Pirelli raises its annual financial forecast

Pirelli has revised up its financial outlook for 2020 on the back of expected improvement in demand, mainly in the OE segment in Asia Pacific and North America.

The tire maker said it is "looking with caution" at Europe due to the recent introduction of new restrictions following the resumption of the coronavirus pandemic.

Throughout the year, Pirelli predicts a decline in sales of about 17-18%, slightly less than the 18-20% forecast in August. Annual revenue will be around 4.18-4.23 billion euros. This is slightly higher than the 4.15-4.25 billion euros that the company announced in August 2020.

Pirelli expects its adjusted profit margin to be around 11.5-12%, down from the previous 12-13% on weaker exchange rates and higher raw material costs.

In addition, Pirelli expects a cost increase of € 20 million due to the reduction in finished goods inventories in the third quarter of the year. The costs are now estimated at € 90 million.

In an updated annual forecast, Pirelli said it expects a 17% decline in the auto market, slightly better than the previous forecast when it came to a 19% decline.

Demand in the OE segment will fall by 18% YoY (up 23% previously), and in the replacement segment by 16% (previously down 18%). The Italian tire maker also said that the strongest segment of the market is premium large diameter tires, for which demand will decline by only 10%. In the standard tire segment for the year as a whole, Pirelli expects the decline to be only 18%, rather than the 20% expected in August.