Pirelli & C SpA (PLLIF) Q3 2024 Earnings Call Highlights: Strong Profitability Amid Market ...

GuruFocus News
4 min read

In This Article:

  • Revenue: Approximately EUR5.2 billion with organic growth of 4.9%.

  • Adjusted EBIT: EUR816 million, up 4.3% year-over-year, with a margin of 15.7%.

  • Net Profit: EUR371 million, stable compared to the same period of 2023.

  • Net Financial Position: Negative EUR2.82 billion, down EUR322 million compared to September 2023.

  • Net Cash Flow Before Dividends: Negative EUR357 million, improved by EUR11 million compared to the first nine months of 2023.

  • CapEx: EUR236 million, mainly for high value activities and sustainability support.

  • Gross Debt: Approximately EUR4 billion, with a net financial position of about EUR2.8 billion.

  • Liquidity Margin: Approximately EUR2.45 billion, covering debt maturities until Q4 2028.

  • Cost of Debt: 5.15%, slightly down compared to June 2024.

Release Date: November 07, 2024

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

Positive Points

  • Pirelli & C SpA (PLLIF) reported solid volume growth and improved profitability, achieving the highest profitability among tier one players.

  • The company successfully reduced its debt and generated positive cash flow in the third quarter due to efficient working capital management.

  • Pirelli & C SpA (PLLIF) confirmed its 2024 targets, supported by its strong positioning in the high-value market segment and resilient business model.

  • The company is advancing in connectivity and sustainability, with a partnership with Bosch to integrate tire sensors into car control systems.

  • Pirelli & C SpA (PLLIF) achieved significant efficiencies, offsetting inflation impacts and progressing on its decarbonization journey with validated targets by the Science Based Targets initiative.

Negative Points

  • The company faces an uncertain environment with geopolitical tensions, slowing demand from carmakers, and raw material volatility.

  • Pirelli & C SpA (PLLIF) reported a negative net financial position of EUR 2.82 billion, despite improvements compared to the previous year.

  • The replacement market in China showed weakness, and the company does not expect a recovery in the last quarter of the year.

  • The company anticipates a negative impact from raw material costs in the fourth quarter, which could affect profitability.

  • Pirelli & C SpA (PLLIF) is exposed to potential risks from geopolitical developments, such as the Golden Power investigation concerning its Chinese stakeholder.

Q & A Highlights

Q: What is Pirelli's strategy if the US raises tariffs on tires from Mexico or Latin America? Can you cover that through pricing or expand local production? Also, can you provide details on the Golden Power investigation? A: Pirelli plans to increase production capacity in North America, following a local-for-local strategy. Currently, 60% of sales are supported by local production in Mexico and Georgia. Regarding the Golden Power investigation, it concerns a possible breach by CNRC of organizational and functional links with Pirelli. The outcome is pending, and CNRC believes they can defend their position.

Recommended Stories