Pirelli SpA achieved $1.83 billion in revenue and profit of $124.6 million during the first quarter of 2003.
The revenue gain represents an 11.7% year-over-year increase, while the profit increase represents a gain of nearly 5% versus the same period last year. (The company did not provide a region-by-region financial breakdown.)
Pirelli cited a 15.1% improvement in price/mix as a driver of growth during the first quarter of 2023 and says it outperformed the overall market by 2.3% in achieving 4.9% year-over-year volume growth in the 18-inch and higher tire category, despite a total 3.1% drop in tire volume demand.
At the same time, Pirelli reported “further reduction … of the exposure to the standard (tire) segment” - in other words, tires with wheel diameters of 17-inches and lower. (The company reported a volume drop in this category of 11.3%, “compared with the market’s -6%.”)
“There was a continuing focus on a mix always oriented towards products with higher rim sizes,” according to Pirelli officials.
In the original equipment channel, Pirelli says its growth “was in line with the market” in 18-inch and above tires during the first three months of the year, achieving 7% growth.
In comments made during Pirelli’s 1Q 2023 earnings call, Andrea Casaluci, the company’s general manager of operations, said that Pirelli’s OE performance in the “standard” tire category, “reflects (Pirelli’s) greater selectivity in this channel,” plus the impact of the Russia-Ukraine war.
Focus on EVs
During the first quarter, Pirelli reports that it secured “around 60 new technical homologations with the main makers of prestige and premium cars,” mainly on vehicles that have 19-inch and above wheels.
“There was a further strengthening in the positioning in electric (vehicles) thanks to a portfolio of over 350 homologations at the global level, with Pirelli enjoying 1.5% more share of market in the EV category than internal combustion engine vehicles in the same segment.”
During Pirelli’s investor call, Casaluci said that EVs “are going to represent one of the most important opportunities we have in front of us as a high-value leader. The average selling price on EVs in replacement is around 15 percentage points higher than the equal size for the internal combustion engine.
“We have already reached a market share on EVs 1.5x higher versus the one on internal combustion engine and this is expected to be reflected in the replacement channel, starting from 2024.”
2023 outlook
The overall industry “framework remains extremely volatile, with a general slowdown in the economy and consumption,” Marco Tronchetti Provera, Pirelli’s vice chairman and CEO, told investors.
That said, the passenger car tire market “is expected to be broadly stable year-on-year, but with opposite trends between high-value and standard. High-value confirms its resilience,” with growth predicted in the 18-inch and above segment compared to a projected 2% decline in smaller tires.
Tronchetti said Pirelli projects volume growth of 18-inch and above tires “at a low single-digit rate (3% year-over-year), with a gradual recovery in demand in the second half of the year, thanks to a recovery in China and other major markets.”
Overall, Pirelli expects to achieve revenue of $7.1 billion to $7.3 billion for full-year 2023, with a price/mix improvement of 4.5% to 5.5%, “benefitting from price increases in 2022 and those announced earlier this year.” (In North America, Pirelli raised the price of its passenger and light truck tires three times during 2022 – first in January, with an increase of up to 10%; then in April, with another hike of up to 10%; and in June 2022, with yet another increase of up to 10%.)
During Pirelli’s investor call, Casaluci told analysts that the company expects to see OE volume gains of around 8% to 10% in both North America and Europe “and as always, more resilient in the 18 inches and above” category, which “goes up normally four to five percentage points more than the overall market. We do expect to see a rebound of the market in China … compared to the first quarter."
For the full-year, Pirelli also plans to invest more than $430 million in technology upgrades at its plants, which are currently at 90% utilization, as well as an increase in “high-value” tire manufacturing capacity at its factories in Romania and North America.
Pirelli’s plant in Rome, Ga., can make 1,200 tires per day at full throttle, according to MTD’s 2023 Facts Issue. The company’s plant in Guanajuato, Mexico, which opened in 2018, can produce 22,000 units per day at maximum capacity.
