Pirelli studying plan to offset weakening European demand - source
MILAN, April 7
MILAN, April 7 (Reuters) - Tyremaker Pirelli plans to offset weakening demand in Europe for its premium tyres by shipping tyres produced in Europe to emerging markets, where demand is growing, said an industry source on Sunday.
Pirelli said on Friday that it is carrying out a "significant review of its commercial structures" in response to weak economic conditions in Europe. Lack of visibility on business conditions has forced it to delay the release of its new 2013-2017 business plan to November from May 8, it said.
"The idea is to keep the factories busy in Europe where these tyres are made producing premium tyres to serve growing markets elsewhere," the person said. "It entails some extra transport costs, but the margin on premium tyres is enough to cover it."
Another person familiar with the matter said that Pirelli had no plans to cut production or close factories outside of Europe, indicating that the company is counting on growing sales in emerging markets to soak up European production as demand in Europe slows. (Reporting by Jennifer Clark and Lisa Jucca)
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