of the “negative impact of exchange rates on Latin American, Turkey, Egypt and Japan currencies,” it said in the statement.
Michelin & Cie., Europe’s largest tiremaker, forecast in October that full-year operating profit will rise by 150 million euros before one-time items and currency effects, which will be “more deeply negative” than anticipated earlier in 2013. Nokian Renkaat Oyj, the biggest tire producer in the Nordic region, cut sales and profit forecasts because of slowing Russian sales and the ruble’s decline against the euro.
Pirelli’s eight main shareholders dissolved an agreement on Oct. 31 that protected the Italian company from takeovers, six months before the pact’s expiration in April 2014. The move frees the investors to sell Pirelli stock. The tiremaker is scheduled tomorrow to publish a plan for business through 2017.