MILAN, Italy — Pirelli & C. S.p.A.'s outlook for the fiscal 2020 has improved marginally based on an apparent "improvement in demand" versus previous projections.
Rising demand, Pirelli said in its third-quarter financial report, mostly will be driven by the original equipment (OE) segment in the Asia-Pacific (APAC) and North America regions.
The tire maker said it was taking "a cautious view" on Europe due to the recent reintroduction of COVID-19 restrictions following a resurgence of the pandemic.
For the full year, Pirelli foresees a decline in volumes for the group of between 17% and 18%, a marginal improvement from the previous forecast of drops of 18% to 20% announced in August.
Taking into account a 1.5% positive price/mix effect and an expected 5% negative currency impact, the Italian tire maker expects full-year revenues of about $4.75 billion, up slightly from the earlier forecast.
Pirelli said it expects its adjusted EBIT margin to come in at between 11.5% and 12%, down from the previous indication of around 12% to 13%.
This, it said, was due to a worsening of exchange, which will also affect the cost of raw materials.
In addition, Pirelli now expects an increase in costs of about $22 million — to over $100 million — linked to the reduction of inventories of finished products in the third quarter.
In its updated full-year outlook Pirelli said it anticipates a 17% decline in the car market in 2020, versus an estimated 19% drop published in August.
Demand in the OE segment is set to fall 18%, up from an earlier estimate of a 23% decline. Pirelli also increased its estimates for the replacement channel by two percentage points to a 16% drop.
The Italian tire maker said its "car new premium" market, comprising tires with rim diameters of over 18 inches, was its "most resilient segment," with an expected decline of 10%.
The standard segment is set for an 18% decline, a slight improvement versus the previous forecast of 20% drop, according to Pirelli.
