Pirelli Profit Margin Outlook Up in 2012 image

Pirelli recently raised its forecast for profit in 2012, planning to focus more on the premium tire market.

The company forecasts its margin on earnings before interest and taxes to pass 12% of sales, compared to a previous forecast of between 11% and 12% of this year’s sales. Pirelli also trimmed its revenue target in 2012 to around 6.6 billion euros, from a previous target of 6.7 billion euros.

Pirelli is not drawn back by the general slowdown in the demand for tires and plans to improve its product mix by increasing its focus on the premium tire segment. After the profit margin upgrade the company’s share were up 9% and 7.3% at 1625 GMT, while the European sector .SXAP was up 0.9%.

“The guidance improvement is clearly good news,” said one brokerage in a post-earnings note. “The company is guiding for an EBIT which is at least 792 million euros ($1.04 billion), or 8.9% higher than consensus.”

For the fourth quarter, revenue was 1.38 billion euros, up 13%. Pirelli’s fourth-quarter operating profit was 131 million euros, up 30%. The company did not provide a fourth-quarter net profit figure.