MILAN — Pirelli & C. S.p.A. expects a considerable decline in first quarter sales from its Asia-Pacific region, following the outbreak of the coronavirus in China.
The Italian tire maker's February sales figures for the region are down 80%, and the company said it anticipates its sales in March to be about 30% below average.
As a result, Pirelli said it is likely to see a $32.5 million decline in first quarter sales for its APAC operations, but expects that impact to be offset during the year.
With more than $976 million of annual sales, China contributes about 12% of Pirelli's overall sales and has strong impact on the company's earnings.
Pirelli employs 4,000 people at its operations in China, which includes tire plants in Yanzhou, Jiaozuo and Shenzhou. Of the three factories, two were closed temporarily in response to the outbreak of the virus, while the Yanzhou facility is running at low capacity utilization.
The company also suspended operations its Asia-Pacific headquarters in Shanghai; Those operations are being run by offices in Tokyo and Singapore.
However, with the stabilization of the virus in different regions of China, Pirelli expects to opertions to return to normal in the coming weeks, according to Marco Tronchetti Provera, executive vice chairman and CEO.
Expatriates were returned to their homeland upon the outbreak of the disease, and Pirelli expects many to return to China within a few days, Mr. Tronchetti said when presenting the company's Industrial Plan 2020-22 on Feb. 19.
"We have set up a task force for the region, and we are taking all the measures needed to protect our employees and the workplace," he said.
As part of the measures, travel to and from China is blocked and all travel to the APAC region is discouraged.