MILAN (Reuters) - Italy’s Pirelli PECI.MI, the world’s fifth-largest tyremaker, on Thursday forecast an 11 percent rise in 2015 operating profit after profits for last year met expectations.
Pirelli, which makes tires for motorcycles, cars and Formula 1 racing cars, has managed to boost margins in the past few years even when car sales in Europe fell to historic lows. In 2014 strong sales of premium tires offset weakness in Latin America.
Pirelli has been focusing since 2010 on more upmarket tires for brands such as Mercedes (DAIGn.DE), Audi, and BMW (BMWG.DE) - luxury carmakers which have weathered the downturn better than their mainstream rivals. Pirelli’s sales volumes of premium tires increased by nearly 18 percent last year.
The company forecast 2015 earnings before interest and tax, after restructuring costs, of around 930 million euros ($1 billion). It expects to grow revenues by up to 6.5 percent to around 6.4 billion euros, while investments are seen at below 400 million euros.
On a conference call with analysts, Chairman and CEO Marco Tronchetti Provera confirmed the company’s policy to distribute around 40 percent of net profits in dividends. Should the cash generation continue, the board may consider a higher dividend or a buyback, but no decision had been taken at this stage.
Tronchetti Provera also said Pirelli continues its search for a partner in Asia for its truck business.
“We hope that in 2015 we will be able to start the process with some of the players we are in touch with,” he said, without elaborating.
Earlier on Thursday Pirelli said 2014 operating profit rose 6.8 percent to 838 million euros helped by its focus on higher-margin products, a better price mix and efficiency measures.
Analysts were expecting a 837 million euro operating profit, according to a consensus provided by the company.
Revenues stood at 6.02 billion euros, down from 6.06 billion the previous year and compared with an analyst consensus of 6.05 billion euros.
The Italian group’s figures compare with weaker results from France’s Michelin (MICP.PA), which has a bigger exposure to mass-market tires. Michelin pledged to step up cost-cutting efforts after cut-price competition hit profits more than expected last year.
Pirelli’s results were released after market closed on Thursday. The stock, which is up 12 percent in the year to date, closed up 2.4 percent at 12.9 euros earlier in the session.
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Reporting by Agnieszka Flak; editing by Jane Merriman and Elaine Hardcastle