2018 saw operating trends in line with targets thanks to the resilience of the business model, with our focus on High Value, the performance of which was better than that of the market.

Organic revenue growth of +3.7%, thanks to the reinforcement registered in all Regions of the High Value segment, which today accounts for 63.7% of total revenues (+6.2pp vs. 57.5% in 2017); High Value volumes +11% with an improvement of the market share in Car ≥18” (Pirelli sales volumes +14% in Car ≥18” compared with market growth of +10%);

Reduction of exposure to the Standard segment, with a -14% volume as a consequence of the acceleration of the exit from less profitable, lower rim size products in a context of general slowdown in the Standard segment;

Improvement of price/mix, at +6.8% in 2018 (target +6.5%), as a consequence of the growing weight of the high end, the progressive improvement of the product and channel mix and price increases in emerging countries to offset exchange rate volatility;

Acceleration of the efficiencies’ program beginning from 3Q (€70 million for FY 2018, 1.3% of revenues) which more than offset costs’ inflation (-€48 million); Rapid implementation of actions to recoup costs (~€50 million) to counter the worsening market trend of the Standard segment in emerging countries, in particular in South America;

Net Financial Position negative €3,180 million, an improvement compared to €3,219 million on 31 December 2017; the Net Financial Position at the end of 2018 includes ~€140 million consisting of advances on financial investments in the JV in China and the slowdown/restructuring in Brazil to be recouped between now and 2020; consequently the Net Financial Position / adjusted EBITDA before start-up costs reached 2.49x (2.7x in 2017, 2.35x the 2018 target);

Investments of €463 million (€489 million in 2017), mainly destined to the growth of High Value and the improvement of mix and quality.

  1. In accordance with IFRS 15 (starting from January 1st 2018), some costs for variable considerations paid or payable to indirect customers & mainly linked to achieving sale targets are recognized as a reduction of revenues;
  2. Before amortization of PPA, non-recurring items, restructuring costs, other adjustments and start-up costs.

Source: FY 2018 Preliminary Results Presentation

Last Revised: 28 Feb 2019