The Italian tyre maker Pirelli is not going to leave Egypt, despite the turmoil in the country, according to comments by high-ranking officials within the company.
Serving as a very good basis for export purposes and as the world’s fifth-largest tyre maker is looking to emerging markets to offset weakness in Russia and Europe, Pirelli is not planning to leave Egypt, the group being present there since 1999.
“We don’t have any reason to leave the Egyptian market because it’s also a good basis for exports,” Pirelli chairman and CEO Marco Tronchetti Provera said in a conference call on second-quarter results.
And there is a good reason for that, as the Italian group generates almost 60 percent of its sales in emerging economies and generated cost efficiencies by building low-cost manufacturing sites in these countries. “We build factories not for the next months but for the next decades,” Tronchetti Provera said.
Also, they need these emerging markets sales, as they encountered declines in the strong markets of Russia and Europe. The big eastern country has had a slowdown in economic activity, which in turn lead to lower demand and higher costs due to underused production facilities. Also, business in Europe is still slow, due to the continued crisis, but Chief Commercial Officer Andrea Pirondini said he was more optimistic for the second quarter, with some good news from recent German car sales. “Some fundamentals are going in the right direction,” he said.
Pirelli’s operating profit in the second quarter grew 4.2% on the year to 200.9 million euros ($266 million), boosted by business in the higher-margin premium segment in Latin America, Asia and Africa. Pirelli is now shifting focus to the premium sector, with higher margins for profit and wants to become global leader in the segment by 2015.