Pirelli raises outlook for full-year sales due to volume growth

MILAN, Italy—Pirelli & C. S.p.A. has adjusted upward its full-year revenue and cash-generation targets as tire sales volumes through the first nine months of fiscal 2021 continue to increase, supported by improvements in the price/mix component.

Pirelli said it expects to report revenue this year of approximately $6 billion, up about 2 percent from earlier targets reported in August, based in part on expected volume increase of 14-15 percent over 2020 and "marked improvements" in price/mix.

At the same time, Pirelli affirmed its earlier forecast of an adjusted pre-tax operating margin of 15-15.5 percent.

The tire maker said it foresees a 7-percent increase in global demand for tires for 2021, a decline from the previously indicated 10-percent, due to the "prolongation of the semi-conductor crisis throughout the entire automotive supply chain."

In the original equipment channel, the market is expected to decline by 1 percent, compared with the previous indication of 6-percent growth.

Pirelli, however, expects its growth forecast for the replacement channel to remain at 10 percent for the full year.

During the three months ended Sept. 30, Pirelli posted a 4-percent improvement in adjusted EBIT to $261 million, helped by the contribution of internal levers such as restructuring.

Revenue grew 10.7 percent to $1.67 billion, supported by a 10.9-percent price/mix contribution. Sales volumes dropped 0.4 percent, Pirelli said, reflecting the decline in OE demand and for the standard segment.

Volume in the high-value segment, which includes larger-rim diameter tires, grew 1.8 percent, while the standard segment was down by 2.6 percent.

Furthermore, the $121 million price/mix effect "more than offset" the $88.5-million impact of higher raw materials costs and the $6 million exchange-rate effect.

For the first nine months of 2021, Pirelli said volumes recorded an increase of 24.7 percent, with "a steady gain" in market share particularly for the high value segment.

Nine-month sales were up 28.6 percent to $4.69 billion, helped by higher volumes and improvements in prices and mix.

Year-to-date EBIT was up 114 percent at $707.5 million, boosted by volumes and a $177 million price/mix effect, which more than offset the €134 million increase in raw-materials costs and a $21.2 million foreign-exchange impact.

Pirelli's sales in North America for the January-September period were 35.9 percent over the 2020 period to nearly $996 million. Sales in South America during the nine-month period were up 54.8 percent to $563.8 million.