Pirelli Q1 2025 slides: net income jumps 27% as High Value strategy delivers

Pirelli & C SPA (BIT:PIRC) presented its Q1 2025 results on May 14, 2025, reporting solid performance with organic growth of 4.7% and a 27% increase in net income, despite facing tariff challenges in the US market. The Italian tire manufacturer confirmed its full-year 2025 guidance while continuing to execute its High Value strategy.

Quarterly Performance Highlights

Pirelli reported net sales of €1,759 million in Q1 2025, representing a 3.7% increase from €1,696 million in the same period last year. The company’s adjusted EBIT rose 6.5% to €280 million, with margins improving to 15.9% from 15.5% in Q1 2024. Net income saw a significant jump of 27% to €127 million.

As shown in the following chart of quarterly financial highlights:

The strong performance was driven by several factors, including a solid price/mix contribution of 3.9% and modest volume growth of 0.8%. These positive elements were partially offset by negative forex impact of 1.0%, primarily due to depreciation of emerging markets’ currencies despite USD appreciation.

The following sales bridge illustrates the components contributing to Q1 2025 revenue growth:

On the profitability side, Pirelli’s adjusted EBIT benefited from positive price/mix effects and efficiency gains that fully offset inflation and raw material headwinds. The company achieved €25 million in gross savings during the quarter, in line with program seasonality.

The adjusted EBIT bridge below shows the various factors impacting profitability:

Strategic Initiatives

Pirelli continued to execute its strategic programs across commercial, innovation, and operations. The company strengthened its global High Value leadership, with High Value products now representing 81% of total sales, up from 77% in Q1 2024.

The company gained market share in the High Value Replacement segment across regions, with Car ≥18" growing at 5% compared to market growth of 4%. This performance was supported by OE pull-through and new replacement product lines.

As illustrated in the following summary of strategic program delivery:

Innovation remained a key focus, with Pirelli launching four new products during the quarter – two for cars and two for motorcycles. These included the new Cinturato™ summer tire for premium cars and the SCORPION™ XTM for the all-terrain segment, as well as new motorcycle products targeting performance cruiser and off-road segments.

The following slide highlights the new High Value product launches:

US Tariff Challenges and Mitigation

A significant challenge facing Pirelli is the implementation of new tariffs by the US administration. The US market represents over 20% of group revenues, primarily in the High Value segment. The company is now facing 25% tariffs on imports from the EU and Brazil (effective May 3, 2025) and universal tariffs averaging 10% (effective April 5, 2025).

The company has outlined a comprehensive mitigation plan including optimizing import flows and inventory, reviewing US commercial agreements, and implementing a cost-cutting crash program at the group level.

The following slide details the US tariff situation and Pirelli’s response:

"Despite the current environment, Consumer Demand still holding with High Value outperforming Standard," the company noted in its presentation. "High level of uncertainty on tariffs due to the ongoing international negotiations with the US administration."

Forward-Looking Statements

Despite the tariff challenges, Pirelli confirmed its full-year 2025 guidance. The company expects net sales of approximately €6.8-7.0 billion, adjusted EBIT margin of around 16%, and net cash flow before dividends of €0.55-0.57 billion.

The company emphasized that should current tariffs be maintained for the full year, its mitigation plan would ensure achievement of adjusted EBIT targets and cash generation at the lower end of guidance, still enabling the company to reach its deleveraging target.

As shown in the following table of 2025 targets:

For the broader market, Pirelli expects the global car tire market to show modest growth in 2025, with the ≥18" segment growing approximately 1-4% while the ≤17" segment is expected to range between -1% and +1%. The company plans to continue gaining share in High Value segments while further reducing exposure to Standard segments.

Pirelli also highlighted its strong sustainability performance, maintaining leadership positions across major ESG indices. The company achieved top scores in multiple rankings, including the Dow Jones Sustainability Index, CDP A List, and MSCI AA rating.

The following table summarizes Pirelli’s ESG performance:

With its Q1 2025 results, Pirelli demonstrates continued execution of its High Value strategy while navigating external challenges. The company’s focus on premium segments, product innovation, and operational efficiency positions it to maintain growth and profitability despite the uncertain tariff environment.

Full presentation:

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