MILAN—Pirelli & C. S.p.A. expects to achieve pre-tax earnings this year of about $1.17 billion, roughly in line with its forecast of last November.
However, the company has revised its sales projection downward by 6 percent, reflecting a “more cautious” exchange rate scenario.
Nonetheless, Pirelli expects unit sales volumes to grow 5 percent over 2013, with an even greater contribution from its premium products—up 14 percent vs. the earlier forecast of 12 percent—and the price/mix component to improve by 4 to 5 percent over 2013.
The earnings forecast represents 6.5-percent growth over 2013, and would increase the earnings/sales ratio nearly a full point to 13.7 percent.
For the year ended Dec. 31, Pirelli reported pre-tax operating income of $1.05 billion—a slight dip from 2012—on 1.2-percent higher sales of $8.16 billion. Net income of $407 million was 21.7 percent below the 2012 number.
Pirelli's tire business now accounts for 99.5 percent of Pirelli's revenues.
The company reported its unit sales volumes rose 5.7 percent last year, plumped by a 15.3-percent jump in volumes of premium products.
Pirelli said the results “show revenue growth and stable profitability, regardless of exchange rate volatility and the difficult macro-economic context, which affected Europe in particular.”
Pirelli's sales performance reflected the strength of emerging markets, where revenue growth of 4.3 percent more than offset the weakness of mature markets, such as Europe (down 2.2 percnet and the North America Free Trade Area (down 1.5 percent).
Specifically, South America and Asia/Pacific generated 5.2- and 14.5-percent revenue growth, respectively, Pirelli said.
The company noted that profitability improved markedly in the fourth quarter, thanks to a better product mix, including 27.5-percent growth in premium segment products.
During fiscal 2013 Pirelli invested $264.5 million in research and development, about 80 percent of which was devoted to premium segment products.
Regarding fiscal 2013 earnings, Pirelli said the pre-tax operating profit was positively impacted by the contributions from volumes and price/mix, the lower cost of raw materials and gross efficiencies, which were offset to a degree by higher production costs and restructuring charges linked to the ongoing rationalization of structures.
The drop in net profit was impacted by the results of shareholdings and an increase in financial charges related to a higher average level of debt and the diverse geographic mix of financings.
The board of directors will propose a dividend of about 42 cents a share, equal to $208.1 million.