Net income

Net income at December 31, 2013 totalled a positive euro 306.5 million (euro 391.5 million in 2012).

The lower net income was impacted by net financial expenses, totalling euro 195.8 million and reflecting an increase of euro 45.3 million from 2012 (which benefited from euro 8.7 million in non-recurring exchange rate gains related to the start-up of activities in Russia).

This largely occurred in 1H 2013, and resulted from:

  • the higher average indebtedness during the period and greater exposure to currencies in countries where interest rates are higher than in the eurozone;
  • the negative euro 8.5 million impact of devaluation of the Venezuelan currency that occurred at the beginning of 2013:
  • the euro 13.3 million in lower financial income from the loan to Prelios S.p.A.

The average cost of debt during the period was 6.23%. Tax liabilities totalled euro 210.4 million, with a tax rate of 40.7%. Excluding the amount resulting from consolidation of associates under the equity method (negative euro 25.8 million), the effective tax rate was 38.8%. Impairment of the Prelios S.p.A. “convertendo” equity instruments impacted that result by about 3 percentage points.

The total net income attributable to owners of Pirelli & C. S.p.A. at December 31, 2013 was a positive euro 303.6 million (euro 0.62 per share), compared with euro 387.1 million for the same period of 2012 (euro 0.79 per share).