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March 01, 2018 01:00 AM

Pirelli posts strong 2017, Europe leads sales

European Rubber Journal
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    Pirelli Tyre S.p.A.
    Pirelli's new customization option allows buyers to order their tires with colored raised letters and an accompanying thin sidewall strip.

    MILAN—Pirelli & C. S.p.A. reported higher sales and earnings for fiscal 2017 as "internal levers" such as price/mix, volumes and efficiencies more than offset increased raw-materials costs and cost inflation.

    The Milan-based company is forecasting continued growth of both sales and earnings in 2018, based on the steady conversion of its sales efforts toward higher value-added product categories

    Fiscal 2017 adjusted pre-tax operating income rose 8.6 percent to $1.28 billion on 7.6-percent higher sales of $6.03 billion. Net income shot up 60.5 percent to $338.9 million.

    Revenue growth was buoyed by a nearly 12 percent jump in "high-value" tires, which now represent 57.5 percent of the firm's annual revenue, up two percentage points from 2016.

    The segment should represent 60 percent of sales this year.

    Pirelli previously outlined four categories of such products:

    • Prestige, developed with car makers such as Ferrari, Bentley, Bugatti and Rolls Royce;
    • New premium tires with rim diameters of 18 inches or more;
    • Specialty tires, including run-flats and colored editions; and
    • Premium moto—high-end motorcycle tires.

    Also behind the sales growth was an improvement of the price/mix component and further partnerships with top-end car makers.

    All regions experienced growth in 2017, Pirelli, led by Asia-Pacific, where sales jumped 14.3 percent to $1.04 billion and now represent 17.2 percent of the firm's global revenue.

    The NAFTA region posted 7.4-percent higher sales of $1.27 billion, or 21 percent of global revenue.

    Europe's sales grew 7.5 percent to $2.87 billion, accounting for 41.7 percent of revenue. Sales in Russia and the former Soviet Bloc tumbled 14.6 percent to $205.5 million.

    Pirelli went on to highlight its "strategic focus" on more profitable segments, with the "progressive reduction" of products not labelled Pirelli.

    Another goal is for Pirelli to double the weight of renewable materials it uses in its tires, and reduce fossil-based raw materials by 30 percent by 2025.

    On a unit volume basis, Pirelli said sales of high value tires grew 12.5 percent, including growth of 15.4 percent in tires of 18-inch and higher rim diameters. Total volume, however, was up just 1 percent when a 5.3 percent drop in shipments of standard tires is considered

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