Pirelli anticipating moderate growth for 2022

MILAN— Pirelli & C. S.p.A. expects a "more moderate pace of growth" during 2022 following a strong rebound that saw the tire maker exceed revenue target last year.

The Italian manufacturer expects revenue to come in between $6.1 billion and $6.2 billion (€5.6 billion and €5.7 billion), up from nearly $5.8 billion reported last year, Pirelli announced in its annual financial report published March 29.

The company anticipates a total growth in volumes of between 1.5 percent and 2.5 percent, reflecting an increase of 6-7 percent in unit sales of "high value," large rim-sized tires and a 3-4 percent decline in standard volumes.

Furthermore, Pirelli expects a price/mix improvement by 5.5-6.5 percent, helped by further price increases and a "more favorable mix."

EBIT margin, Pirelli said, is projected to come in between 16 percent and 16.5 percent, up from 15.3 percent last year.

Elaborating on the potential risks in 2022, Pirelli said it expected mature and emerging markets to be impacted by the Omicron variant of COVID-19 "at least for the first few quarters of the year."

In addition, higher energy prices and, more generally, the continuation of "a higher and more persistent inflationary scenario" are expected to affect results.

Natural and synthetic rubber as well as oil-related raw materials—particularly chemicals and carbon black—will likely continue to "represent a factor of uncertainty" given the strong volatility recorded in recent years, Pirelli added.

On individual economic levels, Pirelli said a slowdown in China, due to the normalization of the real estate market and geopolitical tensions elsewhere, will add to 2022 risks.

"At the date of this document, the outcomes and implications of the Russia-Ukraine crisis remain uncertain," said Pirelli.

According to the tire maker, the tightening of international sanctions is having repercussions on the growth of Russian economy, the currency market and the country's domestic economic and financial system.

These factors, Pirelli said, are "compounded" by the countermeasures that the Russian government is preparing—and in some cases has already implemented—in response to international pressure.

"The current situation is also bringing about rising prices for energy, metal and agricultural commodities, with repercussions on consumer price pressure and growth prospects for the Eurozone," Pirelli noted.

"These elements of uncertainty could lead to an alteration of normal market dynamics and, more generally, of business operating conditions," the company concluded.

Last year, Pirelli reported sales of $5.8 billion, up 24 percent compared to 2020, and above the previously announced target of $5.5 billion and €5.6 billion.

Volumes grew 15.7 percent supported by the "high value," large-rim-sized segment, which was up 20.2 percent, exceeding the target of 17-18 percent growth. Price/Mix also improved 9.1 percent year-on-year, helping Pirelli achieve higher sales.

Adjusted earnings (EBITDA) rose 35.6 percent to $1.3 billion, helped by the improvement of price/mix and efficiencies, which Pirelli said "more than offset" the impact of raw materials costs as well as currency and inflation headwinds.