MILAN, Italy (March 16, 2016) — Pirelli & C. S.p.A. has “deconsolidated” its operations in Venezuela due to a “deterioration of the macro-economic context, growing restrictions on the conversion of foreign currencies and the reduced availability of US dollars.”
“In line with other multi-nationals, Pirelli therefore proceeded — with reference date Dec. 31, 2015 — to the accounting deconsolidation of Pirelli de Venezuela C.A., the value of the stake being booked at fair value (equal to nearly $21 million),” the Italian tire maker disclosed in its fiscal 2015 earnings report.
The deconsolidation had a negative impact of $615 million on its accounts. Of that amount, said the company, $306 million related to the Venezuelan company's positive net financial position.
Pirelli said that the Venezuelan operation would no longer be included in its results, “and therefore will no longer bear the impact of the recurring devaluations which we have seen in recent years, both at the level of results and the net financial position.”
Pirelli operates one tire plant in Venezuela, in Guacara, making passenger and light truck tires with 700 employees. Capacity at the 26-year-old plant is listed at 4,000 units a day, although Pirelli said in its earnings report that the plant operated at only about 50-percent capacity throughout 2015.
Shahrzad Pourriahi is a reporter with European Rubber Journal, a London-based sister publication of Tire Business.