* Sees 2014 revenues at 6.2 bln euros, down from fcast of
* Confirms 2014 EBIT target, to raise prices in Latin
* Cautiously optimistic on gradual recovery in Europe
* CEO says Pirelli outperforms market in Russia
(Adds details, context, comments)
By Agnieszka Flak
MILAN, March 27 Pirelli, the world's
fifth-largest tyremaker, has cut its sales target for this year,
citing worse-than-expected currency effects, after delivering
2013 results in line with its own previously-lowered forecasts.
The Italian company, whose tyres equip motorcycles, cars and
Formula 1 racers, said it expects to report sales of 6.2 billion
euros ($8.52 billion) this year, up nearly 1 percent on 2013 but
down from a previous target of 6.6 billion euros. The adjustment
was largely expected.
Pirelli said it expected to be hit hard by unfavourable
exchange rates in emerging markets, especially in Latin America,
its single largest region. The group expects the total impact on
the year's operating result from currency headwinds of 110
million euros this year, more than double its previous estimate.
However, with higher volumes, lower raw material costs and a
better price mix, 2014 earnings before interest and taxes were
still expected at around 850 million euros. Pirelli will raise
prices in Latin America to counter some of the currency effects.
"In Argentina and Venezuela the price increases are in two
digits and in Brazil it's one digit. That's the move we are
making in the market," Pirelli CEO Marco Tronchetti Provera told
analysts during a conference call.
The group proposed to pay a dividend of 0.32 euros per
ordinary share, flat from the previous year.
Pirelli has managed to boost margins in the face of
declining European car sales by focusing since 2010 on more
expensive tyres for brands such as Mercedes, Audi
and BMW - luxury carmakers that have
weathered the downturn better than their mainstream rivals.
Europe's car industry has endured a six-year slump in which
auto sales hit a two-decade low.
Tronchetti said he was "cautiously optimistic" about the
gradual recovery in Europe, where car sales rose in February for
a sixth straight month.
Pirelli plans to accelerate its shift into the premium tyre
segment, which it expects to account for 44 percent of sales
volumes by 2016 against 38 percent in 2013.
Pirelli struck a deal with Rosneft earlier this
month that made the Russian oil major the group's single largest
shareholder, a move expected to boost the tyremaker's expansion
ambitions in that country.
The Italian company currently records only around five
percent of its sales in Russia, but the country's size, its
climate and bad roads make it a prime market for high-margin
While analysts said Russia's annexation of Ukraine's Crimea
and the possibility of a recession in Russia have cast some
doubts over those growth plans, Tronchetti was optimistic on
Pirelli's performance there.
"During the first two months we had a double digit sales
volume growth year-on-year and that is in a downturn market. The
market was down 6.5 percent," Tronchetti said, attributing the
improvement to better distribution and an adequate product
He also said the weakness in the Russian rouble made it
cheaper for Pirelli to export into Europe.
Pirelli said EBIT last year stood at 791 million euros
compared with 792.5 million euros the previous year and with a
forecast of 788 million euros in an analyst consensus.
Revenue rose 1.2 percent to 6.15 billion euros as strong
demand in emerging markets, especially for premium tyres, offset
weakness in Europe and currency woes. Excluding currency
effects, revenues rose 8.4 percent.
($1 = 0.7278 Euros)
(Editing by Sonya Hepinstall)