MILAN, Italy (April 2, 2015) —Pirelli & C. S.p.A. is projecting 11-percent growth in pre-tax operating earnings this year, to $1 billion, on the basis of above-average sales growth in the firm's premium tire segment and $97 million in operating efficiencies.
That scale of earnings growth, coupled with projected sales growth of 6.3 percent, will raise the operating ratio about half a percentage point to 14.5 percent, the company said in documents presented at its latest board meeting.
Pirelli also disclosed it has completed the sale of its steelcord activities in Yanzhou, China, to Belgium's N.V. Bekaert S.A., thus finalizing the $350 million transfer of its steelcord business to Bekaert. The business represented about $430 million in annual sales.
The operating earnings cited are after non-recurring and restructuring charges of about $43 million, Pirelli said. These charges reflect the tire maker's estimates for dealing with currency translation difficulties related to its operations in Argentina and Venezuela, where local economic turmoil is prompting Pirelli to scale back its operations, particularly in Venezuela.
Overall sales should reach nearly $6.9 billion, Pirelli said, based on several factors, including: growth of premium volume of at least 10 percent; an improved price/mix factor of 4 or more percent; a relatively low foreign exchange impact of about 1 percent; and operating efficiencies valued at nearly $97 million.
Pirelli expects capital investments of about $430 million this year, down percent from 2014. Of the total, 37 percent will be for developing premium capacity and 35 percent to improve mix and quality.