Italy’s Pirelli, the fifth-biggest tyre maker in the world has announced it sees the 2015 operating profit soaring 11 percent after last year’s financial figures were level with forecasts.
Pirelli builds tyres for motorcycles, cars and Formula 1 monoposts and has been hard a t work increasing its earnings margins in the near past as the European auto sales were at a historic two-decade low after a six-year slump in demand. The company managed to post increasingly strong sales of premium tyres that ultimately offset lower demand from Latin America. Pirelli has been focusing since 2010 on the luxury market, mulling production for such brands as Mercedes, Audi and BMW – the German trio being able to withstand the battered European market better than mass-market rivals. Last year alone Pirelli deliveries of premium tyres jumped almost 18 percent.
The company is now mulling 2015 earnings before interest and tax, after restructuring costs, of around 930 million euros, with revenues expected to climb by up to 6.5 percent to around 6.4 billion euros, as investments fall below 400 million euros. Chairman and CEO Marco Tronchetti Provera said in a conference call with analysts that the company will maintain its policy of divesting about 40 percent of net profits in dividends towards the shareholders. Higher-margin products, a better price mix and efficiency measures led to Pirelli post 2014 operating profit of 838 million euros, a surge of 6.8 percent from the same period of 2013. Revenues slid modestly to 6.02 billion euros, from 6.06 billion for the year-ago period.