Pirelli FY 2022 targets update: price/mix & efficiencies more than offsetting raw mat. & inflation

Ukraine conflict and China slowdown affecting profitability; solid NCF target confirmed

1. adjusted for goodwill and PPA intangibles

In view of the outlook for 2022, Pirelli expects:

  • Revenues ranging ~€5.9÷~€6.0 billion (previous estimate: ~€5.6÷~€5.7 billion), with:
    • Group volumes growing ~+0.5%÷~+1.5% (previous indication: ~+1.5%÷~+2.5%); High Value volumes are expected to increase ~+5.5%÷~+6% (previous indication: ~+6%÷~+7%) while Standard volumes are expected to decrease ~-5%÷~-4% (previous indication: ~-3%÷~-4%)
    • price/mix growing ~+10%÷~+11% (previous indication: ~+5.5%÷~+6.5%) thanks to further price increases and a more favourable mix
    • exchange rate impact now expected to be ~flat (previous indication: negative ~-1.5%÷~-2%)
  • adjusted EBIT margin is expected to be ~15% (previous indication: ~16%÷~16.5%), with increasing inflation and raw material costs more than offset by the price/mix and efficiencies; further actions are being planned to improve this profitability target which prudently reflects:
    • the impact of the Russia-Ukraine crisis, with the confirmation of an adj. EBIT of €890 million, as already indicated in the sensitivity in February, although this did not take into account the blocking of import/export flows
    • the drop in demand in China, due to the new lockdown measures, being partly offset by the better performance expected in North and South America
  • Net Cash Flow before Dividends is expected to be ~€450 million (previous indication: ~€450÷~€480 million), at the lower end of the range indicated in February
  • confirmed CapEx of ~€390 million (~6.5% of revenues)
  • confirmed Net Financial Position of ~-€2.6 billion, with a NFP / adj. EBITDA ratio of ≤2x
  • ROIC of ~19% (previous target: ≥19%), consistent with the expected operating performance

Last revised: 10 May 2022