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Introduction & Market Context
Pirelli & C SPA (BIT:PIRC) presented its first-half 2025 results on July 31, 2025, highlighting resilient performance despite a challenging external environment. The Italian tire manufacturer continues to execute its strategic shift toward high-value segments, with a particular focus on premium and electric vehicle tires. This strategy appears to be paying dividends, as the company reported solid organic growth and improved profitability metrics despite headwinds from currency fluctuations, raw material costs, and tariff impacts.
Building on the momentum reported in Q1 2025, when Pirelli saw a 3.7% revenue increase and a 27% jump in net income, the company’s first-half results demonstrate continued execution of its premium positioning strategy in a volatile market environment.
As shown in the following key messages from Pirelli’s presentation:
Financial Performance Highlights
Pirelli reported net sales of €3,499 million for the first half of 2025, representing a 1.5% year-over-year increase. More significantly, organic growth reached 4.4%, underscoring the company’s strong commercial performance despite external challenges. The high-value segment now accounts for 80% of total sales, up from 77% in the first half of 2024, reflecting the company’s continued strategic shift toward premium products.
Adjusted EBIT increased by 3.6% year-over-year to €558 million, resulting in a 16% adjusted EBIT margin, an improvement of 0.4 percentage points compared to the same period last year. This profitability enhancement demonstrates the effectiveness of Pirelli’s tariff mitigation actions, which the company notes are already showing results in the second quarter.
Net income saw a substantial increase of 14% year-over-year, reaching €264 million. This growth was attributed to both improved operating performance and lower financial expenses. The company also reported progress in deleveraging, with net financial position improving by €299 million year-over-year to €2,679 million.
The detailed financial results are illustrated in the following slide:
Cash flow generation remained strong, with positive net cash flow before dividends in Q2 2025 of €193 million, compared to €154 million in Q2 2024. This performance was stable year-over-year when excluding the one-time impact from the sale of Däckia.
Strategic Initiatives and Market Position
Pirelli continues to strengthen its leadership in the high-value market segment, gaining share in the Car ≥18" category across both original equipment (OE) and replacement channels. In the premium segment, Pirelli outperformed the market with 5% growth compared to the overall market growth of 4%. The replacement channel showed even stronger performance, with Pirelli achieving 6% growth against market growth of 5%.
The company’s market position is clearly illustrated in this slide:
Simultaneously, Pirelli is accelerating its selective strategy of reducing exposure to the standard segment, particularly in South America. The company reported an 11% reduction in the standard segment during Q2 2025, compared to a flat overall market, following a 7% reduction in Q1 against 1% market growth.
Innovation remains a key driver of Pirelli’s growth strategy. The company secured approximately 110 new homologations in the first half of 2025, with about 90% for higher rim sizes (≥19") and approximately 60% of homologations ≥18" for electric vehicles. This focus on premium and EV segments aligns with the company’s Q1 2025 report, which highlighted Pirelli’s 28% market share in the premium EV segment compared to 20% for internal combustion engine vehicles.
The company’s product innovation is exemplified by the launch of the PZERO 5th generation, which has already secured over 150 active homologations with premium car manufacturers, with more than 380 additional homologations in development:
Pirelli’s innovation extends beyond car tires to its two-wheel business, with the introduction of two new motorcycle products and four cycling products in the first half of 2025, strengthening the company’s position in both segments.
Sustainability Progress
Pirelli continues to make progress on its sustainability initiatives, which are aligned with its long-term plan. The company reported a 3% decrease in its Accident Frequency Index compared to FY 2024, reflecting its ongoing focus on health and safety. Scope 1+2 emissions decreased by 16.5% year-over-year, while Scope 3 absolute emissions are on track to meet the 2025 target of a 27% reduction compared to 2018 levels.
The company is progressing toward its net-zero target by 2040 for Scope 1+2+3 emissions, which has been approved by the Science Based Targets initiative (SBTi). Product sustainability has also improved, with more than 70% bio-based and recycled materials used in the best products, such as the P-Zero developed for Jaguar Land Rover.
These sustainability achievements are detailed in the following slide:
Forward-Looking Statements
Looking ahead, Pirelli acknowledges that the external context remains volatile, with uncertainties related to tariffs and a greater-than-expected depreciation of the US dollar. Despite these challenges, consumer demand is holding steady, with the high-value segment continuing to outperform the standard segment.
The company has confirmed its profitability and cash targets for FY 2025, citing solid organic growth and the effectiveness of its tariff mitigation plan. Operational efficiency remains a focus, with approximately €70 million in efficiencies achieved in the first half of 2025, representing about 45% of the full-year target.
Building on the guidance provided in its Q1 2025 report, where Pirelli projected full-year 2025 revenues between €6.8 billion and €7.0 billion with an adjusted EBIT margin of around 16%, the company appears to be on track to meet these targets despite the challenging external environment.
As CEO Marco Tranchetti Correira stated in the Q1 earnings call, "Our results confirm the solidity of the company that has grown and will keep on growing." The first-half 2025 results presented on July 31 reinforce this message of resilient growth and strategic execution in the face of external challenges.
Full presentation:
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