Political uncertainty to weigh on Pirelli's Russia expansion plans

miércoles 26 de marzo de 2014 12:59 GYT

* Rosneft deal aimed to boost Pirelli's Russia market share

* Russia economic slowdown to weigh on Pirelli's expansion

* Pirelli to report full year results on Thursday

By Agnieszka Flak

MILAN, March 26 (Reuters) - The Ukraine crisis and the possibility of a recession in Russia creates uncertainty for Pirelli's plans to use a tie-up with oil group Rosneft to expand in the country, seen as a big growth market for the Italian tyre company's products.

Rosneft agreed a deal earlier this month to become Pirelli's single biggest shareholder, thus offering Pirelli the chance to exploit the Russian company's big gas station network to sell tyres.

Rosneft's 2,800 gas stations should put Pirelli, the world's fifth-largest tyre maker, on a par with Finnish rival Nokian Renkaat in terms of a distribution network in Russia. The deal could also help boost Pirelli's production base in Russia, where it already runs two plants, analysts said.

But the timing of the deal could delay the benefits given the sanctions imposed on Russia over its annexation of Crimea and the possibility that these could be expanded.

"The timing of (the Rosneft deal) is particularly negative given the current volatility in Russian politics," Edoardo Spina, an analyst at Exane BNP Paribas, said in a note.   Continuación...