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MILAN, March 31 (Reuters) - A planned merger between Pirelli’s top shareholder ChemChina and Sinochem Group will not have any impact on the Italian tyremaker, its chief executive said on Wednesday.
China has approved a long proposed merger between the two state-run companies, the country’s state assets regulator said on Wednesday.
This raised speculation that ChemChina, which holds a 37% stake in Pirelli, would further increase its fundraising efforts to cut its debt ahead of the merger, including considering trimming its international investments.
Pirelli Chief Executive Marco Tronchetti Provera said the merger would have “absolutely” no impact on the company’s shareholdings nor on the way it is managed.
“Nothing changes, 100%,” he said following the presentation of Pirelli’s new business plan, which targets sales and profitability to return close to pre-COVID-19 levels next year.
Pirelli shares closed down 3.55%.
ChemChina, China’s Silk Road Fund and Tronchetti Provera’s vehicle Camfin, which together count some 56% of Pirelli shares, are tied into a shareholder agreement expiring in 2023.
The manufacturer of tyres for Formula One and high-end carmakers such as BMW and Audi said on Wednesday it expected its margin on adjusted operating profit (EBIT) to rise to between 16-17% next year and to between 19-20% in 2025.
It fell to 11.6% in 2020 from 17.2% in 2019, before the coronavirus pandemic broke out globally.
A Milan-based trader said the selling of Pirelli shares were mainly due to profit-taking following a rise of over 20% in the past two months.
“The plan’s figures don’t look particularly exciting,” he said.
Pirelli said the business plan was centred on the high-value tyre segment - those of 18 inches and above, used in popular cars such as SUVs - where it leads in China and which is expected to grow faster than car production in the coming years.
The company added it would also increase its efforts on speciality products, such as higher profitability tyres for electrified vehicles.
The company expects 60% of new cars fitted with Pirelli tyres will be either electric or hybrid by 2025. (Reporting by Giulio Piovaccari, additional reporting by Giancarlo Navach, editing by Bernadette Baum and Sonya Hepinstall)
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