According to the Pirelli Group, the first nine months of the 2009 fiscal year delivered “positive” operating indicators that are “overall in line with what was set out in the 2009-2011 industrial plan.” The company forecasts that, barring unforeseeable events, it will in the full year 2009 reach the targets identified in the plan presented last February, and due to Pirelli Tire’s positive performance may even surpass these targets, reported Tyres & Accessories.

Overall, the Pirelli Group closed the third quarter with attributable consolidated net income of 11.9 million euros, compared with a loss of 15.1 million euros in the corresponding period of 2008, while total net income was 3.7 million euros compared with a loss of 26.8 million euros in the third quarter of 2008. During the nine months to Sept. 30 attributable consolidated net income amounted to 18.2 million euros, while total net income was minus 8.7 million euros. During the third quarter the Group sold a total of 123,923,185 ordinary shares in Telecom Italia SpA. As of today Pirelli holds no Telecom Italia shares. The net financial position of the Group as of Sept. 30 was minus 691.4 million euros, decidedly improved over the negative 1,107.6 million euro figure as of June 30 (1,055.7 million euros as of Sept. 30 2008), thanks to the positive contribution of cash flow from Pirelli Tire and an income of around 130 million euros gained from the sale of Telecom Italia shares and the success of the Pirelli RE capital increase.

Pirelli Tire revenue in the third quarter amounted to 1,042.7 million euros, down 1.9% on the corresponding quarter of  2008. Furthermore, unlike in the two previous quarters in 2009, third quarter revenues showed a positive organic variation of 1.4% thanks to a much less negative volume shift (-3.3% compared with -13.3% in the second quarter and -18.1% in the first quarter) and to a positive price/mix trend (+4.7%). As of Sept. 30, revenues amounted to 2,958.6 million euros for the nine-month period, down 8.4% compared with the corresponding period last year. Net of exchange rate effects, which were negative for 2.6%, the organic variation was a decline of 5.8%, with a negative variation in volumes of 11.6% and a positive variation in price/mix of 5.8%.

EBITDA before restructuring charges amounted to 142.0 million euros in the third quarter (133.0 million euros in the second quarter of 2009 and 91.8 million euros in the third quarter of 2008), with an improvement in the EBITDA margin to 13.6%, compared with 8.6% a year earlier. EBITDA before restructuring charges as of Sept. 30 was 382.8 million euros for the first nine months, up 1.2% compared with 378.3 million euros in the corresponding period of 2008, or 12.9% of revenues.

EBIT before restructuring charges stood at 94.3 million euros in the third quarter compared with 40.8 million euros in the third quarter of 2008, with an EBIT margin improved to 9%. As of Sept. 30, EBIT before restructuring charges for the first nine months of 2009 was 240.8 million euros, or 8.1% of revenues. EBIT post-restructuring charges amounted to 85.9 million euros in the third quarter, with a margin of 8.2%. As of Sept. 30, EBIT post-restructuring charges amounted to 222.7 million euros for the nine-month period, or 7.5% of revenues. Net income in the third quarter stood at 36.7 million euros compared with 6.6 million euros in the third quarter of 2008. Net income as of Sept. 30 amounted to 90.9 million euros compared with 108.3million euros a year earlier. Pirelli Tyre’s financial position was minus 1,298.6 million euros, improved from the negative figure of 1,467.0 million euros as of June 30.

In the Consumer business (passenger car, light commercial vehicle and motorcycle tyres), revenues in the third quarter amounted to 736 million euros, up 3.1% (+5.3% in organic terms, net of exchange rate effects) compared with 713.6 million euros in the same period of 2008, while EBIT before restructuring charges rose to 64.1 million euros from 12.7 million euros, with EBIT as a percentage of sales up to 8.7% from 1.8% in the same period last year. The strong improvement in profitability in the third quarter was linked to the decline in raw materials costs, the focus on price/mix, actions for greater competitiveness and a recovery in the market, accompanied by sales growth at higher rates than the market in all areas. The replacement channel in particular showed growth rates higher than in the corresponding period of 2008 and the OE channel rates of decline that were smaller than in the previous quarters.

In the Industrial business (tires for industrial vehicles and steelcord) revenues in the third quarter stood at 306.7 million euros (349.3 million euros in the third quarter of 2008) and EBIT before restructuring charges amounted to 30.2 million euros (28.1 million euros in the third quarter of 2008), with improvement in the EBIT margin to 9.8%, compared with 8% a year earlier. As of Sept. 30, revenues in the first nine months of 2009 amounted to a total of 850.6 million euros, down 16.7% compared with the like period of 2008 (1,021.3 million euros), while EBIT before restructuring charges was 80.3 million euros, with an EBIT margin of 9.4%, compared with 92.8 million euros in the first nine months of 2008, with an EBIT margin of 9.1%.

Pirelli notes that the industrial segment, more cyclical because it is linked to macroeconomic performance and to certain specific areas such as public works and large construction projects, registered a slowdown in both sales channels in the first nine months of 2009. The strategic positioning of Pirelli Tire, focused in high growth economies both in production and in sales, allowed the company to maintain good levels of profitability, even in the presence of an unfavourable trend in sales volumes, which fell 19.8% and were in part counter-balanced by a positive variation in price/mix (+7.3%), in organic terms a decline in sales of 12.5%. Exchange rate effects weighed negatively for 4.2%.  

As of Sept. 30, Pirelli Tire has 27,283 employees, down 1,318 compared with Dec. 31, 2008. This reduction is, Pirelli notes, in line with the restructuring plan outlined in February’s three-year plan.

In light of the results registered in the first nine months of the year, Pirelli expects that, barring unforeseeable events, the group will reach the targets identified in its 2009-2011 industrial plan, and thanks to Pirelli Tire’s strong performance even surpass some indicators. Consolidated revenue is expected to reach more than 4.3 billion euros and the EBIT margin forecast at approximately 4.5%, even after greater restructuring charges than foreseen in the industrial plan.

The group forecasts a further improvement to a level of net debt of about 700 million euros, thanks to the positive contribution of cash flow from Pirelli Tire, sales of non-core assets, and the success of the Pirelli RE capital increase. For Pirelli Tire, in particular, the results in the first nine months allow the company to increase its 2009 revenue target from 3.8 billion euros to about 3.9 billion euros. The EBIT margin post restructuring charges is foreseen at year-end equal to or greater than 7% despite the increase in the prices of some raw materials, thanks to benefits deriving from restructuring actions, the positive channel mix and prices holding up both in the Consumer segment and in the Industrial segment. The 2009 target for the net financial position (-1.3 billion euros) was reached a quarter ahead of time and is expected to slightly improve at the end of the year.