Why the analysts are tripping over Pirelli
Pirelli has revised upwards some targets for 2022 yet according to analysts the tire market continues to record data below the levels reached before the pandemic
The unknown tire market casts a shadow over Pirelli for analysts.
Just when the group led by Marco Tronchetti Provera has completed the Scorpion range with two gravity products designed for the most demanding Enduro and Downhill races three years after the launch of the family of mountain bike tires, analysts release chiaroscuro notes for Pirelli .
In addition, last August the company closed a record half-year with revenues up 24.6% to 3,197 million euros and a net profit of 233 million (+ 77.1%). With these results, the tire manufacturer announced an increase in targets “thanks to the effectiveness of the business model and the measures to compensate for the external scenario”.
However, analysts remain cautious due to the uncertain economic scenario, reports MF .
All the details.
SCORPION LINE COMPLETED
The new line, available from early 2023, is the culmination of a nearly two-year process of design, prototyping, testing, feedback and field validation.
“The completion of the Scorpion line strengthens our offer in the mountain bike segment, which is experiencing significant growth,” said Matteo Barbieri, head of Pirelli Cycling. “Now our range of tires covers all the main types of use, from road to off-road, with solutions for professionals and amateurs that focus on high technology, performance and safety. We are also proud that important teams and great champions of this sport, such as Fabien Barel, have collaborated with our technicians and testers to create these tires. " concluded Barbieri.
THE HALF-YEAR ACCOUNTS OF PIRELLI
On August 4, Pirelli's board of directors approved the results for the first half of 2022. The company closed the first half with double-digit growth in revenues and profits and thus revised its guidance on turnover upwards.
Specifically, the group recorded revenues in the first half of the year of € 3,197.0 million, + 24.6% compared to the first half of 2021 (+ 19.4% growth net of exchange rates and hyperinflation in Argentina and Turkey) supported by the strong improvement in the price / mix (+ 20.4%). High Value sales amounted to 72% of total Group revenues (72% in the first half of 2021). Profit stood at 233.0 million euros (131.6 million euros in the first half of 2021) which reflects the improvement in operating performance.
At 30 June 2022 the Net Financial Position was negative for 3,530.7 million euros (2,907.1 at 31 December 2021 and 3,818.7 million euros at 30 June 2021), with a net cash absorption before dividends of 464 million of euro (481 million euro in the first half of 2021) "which reflects the usual seasonality of the business" explains the note from the company.
THE COMMERCIAL FRONT
On the Commercial front, growth continues in High Value (72% of Group revenues) with particular focus on Car ≥19 ”, on Specialties and on electricity. In the first half of the year, the group strengthened its positioning on the Replacement Car ≥18 ”(Pirelli volumes + 13% compared to + 8% of the market), thanks to a further renewed product portfolio. In line with the market, the trend in Car Original Equipment ≥18 ”(Pirelli and market volumes + 2%), is stated in the report of the half-yearly accounts.
PIRELLI UPDATED THE TARGETS FOR 2022
Therefore, the tire manufacturer has revised upwards some targets for the whole of 2022 “in light of the solid performance recorded in the first half”. In particular, Pirelli expects revenues of between 6.2 and 6.3 billion euros (around 300 million more than the previous target of 5.9 and 6 billion) with an expected annual growth of between + 17% and + 18%.
THE OPINION OF BESTINVER SECURITIES
But, "according to Bestinver Securities analysts, the tire market continues to record data below the levels reached before the pandemic: in August Europe and North America recorded negative growth of 15% and 12% respectively, Russia lost 14% % and South America 3%. Only China accelerated compared to August 2019, marking a + 3% ”reports Milano Finanza .
Even if “Pirelli's data are in line with the company's expectations”, they continue from Bestinver. Analysts positively assess the outperformance of the Hv segment compared to the standard one and the strength of the Oe channel. "However, we cannot overlook the fact that the market still suffers from very low visibility due to the economic slowdown, now widely expected for next year, and the worsening of the energy crisis as the autumn and winter season approaches, and keeping I also take into account the signs of weakness in the automotive sector ”. In light of these considerations, Bestinver analysts confirm the hold recommendation on the stock and the target price in the range between 4.75 and 5.25 euros.
THE COMMENT OF EQUITA SIM
Finally, "Equita Sim analysts believe that in 2022 the market volumes of the automotive sector could move around zero growth, settling in the lower part of the guidance range published by Michelin, between 0% and + 4%, and slightly below that of Pirelli equal to 0.5% year on year ”reports MF . “That the mix was unfavorable in the second half of 2022 is in line with expectations,” adds Sim. On the Pirelli Equita share, it confirms the buy rating and the target price of 6.2 euros.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-gli-analisti-sgambettano-pirelli/ on Tue, 04 Oct 2022 18:34:49 +0000.