LONDON (Nov. 9, 2011)—Pirelli & C. S.p.A. will form only a single joint venture with Russian Technologies State Corp., instead of the two previously announced, according to Pirelli Chairman and CEO Marco Tronchetti Provera.
The executive told analysts today the second joint venture is no longer being discussed.
Pirelli's business in Russia will focus on a single joint venture covering two factories, in Kirov and Voronezh. The venture is now signed with Pirelli owning 50 percent, Russian Technologies 24.99 percent and the Fleming family 25.01 percent.
The Voronezh plant is expected to produce 2 million units annually of premium passenger in 2012, increasing to 4 million in 2014, and by 2015 will produce only Pirelli-brand tires, Tronchetti Provera said.
To achieve this, Pirelli will invest $138 million from 2012-2014, covering a new mixing room, new finishing area and improved quality control at Voronezh, which Pirelli said has yet to produce a single tire. This comment suggests Pirelli is referring to the Voronezh II factory, built by Amtel Holdings and specified by Vredestein Banden—then a part of Amtel—as a high-performance factory adjacent to the older Voronezh I plant.
The Kirov plant will receive a similar level of investment in the same period. In 2012, Pirelli expects the Kirov plant to produce 6.5 million units, in mixed brands. Pirelli expects the plant's output will be 60 percent Pirelli-brand tires by 2015. Investments include a new mixing room, new finishing area and improved quality systems.
Overall, Pirelli said, 80 percent of sales in Russia and the former Soviet Bloc region will be produced in Russia by 2015. Tronchetti Provera said Pirelli will exit the entry-level “C” segment of the market immediately and focus mainly on the higher value “A” segment with some activity in the “B” segment.