MILAN—Pirelli & C. S.p.A.'s outlook for the fiscal 2020 has improved marginally based on an apparent "improvement in demand" versus previous projections.
Rising demand, Pirelli said in its third-quarter financial report, mostly will be driven by the original equipment segment in the Asia-Pacific and North America regions.
The tire maker said it was taking "a cautious view" on Europe due to the recent reintroduction of COVID-19 restrictions following a resurgence of the pandemic.
For the full year, Pirelli foresees a decline in volumes for the group of between 17 percent and 18 percent, a marginal improvement from a previous forecast, issued in August, that expected drops of 18-20 percent.
Taking into account a 1.5 percent positive price/mix effect and an expected 5 percent negative currency impact, the Italian tire maker expects full-year revenues of about $4.75 billion, up slightly from the earlier forecast.
Pirelli said it expects its adjusted EBIT margin to come in at between 11.5 percent and 12 percent, down from the previous indication of around 12 percent to 13 percent.
This, it said, was due to a worsening of exchange, which will also affect the cost of raw materials.
In addition, Pirelli now expects an increase in costs of about $22 million—to more than $100 million—linked to the reduction of inventories of finished products in the third quarter.
In its updated full-year outlook Pirelli said it anticipates a 17 percent decline in the car market in 2020, versus an estimated 19 percent drop published in August.
Demand in the OE segment is set to fall 18 percent, up from an earlier estimate of a 23 percent decline. Pirelli also increased its estimates for the replacement channel by two percentage points to a 16 percent drop.
The Italian tire maker said its "car new premium" market, comprising tires with rim diameters of over 18 inches, was its "most resilient segment," with an expected decline of 10 percent.
The standard segment is set for an 18 percent decline, a slight improvement versus the previous forecast of 20 percent drop, according to Pirelli.