Pirelli mentioned that their profits and cash production might fall within the lower range of forecasts for this year if President Trump’s duties on the car sector continue to be enforced.
The tire manufacturer based in Italy stated that they were still anticipating sales to be within the range of approximately €6.8 billion and €7 billion ($7.61 billion - $7.83 billion) for this year. Additionally, the company projects an adjusted EBITDA margin around 16%, with net cash flow prior to dividend payments expected to fall between nearly €550 million and €570 million.
The firm, responsible for over 20 percent of yearly sales within the U.S., mentioned that Trump’s proposed 25-percent duties on car manufacturing introduced ambiguity, mainly concerning how they would affect operations and last. In February, Pirelli disclosed that they were developing strategies to counteract potential tariff effects prior to the announcement made by Washington in late March.
Pirelli mentioned they have adjusted their strategies accordingly to account for the recent tariffs, as merely 5% of the demand in the U.S. is met locally. They stated that they fulfill 55% of the U.S.'s needs via imports from Mexico, with approximately 40% coming from Brazil and Europe.
The most recent mitigation strategy now includes revising business transactions, temporarily boosting stock levels, modifying trade policies, and implementing a program aimed at reducing expenses.
“Should current tariffs remain in force for the whole year, the mitigation plan already being implemented will guarantee the adjusted EBIT target and cash generation at the lower end of guidance,” the company said.
Following the release of their first-quarter results that surpassed analyst expectations—showing an increase in sales to €1.76 billion from approximately €1.70 billion during the same period last year—the organization made this announcement.
The net profit climbed to €118.8 million from €93.7 million. Additionally, the adjusted earnings before interest and taxes went up to €279.8 million from €262.6 million, resulting in an adjusted margin of 15.9%.
According to the market consensus supplied by the firm, analysts predicted sales of €1.74 billion, an adjusted EBIT of €270 million, and a 15.5% adjusted EBIT margin for the quarter.
Send your correspondence to Mauro Orru. mauro.orru@wsj.com
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