MILAN — Despite double-digit declines in first half results and a net loss of more than $119 million, Pirelli & C. SpA said it has "contained" the effects of the COVID-19 pandemic, learning from experience gained in China.
Pre-tax operating earnings (adjusted EBIT) plunged 85% to $73.5 million during the first half, on 31.6% lower sales of $2 billion, the company announced Aug. 5. The net loss was $112 million, compared with a profit of over $340 million in the first half of 2019.
Pirelli cited the impact of the COVID-19 pandemic-related lockdown measures, as well as a "general worsening" of economic conditions, for a marked drop in consumption and production.
Unit demand for car tires fell 36% in the second quarter, Pirelli said, dragging down demand in the half by 28%.
Pirelli said the tire sector was strongly impacted by COVID-19 globally in the first six months of the year, as economic conditions generally worsened while consumption and production decreased.
However, the tire maker said its "efficiencies and cost containment actions" limited the impact of the reduction in demand and the slowdown.
The Milan-based manufacturer said it used experience it gained in China — where production and commercial activities have returned to normal — to respond promptly to the pandemic and define an action plan in April.
As for the 2020 outlook, the tire maker lowered its sales targets again, now expecting revenues to come in at approximately $5 billion, down slightly from projections in April.
Impacted by exchange rates, raw materials and increased costs, Pirelli said its adjusted EBIT margin is expected to come in at around 12%-13%, against previous indication of around 14%-15%.