PIRELLI & C. SPA BOARD REVIEWED CONSOLIDATED RESULTS TO 30 SEPTEMBER 2023
PIRELLI : 9M REVENUES +2.5%, NET PROFIT +14.4% TO 411 MILLION EURO
PRICE/MIX AT 10.4% THANKS TO PRICE INCREASES AND MIX IMPROVEMENT
ADJUSTED EBIT: +3.8% TO 782.5 MILLION EURO, MARGIN INCREASED TO 15.2%
IN THE THIRD QUARTER ADJUSTED EBIT MARGIN ROSE TO 15.4% AND CASH FLOW BEFORE DIVIDENDS POSITIVE 167.2 MILLION EURO
First 9 months 2023
- Revenues: 5,160.2 million euro, +2.5% compared with the first 9 months of 2022 (organic growth of +7.4% excluding forex effect of -4.9%)
- Price/Mix: +10.4% thanks to price increases and mix improvement.
- Adjusted EBIT: 782.5 million euro, +3.8% compared with first 9 months of 2022. The improvement of the price/mix and efficiencies more than offset the impact of external context (raw materials, inflation and forex)
- Adjusted EBIT margin at 15.2% compared with +15% in the first 9 months of 2022
- Net profit: 411 million euro, +14.4% compared with 359.3 million euro in first 9 months of 2022 thanks to the improved operating performance and benefit derived from the Patent Box
- Net cash flow before dividends: -367.7 million euro (-323.2 million in the first 9 months of 2022). Excluding the impact of the 3-year LTI 2020-2022 management incentive plan of 67 million euro, the net cash flow before dividends was -300.7 million euro, an improvement compared with the 9-month figure in 2022
- Net Financial Position: -3,138.1 million euro (-3,390.5 million on 30 September 2022 and -2,552.6 million on 31 December 2022)
Third quarter 2023
- Revenues: 1,722.7 million euro (1,836.3 million in third quarter 2022) with organic growth of 2.2% excluding the forex effect of -8.4%
- Price/Mix: improvement to +6.8%
- Adjusted EBIT: 265.1 million euro (271.9 million in third quarter 2022), with an adjusted EBIT margin rising to 15.4% (14.8% in third quarter 2022)
- Net profit: +33.3% to 168.4 million euro (126.3 million euro in third quarter 2022) that reflects the benefit derived from the Patent Box
- Net cash flow before dividends: +167.2 million euro (+140.5 million in third quarter 2022)
***
2023 TARGETS
- Revenues estimated at ~6.6 billion euro (previous estimate ~6.5 and ~6.7 billion euro)
- Adjusted EBIT Margin expected at ~15% (at the high end of the target range in July of ~14.5% /<15%) thanks to improved price/mix, expected at ~+8% (the high end of the range of ~+7% /~+8% indicated in July)
- Net cash generation before dividends expected at between ~450 and ~470 million euro (previous estimate between ~440 and ~470)
- Investments confirmed at ~400 million euro (~6% of revenues)
- Net financial position revised up to ~-2.33 billion euro, with a NFP/adjusted EBITDA ratio of about 1.6x/1.65x (previous estimate ~-2.35 billion euro, with a NFP/adjusted EBITDA ratio of about 1.65x/1.7x)
***
Milan, 9 November 2023 – The Board of Directors of Pirelli & C. Spa met today and approved results to 30 September 2023 which show growth in the main economic and market indicators thanks to the implementation of the “key programs” of the Industrial Plan 2021-2022|2025.
In particular:
- Commercial Program
The first 9 months of 2023 saw consolidation of High Value with a particular focus on Car ≥19’’, Specialties and Electric. In the period, Pirelli registered Car ≥18” volume growth of +4% (in line with the market). In the Car ≥18” Replacement channel, in particular, Pirelli volumes grew +2% (market +1%), while in Original Equipment Car ≥18” (Pirelli volumes +6%, market +7%) Pirelli pursued its strategic focus on higher rim sizes (with growth of around 4 percentage points of the weight of ≥19” volumes, which represent 81% of Original Equipment ≥18”) and Electric (around 26% the weight of Original Equipment ≥19” volumes, an increase of 7 percentage points compared with the first 9 months of 2022).
On the other hand, there was a further reduction of exposure to the Standard segment (Pirelli Car ≤17” volumes -10% compared with market’s -3.0%). The different dynamics between ≥18”and ≤17” resulted in an overall decline in Car volumes -2% (market -1%).
- Innovation Program
In the first 9 months of 2023 Pirelli obtained about 260 new technical homologations with the principal Prestige and Premium car producers, focused mainly on rim sizes ≥19” and Specialties. In Car, there was a further reinforcement of positioning in Electric thanks to a portfolio of about 470 homologations at the global level and a market share in Prestige and Premium Original Equipment 1.5 times higher than that of internal combustion engines in the same segment. The offering in Electric was recently enhanced with the launch of the P Zero E, a product of high technological content and greater sustainability. The position on the SUV segment was also strengthened thanks to the launch of the Scorpion MS. Pirelli also renewed its contract with Formula 1 until 2027 (with the possibility of extension for an additional season) with a commitment to supply tyres that are more sustainable and certified by the FSC from 2024.
In Moto, Pirelli completed the renewal of the Diablo range with the introduction of the Diablo Supercorsa and beginning from 2024 Pirelli will be the official supplier for the Road to Moto GP project for the Moto2 and Moto3 classes. In Cycling, three new products were launched: two super performance characterized by low rolling resistance and suited to all surfaces.
- Competitiveness Program
In the first 9 months of 2023, Pirelli achieved gross efficiency of around 61.4 million euro, in line with expectations and the timing of projects’ development. These benefits regarded product costs (modularity and design-to-cost), manufacturing (optimization of the industrial footprint and efficiency actions), SG&A costs (optimization of the warehouse logistics network and negotiation actions in purchasing) and organization costs.
- Operations Program
In the first 9 months of 2023, total plant saturation stood at around 90% (mainly because of the lower level of production in Russia and China), with a peak of 95% in the High Value segment. In addition, the plant decarbonization program continued through the use of renewable energy sources and energy efficiency programs. Further, thanks to the acquisition, announced on 4 July, of Hevea-Tec, the major independent Brazilian operator in the processing of natural rubber, Pirelli will increase its natural rubber supply quota in South America.
- Digitalization Program
In the first 9 months, following the adoption of CRM, Pirelli activated in the European markets the new e-commerce B2B platform for integrated and digitized commercial management which will be implemented by the end of the year in the USA, Canada, Brazil and Argentina. Pirelli also continued to cover the main factories with Industrial Internet of Things (IIoT) technology to improve efficiency of production processes. In conclusion, the company centralized information into a single Big Data Lake and continued with the IT Service Model project for the digitization of IT operations processes, to extend the coverage of support at the global level and increase the levels of service on the new platforms.