11
May
2004
|
00:00
Europe/Amsterdam

Pirelli 1Q financial statements

BOARD OF DIRECTORS OF PIRELLI & C. SPA APPROVES RESULTS FOR FIRST QUARTER ENDED 31 MARCH 2004 :

 

 

  • OPERATING INCOME OF INDUSTRIAL ACTIVITIES GREW 42%
  • GROWTH OF REAL ESTATE ACTIVITIES: +24% IN OPERATING INCOME INCLUDING INCOME FROM EQUITY PARTICIPATIONS
  • PIRELLI & C. SPA GROUP POSTED A NET PROFIT OF
  • 10 MILLION EUROS, STRONGLY GROWING WHEN COMPARED TO NET LOSS OF 20 MILLION AT 1 MARCH 2003
  •  
  • FOR 2004, GROUP EXPECTS A SIGNIFICANT IMPROVEMENT OF RESULTS IN ALL ACTIVITY SECTORS, BOTH AT OPERATING AND NET LEVEL

  • CONSOLIDATED RESULTS
     
  • REVENUES: 1,677 MILLION EUROS, COMPARED TO 1,572 MILLION EUROS, UP 6.7%(+4.6% AT COMPARABLE CONDITIONS)
  • OPERATING INCOME (EBIT): 83 MILLION EUROS, GROWING 22% WHEN COMPARED TO 68 MILLION EUROS IN SAME PERIOD 2003
  • OPERATING INCOME INCLUDING INCOME FROM EQUITY PARTICIPATIONS: POSITIVE BY 80 MILLION EUROS, AGAINST 57 MILLION IN FIRST QUARTER 2003
  • NET PROFIT: 10 MILLION EUROS (-20 MILLION AT 31 MARCH 2003). Pirelli & C. SpA share of the net result was POSItive by 2 million Euros (-12 MILLION EUROS IN Q1 2003)
  • Olimpia EFFECT NEGATIVE BY 24 MILLION EUROS: IT DOES NOT YET BENEFIT OF TELECOM ITALIA DIVIDENDS, FORESEEN FOR SECOND QUARTER 2004
  • NET DEBT: 1,959 MILLION EUROS COMPARED TO 2,302 MILLION AT 31 MARCH 2003 (GROWING FOR USUAL SEASONAL EFFECTS WHEN COMPARED TO 1,745 MILLION AT END 2003)

  • INDUSTRIAL ACTIVITIES
     
  • REVENUES: 1,586 MILLION EUROS COMPARED TO 1,453 MILLION EUROS, UP 9.2% ( +6.9% AT COMPARABLE CONDITIONS)
  • OPERATING INCOME: 88 MILLION EUROS, UP 42%, WITH ROS RISING TO 5.5% FROM 4.3%
  • TYRES: EBIT 75 MILLION EUROS (+14%) WITH ROS AT 9.2%
  • ENERGY CABLES AND SYSTEMS: EBIT +122% AT 20 MILLION EUROS WITH ROS GROWING TO 3.0% FROM 1.4%
  • TELECOM CABLES AND SYSTEMS: EBIT IMPROVED: -7 MILLION EUROS (OF WHICH -4 FROM SUBMARINE ACTIVITIES) AGAINST -13 MILLION EUROS IN FIRST QUARTER 2003

  • REAL ESTATE OPERATIONS
     
  • OPERATING INCOME INCLUDING INCOME FROM EQUITY PARTICIPATIONS: 30.6 MILLION EUROS, +24% YEAR OVER YEAR
  • CONSOLIDATED NET INCOME: 25 MILLION EUROS, +25%


Milan , 11 May 2004 - The Board of Directors of Pirelli & C. SpA today met and approved the company's consolidated financial statements for the quarter ended 31 March 2004 .

First quarter of 2004 showed a strong improvement of all economic indicators, following the substantial completion in 2003 of a wide process aimed at simplifying and financially strengthening the company structure as well as at significantly aligning industrial activities to dramatically changed market conditions in both Energy and Telecom Cables and Systems sectors.

As Industrial Activities are concerned, a growth in revenues was posted, along with a strong growth of EBIT , up more than 40% from 62 million euros to 88 million euros.

In particular, Tyres Sector confirmed its strong growth - both in profitability and volumes which grew in all market segments. Efficiency and focusing actions undertaken have already shown their results in performance of Energy Cables and Systems sector, still in a generally stable market. Cables and optical fiber segment of Telecom Cables and Systems Sector showed a slight upturn of volumes in Europe and North America , with prices still under pressure; Broad Band Access activities grew both in terms of volumes and margins.

Real Estate activities showed a 24% growth in operating income including income from equity participations - which better signifies results at operational level - reaching the highest targets set out in the three-year plan 2003-2005.

The Group Pirelli & C. Spa

In order to correctly compare results, figures at 31 March 2003 were adjusted in order to account for the attribution of the merger surplus (merger effects were retroactively accounted for starting 1 st January 2003 ). Therefore, EBIT was positively adjusted for 7 million Euros.

In first quarter 2004 the consolidated revenues of Pirelli & C. Spa Group amounted to 1,677 million Euros , up 6.7% against the same period last year, posting growth in all activity sectors. On the same perimeter base - net of the effects of exchange rates and metal prices - revenues grew by 4.6%.

EBITDA grew by 12% and stood at 172 million Euros (154 million Euros in Q1 2003). The ratio EBITDA/Revenues therefore grew from 9.8% to 10.3% .

Operating income (EBIT) amounted to 83 million Euros, up 22% when compared to 68 million Euros in first quarter 2003. Consolidated ROS - Return on Sales was 4.9% , further growing when compared to the 4.3% figure of 2003. It must be remembered that 2003 figure included 10 million euros from Ciena settlement.

The result from investment holdings is negative by 3 million Euros against -11 million Euros in Q1 2003 and it relates to the valuation by the net asset method of the investment in Olimpia - negative by 24 million Euros (-25 million Euros in first quarter 2003) - while results of real estate companies (Pirelli & C. Real Estate Group) were positive by 21 million Euros (14 million Euros in the same period last year). It should be mentioned that Olimpia results do not yet benefit from Telecom Italia dividends, which will be accounted for cash when received presumably in second quarter.

Financial charges at 31 March 2004 were negative by 35 million Euros , substantially in line with Q1 2003 figure of -36 million Euros.

Extraordinary items were negative by 2 million Euros, with a growth compared to -8 million Euros of first quarter 2003.

Net profit at 31 March 2004 was 10 million Euros, against a net loss of 20 million Euros in first quarter 2003.

The Pirelli & C. SpA attributable net result was positive by 2 million Euros, compared to a net loss of 12 million Euros at 31 March 2003 .

Shareholders' equity was 3,751 million euros, compared with 3,678 million euros at year-end 2003. The Pirelli & C. SpA share of the Shareholders' equity was 3,486 million Euros (1.01 Euros per share) against 3,429 million Euros (0.99 per share) at end 2003.

The net financial position at 31 March 2004 is negative by 1,959 million Euros, against 2,302 million euros in first quarter 2003. The negative variation when compared to 1,745 million euros at end 2003 is attributable to usual seasonal effects - determined by increased activities - which caused a growth in working capital.

Groups' employees at 31 March 2004 were 36,663 ( including 2,912 temporary workers) , compared to 36,337 at year-end 2003 ( including 2,417 temporary workers) .

The industrial operations of the Group In first quarter 2004 the Industrial Activities sales revenues reached 1,586 million Euros , up 9.2% when compared to Q1 2003. On the same perimeter base (net of the effects of exchange rates and metal prices) revenues actually grew by 6.9% .

EBITDA grew by more than 18% and stood at 162 million Euros , with a ratio on revenues of 10.2% (9.4% in Q1 2003).

Operating income (EBIT) was 88 million Euros , growing by 42% when compared to Q1 2003. Return On Sale rose to 5.5 % against 4.3% in Q1 2003.

Net profit of industrial operations at 31 March 2004 stood at 34 million Euros, up 79% when compared to 19 million Euros in first quarter 2003.

Group Headcount in the industrial operations of the Group at 31 March 2004 was 33,694 ( including 2,741 temporary workers) , against 33,401 at the end of 2003 ( including 2,253 temporary workers) .

Industrial sector operations

Tyres Sector

Sales amounted to 819 million Euros , a year-on-year increase of 12.5 % (741 million in Q1 2003) : of this percentage, 11% refers to increased volumes and the remaining to prices/mix.

Operating income was 75 million Euros, with a ROS of 9.2 %, an improvement of 13.6% compared to 66 million Euros in Q1 2003.

Net profit stood at 38 million Euros (after financial costs of 10 million Euros and fiscal charges for 27 million Euros), compared to 33 million Euros in the same period last year.

Employee numbers at 31 March 2004 stood at 20,659, including 1,905 temporary workers.

Energy Cables and Systems Sector

Sales totaled 671 million Euros , up 7.7% when compared to Q1 2003 figure of 623 million Euros. On an equal basis figure is in line with last year's.

Operating income was 20 million E uros , compared to the figure of 9 million Euros posted in Q1 2003, with ROS growing to 3.0% with respect to 1.4% recorded in Q1 2003.

Net profit stood at 7 million Euros (after financial costs of 7 million Euros and fiscal charges for 6 million Euros), compared to 3 million Euros at 31 March 2003 .

Employee numbers at 31 March 2004 stood at 10,912 , including 759 temporary workers.

Telecom Cables and Systems Sector

Sales revenues in first quarter 2004 were 96 million Euros, up 7.9% when compared to 89 million Euros at 31 March 2003 . On the same perimeter base (net of the effects of exchange rates and metal prices) a growth of 10.3% was posted, thanks to the improvement in volumes (+19.8%) - foremost due to sales of broadband gateways - which more than offset the already mentioned pressure on prices (-9.5%).

O perating income was negative for 7 million Euros (of which -4 million related to submarine activities), posting an improvement when compared to 13 million Euros in Q1 2003.

A Net loss of 11 million Euros (after financial costs of 3 million Euros and fiscal charges for 1 million Euros), was posted compared to -17 million Euros in Q1 2003.

Employee numbers at 31 March 2004 stood at 2,123 , including 77 temporary workers,.

The Group's Real Estate operations It is worth recalling that Pirelli RE is a management company which manages special purpose vehicles and funds owner of real estate and non performing loans portfolios, investing through minority stakes (asset management and fund management activity) and providing these and other clients with a full range of real estate specialist services (service provider activity). Consequently, the aggregate production value net of acquisitions and EBIT including income from equity participations (pro-quota) are the most significant indicators of the business volume managed by the Group and results at operational level, respectively.

The aggregate production value (the total of sales and the change in inventories, which includes minority equity investments under management) net of acquisitions, totalled approximately 418.8 million Euros, with growth of 18% compared to the figure of 355.7 million Euros inQ1 2003.

EBIT including pro-quota income from equity participations totalled 30.6 million Euros, as compared with 24.7 million Euro in Q1 2003, representing growth of 24% .

Attributable Shareholders Equity at 31 March 2004 was 444.9 million Euro, compared to 421.6 million at end 2003.

The consolidated net profit was 25 million Euros, as compared with 20 million Euros attributable to real estate activities in Q1 2003, with growth of 25%.

For further information of Real Estate activities, please refer to the press release issued by Pirelli & C. Real Estate on 10 May 2004 .

Forecasts for the 2004 fiscal year

Results of first quarter allow Pirelli to confirm forecasts for a further increase in results in all the three activity sectors, both at operating and net level, unless extraordinary events currently not forecastable happen.

In Tyres Sector , in a growing market, Pirelli expects to further improve its results, thanks to high performance segment in Europe , to Truck segment in South America and to an increasing market share in North America .

In Energy Cables and Systems Sector, waiting for a partial market upturn, Pirelli aims at consolidating its operating income growth through a focus on higher margins products.

In Telecom Cables and Systems Sector , in a still stagnating market, Pirelli aims at reaching operating break even, thank mainly to its new products for broadband access.

As regards the Real Estate sector, on the basis of data currently available it is reasonable to expect a growth in EBIT including pro-quota income from equity participations i n line with the targets of the 3-years business plan (2003-2005).

Results will also benefit of improved Olimpia financial statements, which, thanks to operations carried out in 2003 and to Telecom Italia dividends, will reach financial and economic stabilization.

Technology Day

Group outlook for the 2004-2006 period will be presented during the Technology Day, that will take place on 17 May 2004 at 9:30am ( 8:30 GMT ) at Pirelli RE Headquarters in viale Sarca 214. During the meeting, Marco Tronchetti Provera, Chairman of Pirelli & C. SpA, will also show main technologies and new R& D project of Pirelli in all its activity sectors will be also presented.

Summaries of the financial statements for the period ending March 31, 2004 ; pro-forma consolidated representation of Pirelli & C. S.p.A.'s balance sheet and income statement at 31/03/2004 assuming full consolidation of Olimpia S.p.A. and the shareholders' equity method valuation of the Telecom Italia S.p.A. equity stake


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