The following table illustrates the 2013 results compared with 2012
|1° Q||2° Q||3° Q||4° Q||Total|
|2013||2012 restated||2013||2012 restated||2013||2012 restated||2013||2012 restated||2013||2012 restated|
|Gross operating profit before restructuring expenses||194.8||235.4||203.5||214.7||211.9||210.1||229.4||210.8||839.6||871.0|
|% of net sales||17.4%||20.4%||17.9%||19.9%||18.9%||18.8%||20.8%||19.6%||18.7%||19.7%|
|Operating income before restructuring expenses||138.0||187.3||146.7||164.4||155.3||157.8||172.2||154.7||612.2||664.2|
|% of net sales||12.4%||16.3%||12.9%||15.2%||13.8%||14.1%||15.7%||14.4%||13.7%||15.0%|
|% of net sales||12.2%||16.1%||12.7%||14.3%||13.5%||13.9%||15.0%||13.8%||13.3%||14.5%|
The following table shows the detailed breakdown of market performance
|1° Q||2° Q||1° half 2013||3° Q||at 09.30.2013||4° Q||Total year|
(*) including Turkey; excluding Russia
Net sales in 2013 totalled euro 4,478.9 million, up 1.3% (+7.8% excluding the translation effect) as compared with 2012.
Sales made a positive contribution, up by 4.6% (+1.2% in 1Q 2013, +4.6% in 2Q, +6.0% in 3Q and +6.9% in 4Q), driven by the performance of emerging markets (volumes +9.7%, particularly Apac, South America and Russia), which offset the slight downturn in Europe.
The premium segment grew at a rate three times that of the market average, with volumes increasing by 15.3% in 2013.
The performance in South America, Apac and the Middle East Africa and India was particularly positive, confirming the robust development of higher added value product segments on these markets. As measured by net sales, the premium segment expanded strongly on emerging markets (+21.8%), particularly in Asia (+28.6%) and South America (+25.4%), while expanding more modestly in Russia (+4%), Nafta (+3.1%) and Europe (+1.7%), where the improvements occurred over the last two quarters of the year (+7% in 3Q and +17% in 4Q). It must be emphasised that overall performance in Europe was impacted by the crisis in consumer spending due to macroeconomic trends, partial adjustment of prices to current trends on the commodity markets, and a different mix of sales segments, with original equipment assuming greater weight as an investment in the future development of the replacement segment.
The following table sets forth the breakdown of net sales
|1° Q||2° Q||3° Q||4° Q||at 31.12|
|of which Premium volume||4.0%||15.8%||12.9%||12.3%||19.1%||12.5%||27.5%||11.1%||15.3%||12.6%|
|Change in scope of Russia||-||2.7%||-||4.4%||-||5.9%||-||9.5%||-||5.8%|
|Change on a like-for-like basis||0.7%||16.4%||10.3%||12.7%||9.1%||9.4%||12.0%||11.9%||7.8%||12.6%|
Operating income totalled euro 596.4 million in 2013, with an Ebit margin of 13.3%, as compared with euro 642.7 million in the same period of 2012 (14.5% of net sales).
The strong performance of operating variables, with the price/mix up 3.2% in the premium segment and volumes up 4.6%, was offset by:
- higher industrial costs resulting from the start-up of activities in Mexico and Russia and conversion of the Settimo Torinese truck plant to premium car tyre production (euro 23 million);
- higher commercial costs for development of the premium segment (euro 30 million);
- rising inflation for factors of production, mainly related to the cost of labour in emerging countries;
- the costs related to new activities that have not yet reached operating capacity, particularly in Russia and Sweden, where the seasonal nature of the business is focused more on the winter segment;
- the impact related to consolidation translation rates (negative euro 34.3 million) and higher depreciation (negative euro 29.3 million).
The car business accounts for 91.4% of net sales in the consumer segment. In 2013 net sales were divided 70% in the replacement channel and 30% in the original equipment segment (71% in the replacement segment and 29% in the original equipment segment in 2012).
The greater weight of the original equipment segment in 2013 reflects rising original equipment sales in South America (where the market was dynamic in 2013, contrasting with a downturn in 1H 2012, before the reintroduction of car purchase incentives), in Asia (due to continuous growth of the premium segment) and full operating activity in Russia as compared with the previous year. Net sales in the replacement segment fell in Europe and Russia, were substantially stable in the Middle East, Africa and India, while growing significantly in Apac, Latam and Nafta.
The results of the car business reflect the growth in volumes, which rose especially in Apac, Russia and South America, together with improvement of the price/mix due to development of the premium segment. These positive elements offset the effects deriving from a weakened market and greater competition in Europe and Russia, the previously mentioned increase in industrial and start-up costs and higher commercial costs for development of the premium segment, aside from the unfavourable consolidation translation rate.
In 2013 Pirelli reinforced its market presence by rolling out products offering constantly improving performance and responsiveness to environmental concerns, both for winter and summer tyres: the Cinturato P7 Blue, the first summer tyre to come in efficiency class A sizes for rolling resistance and wet braking in compliance with new European labelling requirements; the Winter Sottozero 3, developed to guarantee safety and performance for new sedans and sports cars in the winter season; the Winter Ice Zero, a studded tyre designed for harsh winter climates, dedicated to Nordic markets and Russia.
Over the past year, Pirelli has consolidated its role as a key partner in the sports car and prestige car segment by obtaining numerous product approvals, including those for the new Audi RS6 and RS7, BMW X5, Range Rover, Maserati Quattroporte and Ghibli, and Porsche Panamera, just to mention a few, demonstrating the technological reliability of its products in the PZero, Cinturato and Scorpion lines.
Continuous dedication to innovation has led to introduction of the PNCS (Pirelli Noise Cancelling System) technology: Pirelli was the first tyre maker to integrate a tyre noise abatement solution in original equipment. The new system, initially developed for the new Audi RS6 and RS7 in the PZero tread, allows to improve driving comfort without compromising the classic performance characteristics of this tyre.
The target markets of the Motorcycle Business were heavily impacted by the ongoing crisis, especially in Europe, with vehicle registrations down sharply and volumes down even in the replacement segment.
In 2013 certain market criticalities also arose in specific segments, including the South American original equipment market, due to lower financing of motorcycle purchases, and in the Nafta area, while the market was up in Asia.
Net sales in 2013 totalled euro 386.8 million, down 2.5% from 2012, due to the aforementioned external conditions, with markets contracting in the various reference regions. This trend reversed in 4Q 2013, with net sales rising by 15% year-over-year.
The breakdown of net sales by segment was as follows: 81.1% in the replacement segment and 18.9% in the original equipment segment (in the previous year, the replacement segment accounted for 79.6% and the original equipment segment accounted for 20.4%).
New Metzeler 888 products were launched in 2013 for the custom segment, the Tourance Next and the Angel GT products. The new products won all comparative tests conducted by leading European motorcycle magazines.