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Introduction & Market Context
Pirelli & C. S.p.A. (BIT:PIRC) presented its first half 2025 financial results on July 31, showcasing solid performance amid a challenging external environment characterized by tariff uncertainties and currency fluctuations. The Italian tire manufacturer maintained its strategic focus on the High Value segment, which now represents 80% of total sales, up from 77% in the same period last year.
The company reported that consumer demand remained resilient during the first half of 2025, with the High Value segment outperforming the Standard segment across both original equipment and replacement channels. This trend aligns with Pirelli’s long-term strategy of reducing exposure to the Standard segment while strengthening its position in premium markets.
As shown in the following key messages from the presentation, Pirelli achieved solid execution despite external challenges:
Quarterly Performance Highlights
Pirelli delivered strong financial results for the first half of 2025, with net sales reaching €3,499 million, representing a 1.5% year-over-year increase. More importantly, the company achieved 4.4% organic growth, supported by robust commercial performance. Adjusted EBIT rose to €558 million, up 3.6% compared to the same period in 2024, with the margin improving by 0.4 percentage points to 16%.
Net income showed the most significant improvement, increasing by 14% year-over-year to €264 million. This earnings growth was driven by both operational performance and lower financial expenses, as the company reduced its cost of debt to 4.88% from 5.06% at the end of 2024.
The comprehensive financial overview presented in the slides illustrates these positive trends:
Pirelli’s financial performance was further detailed in the economic results summary, which provides a quarter-by-quarter comparison:
Strategic Initiatives
Pirelli’s strategic focus on the High Value segment has yielded significant market share gains. In the Car ≥18" segment, the company outperformed the market with 5% growth compared to the overall market growth of 4%. The replacement channel showed even stronger performance, with Pirelli growing at 6% versus market growth of 5%.
The company’s leadership position in the High Value market is illustrated in the following slide:
A cornerstone of Pirelli’s High Value strategy is its superior portfolio of homologations with premium and prestige automakers. During the first half of 2025, the company secured approximately 110 new homologations, with 90% for higher rim sizes (≥19") and 60% for electric vehicles. This provides Pirelli with a competitive advantage, as the company claims approximately 1,300 homologations compared to around 400 for other vendors.
Product innovation remains a priority, with the launch of the new P ZERO 5th generation tire, which represents the peak of Pirelli’s technological innovation. The company also introduced two new motorcycle products and four cycling products in the first half of 2025, strengthening its position in the two-wheels business.
Sustainability initiatives continue to advance, with notable achievements including a 3% reduction in accident frequency index, a 16.5% year-over-year decrease in Scope 1+2 emissions, and the development of products with over 70% bio-based and recycled materials.
Detailed Financial Analysis
A closer examination of Pirelli’s sales performance reveals that organic growth of €144 million was driven by a positive price/mix effect of €135 million and volume growth of €15 million. However, this was partially offset by negative forex impact of €99 million, resulting in the net sales increase of 1.5%.
The adjusted EBIT improvement was primarily driven by price/mix effects (+€94 million) and efficiencies (+€70 million), which more than compensated for the negative impacts from raw materials (-€51 million), inflation (-€62 million), forex (-€19 million), and other factors.
Net income growth of 14% to €264 million was supported by the improvement in adjusted EBIT (+€19 million) and significantly lower financial expenses (+€53 million), partially offset by higher taxes (-€34 million).
Forward-Looking Statements
Despite the volatile external context, with uncertainties related to tariffs and greater-than-expected depreciation of the US dollar, Pirelli has confirmed its full-year 2025 targets. The company expects net sales to reach approximately €6.8-7.0 billion, with an adjusted EBIT margin of around 16%.
The US tariffs situation represents a particular challenge for Pirelli, but the company has implemented a mitigation plan leveraging its manufacturing footprint in Georgia and other facilities. The impact and mitigation strategies are detailed in the following slide:
For the full year 2025, Pirelli has maintained its targets across key financial metrics, demonstrating confidence in its strategic direction and operational capabilities:
In terms of market outlook, Pirelli expects global car tire demand to remain relatively flat in 2025, with the High Value segment (Car ≥18") showing mid-single digit growth in the replacement channel and low-single digit growth in original equipment. Conversely, the Standard segment (Car ≤17") is projected to decline year-over-year in both channels.
CEO Marco Tronchetti Provera expressed confidence in the company’s outlook, stating, "We look to the future with confidence. We are ready to face the external complexities and to outperform our peers." This sentiment reflects Pirelli’s strategic positioning and operational resilience in a challenging market environment.
As Pirelli continues to execute its High Value strategy while navigating external challenges, investors will be watching closely to see if the company can maintain its momentum through the second half of 2025 and deliver on its full-year targets.
Full presentation:
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