Pirelli & C SpA (PLLIF) Q2 2024 Earnings Call Highlights: Strong High-Value Segment Growth ...

GuruFocus News
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In This Article:

  • Revenue: EUR3.45 billion, with a 4.6% organic growth.

  • Adjusted EBIT: EUR539 million, up 4.2% year on year, with a 15.6% margin.

  • Net Income: EUR231 million.

  • Net Financial Position: Negative EUR2.98 billion.

  • Net Cash Absorption Before Dividends: EUR519 million.

  • Volume Growth: 1.8% in the first half of 2024.

  • Price Mix Improvement: 2.8% in the first half.

  • Exchange Rate Impact: Negative 4.3% in the first half.

  • Gross Debt: EUR4.16 billion.

  • Liquidity Margin: Approximately EUR2.4 billion.

  • Investment: EUR144 million in the first half of 2024.

  • High Value Segment Growth: 7% growth in both quarters.

  • Standard Segment Volume Decline: Minus 8% for cars 17 inches and below.

  • CO2 Emissions Reduction: 18% compared to the first half of 2023.

  • Water Withdrawal Reduction: 15% reduction compared to the first half of 2023.

Release Date: August 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Pirelli & C SpA (PLLIF) reported a 4.6% organic growth in the first half of 2024, driven by a solid commercial performance.

  • The company achieved an adjusted EBIT of EUR 539 million, marking a 4% increase from the previous year, with a profitability improvement of 0.5 percentage points.

  • Pirelli's high-value segment showed resilience, growing by 7% and outperforming the standard segment.

  • The company made significant strides in sustainability, reducing CO2 emissions by 18% and water withdrawal by 15% compared to the first half of 2023.

  • Pirelli's liquidity margin is strong, covering financial debt maturities until Q1 2027, with a pro forma basis extending to Q1 2028.

Negative Points

  • Pirelli faces geopolitical uncertainties and potential international trade tensions, which could impact future performance.

  • The company reported a negative net financial position of approximately EUR 2.98 billion, despite reducing it compared to June 2023.

  • Exchange rates negatively impacted sales by 4.3% in the first half of 2024, with continued volatility expected.

  • The standard segment is declining, with Pirelli's volumes for cars 17 inches and below decreasing by 8%, compared to a 1% market decline.

  • Raw material costs are expected to have a slight negative impact for the full year, with potential increases in natural rubber and oil derivatives prices.

Q & A Highlights

Q: The new margin guidance implies slightly lower margins in the second half compared to the first half. What factors are contributing to this? A: Marco Tronchetti Provera, Executive Vice Chairman of the Board, explained that the raw material trend is expected to be negative in the second half due to commodities like natural rubber and oil derivatives. Additionally, there are anticipated negative impacts from foreign exchange rates.

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