August 1, 2019 / 4:28 PM / 25 days ago

Pirelli cuts revenue guidance for second time this year

FILE PHOTO: Formula One F1 - Italian Grand Prix - Circuit of Monza, Monza, Italy - August 30, 2018 General view of Pirelli tyres REUTERS/Stefano Rellandini/File Photo

MILAN (Reuters) - Italian tiremaker Pirelli (PIRC.MI) cut its revenue guidance for the second time this year, joining a string of suppliers hit by a broader auto industry downturn during the last quarter.

Pirelli, which makes tires for Formula One racing teams and premium automakers like BMW (BMWG.DE) and Audi, on Thursday cited prolonged weakness in the new vehicle market and the tougher competitive environment.

It now expects its revenue to grow between 1.5% and 2.5% this year, versus an already-lowered guidance of between 3% and 4% set after releasing first-quarter results.

Last month German auto supplier Continental (CONG.DE) cut its 2019 outlook, also citing expectations for a fall in global vehicle production, while France’s Michelin said its earnings felt the effects of shrinking vehicle production.

Releasing first half results, Pirelli also cut its forecasts for its margins on adjusted earnings before interest and taxes (EBIT) before start-up costs to 18-19% versus a previous target of at least 19%.

The Milan-based company said its adjusted EBIT before start-up costs were slightly down in the January-June period to 462.4 million euros ($511 million), in line with a market consensus provided by the company.

Chinese chemicals group ChemChina this week committed to retaining its major stake in Pirelli until 2023.

Reporting by Giulio Piovaccari; Editing by Keith Weir

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