Tyre business

The table below sets forth the consolidated results for 2013 as compared with 2012

(in milions of euro)
 2013 2012 restated 2012 reported 
Net sales 6,115.8  6,031.3  6,031.3 
yoy  1.4%  7.7%  7.7% 
Gross operating profit before restructuring expenses 1,130.3  1,126.5  1,114.8 
% of net sales 18.5%  18.7%  18.5% 
Operating income before restructuring expenses 845.4  859.9  848.2 
% of net sales 13.8%  14.3%  14.1% 
Restructuring expenses (23.4)  (39.1)  (39.1) 
Operating income 822.0  820.8  809.1 
% of net sales 13.4%  13.6%  13.4% 

The following table illustrates the quarterly results

(in milions of euro)
  1° Q2° Q3° Q4° QTotal
2013 2012  restated 2013 2012  restated 2013 2012  restated 2013 2012  restated 2013 2012  restated 
Net sales  1,526.7  1,542.6   1,587.3  1,457.7  1,511.8   1,542.6   1,490.0  1,488.4   6,115.8   6,031.3 
yoy  -1.0%  11.4%  8.9%  5.9%  -2.0%  5.3%  0.1%  8.2%  1.4%  7.7% 
Gross operating profit before restructuring expenses  260.1  283.6   282.7  277.2  284.7   272.9  302.8   292.8   1,130.3  1,126.5 
% of net sales 17.0%  18.4%  17.8%  19.0%  18.8%  17.7%  20.3%  19.7%  18.5%  18.7% 
Operating income before restructuring expenses  188.8   220.5   210.6  212.2   214.6  205.8   231.4  221.4   845.4  859.9 
% of net sales 12.4%  14.3%  13.3%  14.6%  14.2%  13.3%  15.5%  14.9%  13.8%  14.3% 
                     
Operating income  185.6  218.5  207.2  199.7  207.0  202.1  222.2  200.5   822.0  820.8 
% of net sales 12.2%  14.2%  13.1%  13.7%  13.7%  13.1%  14.9%  13.5%  13.4%  13.6% 

NET SALES

Net sales totalled euro 6,115.8 million, up 1.4% compared with euro 6,031.3 million in 2012. Excluding the translation effect (negative 7.2%), net sales rose by 8.6% due to the higher volumes (+5.7%) – especially in the emerging markets (+10.2%) that accounted for 55.7% of net sales in 9M 2013 – and the price/mix component (+2.9%).

The overall change in net sales from the same period in the previous year is summarised as follows

  1° Q2° Q3° Q4° Qat 31.12
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 
Volume  3.9%  -7.4%  8.8%  -7.6%  5.4%  -6.2%  4.9%  -1.8%  5.7%  -5.6% 
of which Premium volume 4.0%  15.8%  12.9%  12.3%  19.1%  12.5%  27.5%  11.1%  15.3%  12.6% 
Price/mix 0.0%  16.5%  5.1%  11.1%  2.5%  8.6%  4.3%  5.4%  2.9%  10.2% 
Change in scope of Russia  - 2.2%  - 3.5%  - 4.1%  - 6.6%  - 4.1% 
Change on a like-for-like basis 3.9%  11.3%  13.9%  7.0%  7.9%  6.5%  9.2%  10.2%  8.6%  8.7% 
Translation effect -4.9%  0.1%  -5.0%  -1.1%  -9.9%  -1.2%  -9.1%  -2.0%  -7.2%  -1.0% 
Total change -1.0%  11.4%  8.9%  5.9%  -2.0%  5.3%  0.1%  8.2%  1.4%  7.7% 

The following tables show the breakdown of net sales by geographic area and product category

Geographical Area12.31.201312.31.2012
  Euro/mln yoy     
Italy  349.1  -9.4%  5.7%  6.4% 
Rest of Europe  1,679.4  -0.5%  27.3%  28.0% 
Russia and CIS  254.1  -0.4%  4.2%  4.0% 
Nafta  682.1  -1.5%  11.2%  11.5% 
Central and South America  2,174.2  5.2%  35.6%  34.3% 
Asia/Pacific  481.5  14.5%  7.9%  7.0% 
Middle East/Africa/India  495.4  -5.1%  8.1%  8.8% 
Total  6,115.8  1.4%  100.0%  100.0% 

Product12.31.201312.31.2012 
  Euro/mln
yoy     
Car tyres  4,092.1  1.7%  66.9%  66.7% 
Motorcycle tyres  386.8  -2.5%  6.3%  6.6% 
Consumer  4,478.9  1.3%  73.2%  73.3% 
Industrial vehicle tyres  1,551.7  2.5%  25.4%  25.1% 
Steelcord  85.2  -12.7%  1.4%  1.6% 
Industrial  1,636.9  1.6%  26.8%  26.7% 

operating income

Operating income in 2013 totalled euro 822.0 million (euro 820.8 million in 2012), with an Ebit margin of 13.4% (13.6% in 2012).

This result reflected the negative 62.7 million euro consolidation translation effect.

In 2013, the change in volume was a positive euro 97.7 million, while the contribution made by the change in the price/mix component to the result was a positive euro 47.3 million. Taken together with efficiency gains (positive euro 74.0 million before the impact of the slowdown in production, amounting to a negative euro 34.0 million) and lower commodity costs (euro 136.2 million), these operating results nearly offset both the growth in production input costs (euro 138.5 million) and the increase in all other operating costs and depreciation and amortisation (euro 134.4 million).

This last quantity mainly refers to:

  • industrial costs (about euro 25.5 million), mainly related to transformation of the Settimo Torinese truck plant into a new plant making premium car tyres and to the start-up costs for the plants in Mexico and Russia;
  • higher depreciation and amortisation (euro 34.2 million) as the result of intense investment activity during previous financial years;
  • higher commercial costs (euro 30.3 million) related to development of the premium segment.

In 2013 non-recurring events occurred related to disposals of real estate and receivables under litigation from the 1990's, and expenses related to settlement of a lawsuit in Brazil for a net positive balance of about euro 22 million. In 2012, the non-recurring events had a positive balance of about euro 30 million (disposal of real estate in Brazil and elimination of liabilities for the earn-out on the Russia acquisition).

The changes as compared with December 2012 can be summarised as follows in the following table:

(in milions of euro)
 1° Q. 2° Q. 3° Q. 4° Q. Total
2012 Operating income restated  218.5  199.7  202.1   200.5  820.8 
Foreign exchange effect (9.6)  (9.2)  (18.8)  (25.1)  (62.7) 
Prices/mix (19.6)  20.2  15.1  31.6  47.3 
Volumes 17.9  28.0  25.7  26.1  97.7 
Cost of prodution factors (raw materials) 37.0  31.2  42.2  25.8  136.2 
Cost of prodution factors (labour/energy/others) (24.2)  (37.2)  (39.3)  (37.8)  (138.5) 
Efficiency 7.6  5.3  18.5  8.6  40.0 
Ammortisation, depreciation and other (40.8)  (39.9)  (34.6)  (19.1)  (134.4) 
Restructuring expenses (1.2)  9.1  (3.9)  11.6  15.6 
Change (32.9)  7.5  4.9  21.7  1.2 
2013 Operating income 185.6  207.2  207.0  222.2  822.0 
* of which slowdown impact (5.5)  (7.5)  (11.1)  (9.9)  (34.0)