27 de marzo de 2014 / 21:03 / en 4 años

UPDATE 1-Currency swings force Pirelli to cut 2014 sales target

* Sees 2014 revenues at 6.2 bln euros, down from fcast of 6.6 bln

* Confirms 2014 EBIT target, to raise prices in Latin America

* Cautiously optimistic on gradual recovery in Europe

* CEO says Pirelli outperforms market in Russia (Adds details, context, comments)

By Agnieszka Flak

MILAN, March 27 (Reuters) - Pirelli, the world’s fifth-largest tyremaker, has cut its sales target for this year, citing worse-than-expected currency effects, after delivering 2013 results in line with its own previously-lowered forecasts.

The Italian company, whose tyres equip motorcycles, cars and Formula 1 racers, said it expects to report sales of 6.2 billion euros ($8.52 billion) this year, up nearly 1 percent on 2013 but down from a previous target of 6.6 billion euros. The adjustment was largely expected.

Pirelli said it expected to be hit hard by unfavourable exchange rates in emerging markets, especially in Latin America, its single largest region. The group expects the total impact on the year’s operating result from currency headwinds of 110 million euros this year, more than double its previous estimate.

However, with higher volumes, lower raw material costs and a better price mix, 2014 earnings before interest and taxes were still expected at around 850 million euros. Pirelli will raise prices in Latin America to counter some of the currency effects.

“In Argentina and Venezuela the price increases are in two digits and in Brazil it’s one digit. That’s the move we are making in the market,” Pirelli CEO Marco Tronchetti Provera told analysts during a conference call.

The group proposed to pay a dividend of 0.32 euros per ordinary share, flat from the previous year.


Pirelli has managed to boost margins in the face of declining European car sales by focusing since 2010 on more expensive tyres for brands such as Mercedes, Audi and BMW - luxury carmakers that have weathered the downturn better than their mainstream rivals.

Europe’s car industry has endured a six-year slump in which auto sales hit a two-decade low.

Tronchetti said he was “cautiously optimistic” about the gradual recovery in Europe, where car sales rose in February for a sixth straight month.

Pirelli plans to accelerate its shift into the premium tyre segment, which it expects to account for 44 percent of sales volumes by 2016 against 38 percent in 2013.

Pirelli struck a deal with Rosneft earlier this month that made the Russian oil major the group’s single largest shareholder, a move expected to boost the tyremaker’s expansion ambitions in that country.

The Italian company currently records only around five percent of its sales in Russia, but the country’s size, its climate and bad roads make it a prime market for high-margin winter tyres.

While analysts said Russia’s annexation of Ukraine’s Crimea and the possibility of a recession in Russia have cast some doubts over those growth plans, Tronchetti was optimistic on Pirelli’s performance there.

“During the first two months we had a double digit sales volume growth year-on-year and that is in a downturn market. The market was down 6.5 percent,” Tronchetti said, attributing the improvement to better distribution and an adequate product portfolio.

He also said the weakness in the Russian rouble made it cheaper for Pirelli to export into Europe.

Pirelli said EBIT last year stood at 791 million euros compared with 792.5 million euros the previous year and with a forecast of 788 million euros in an analyst consensus.

Revenue rose 1.2 percent to 6.15 billion euros as strong demand in emerging markets, especially for premium tyres, offset weakness in Europe and currency woes. Excluding currency effects, revenues rose 8.4 percent. ($1 = 0.7278 Euros) (Editing by Sonya Hepinstall)

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