Earnings call transcript: Pirelli & C reports Q2 2025 growth in revenue and profit

Pirelli & C reported positive financial results for the second quarter of 2025, with notable growth in both revenue and net profit. The company achieved a 4.4% organic revenue growth in the first half of the year, reaching €3.5 billion. Additionally, net profit increased to €264 million, up from €231 million in the same period last year. The stock price showed a modest increase of 1.36%, closing at €6.096.

Key Takeaways

• Pirelli’s revenue for H1 2025 reached €3.5 billion, reflecting a 4.4% organic growth.
• Net profit increased to €264 million, marking a significant improvement from the previous year.
• Adjusted EBIT saw a year-over-year increase of 3.6%, reaching €558 million.
• The company continues to focus on high-value segments, with market share gains in premium tire categories.
• Pirelli aims for a full-year revenue target of €6.7-6.8 billion.

Company Performance

Pirelli demonstrated strong performance in the first half of 2025, with revenue growth driven by its strategic focus on high-value segments. The company increased its market share in the premium tire segment, particularly in the 18-inch and above categories. This growth aligns with industry trends, where the demand for high-value tires remains robust despite a flat global tire market.

Financial Highlights

• Revenue: €3.5 billion (+4.4% organic growth year-over-year)
• Adjusted EBIT: €558 million (+3.6% year-over-year)
• Net Profit: €264 million (up from €231 million in 2024)
• Profitability: 16%, up 0.4 percentage points year-over-year

Outlook & Guidance

Pirelli has set a full-year revenue target of €6.7-6.8 billion for 2025. The company expects to achieve an adjusted EBIT of approximately €1,080 million and aims to generate €550 million in cash. Investments are projected at €420 million, representing 6% of revenue. According to InvestingPro data, analysts maintain a strong bullish consensus on the stock, with price targets ranging from $5.94 to $8.45. The company continues to focus on expanding its high-value product range and enhancing its technological leadership, supported by a strong Piotroski Score of 7, indicating robust financial strength.

Executive Commentary

"The first half results confirm the effectiveness of our strategy," said Marco Tronchetti, CEO. He emphasized the company’s readiness to face external complexities and outperform competitors. CFO Francesco Casaluci highlighted the disciplined pricing environment, which supports Pirelli’s profitability goals.

Risks and Challenges

• Supply Chain Management: Pirelli is optimizing its global supply chain to manage tariff impacts and reduce exposure to standard tire segments.
• Market Saturation: The flat global tire market presents challenges in maintaining growth momentum.
• Economic Pressures: Macroeconomic factors, such as inflation and currency fluctuations, could impact profitability.
• Technological Advancements: Continued investment in cyber tire technology is crucial for maintaining competitive advantage.
• Regional Exposure: Reducing standard tire exposure in South America remains a strategic focus.

Pirelli’s Q2 2025 earnings call highlighted the company’s strategic focus on high-value segments, technological innovation, and operational efficiency. With a clear outlook and robust financial performance, Pirelli is well-positioned to navigate market challenges and capitalize on growth opportunities in the premium tire market. For a comprehensive analysis of Pirelli’s financial health, valuation metrics, and growth prospects, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which provides in-depth analysis of over 1,400 top stocks worldwide.

Full transcript - Pirelli & C SPA (PIRC) Q2 2025:

Event Moderator: Ladies and gentlemen, welcome to Pirelli’s conference call in which Pirelli’s management will present company’s First Half twenty twenty five Results. The live webcast of the event and the presentation slides are available in the Investor Relations section of the Pirelli website. I remind you that the Q and A session will follow the presentation. Now I would like to introduce Mr. Marco Francesco Vera.

Please go ahead, sir.

: Thank

Marco Tronchetti, CEO, Pirelli: you, and good evening, ladies and gentlemen. The results for the 2025 once again confirm the resilience of our business model, It continues to generate value in a complex and challenging external environment. We closed the semester with strong results expected higher than our peers. We stand out for organic growth

Event Moderator: May I ask you about, sir?

Marco Tronchetti, CEO, Pirelli: Okay. Organic growth of 4.4%, driven by solid commercial performance. Improved profitability, thanks to the effectiveness of internal levers, which more than offset the negative impact of the external environment. Solid cash generation supported by the operational performance and disciplined working capital management. And finally, significant progress in sustainability, a core element of our strategy.

Geopolitical and trade tensions continue to wait on the outlook for 2025. Recent estimates point to a slowdown in global economic growth, which is even more pronounced in The United States. In addition, global inflation arm of 3.22.7% in United States. High volatility is expected in exchange rates, concerns about US economic outlook, uncertainties about Fed policies, and high US public debt have pushed the dollar to its lowest level against euro for years. This trend continue to be uncertain, and the relation between the dollar and the different currencies remain volatile.

We see now that there has been revaluation of the dollars lately. The agreement on tariffs between EU and US, which is going to be ratified in the coming days, on the one hand, reduces some uncertainty and prevents the trade escalation, While on the other hand, imposes significant costs on exports and is expected to fuel inflationary pressures. In this context, the ability to react is crucial. As mister Casaruci will illustrate, we are taking concrete measures to manage risks and seize opportunities. We are continuing with our commercial strategy focused on strengthening the high value value segment, which is proving its resilience to expected mid single digit growth also for the second half of the year.

The continuous improvement in price mix will allow us to offset the higher negative impact of exchange rates on profitability. While our tariff mitigation plan has already delivered positive results in the second quarter, and we expect further benefits in the second half of the year. Based on our results achieved in the first half and considering the high volatility of the external scenario, we have updated our expectations for the year, confirming our targets. Profitability with an adjusted EBIT margin around 16% and cash, the net cash flow before dividends of approximately €550,000,000. And now I give the floor to mister Casaluci, please.

Francesco Casaluci, CFO/Executive, Pirelli: Thank you, mister Tronchetti, and good evening, everyone. Tirelli closes the 2025 with results among the best in the industry. Revenues of approximately €3,500,000,000 plus 4.4% excluding ForEx due to the taxes of the commercial strategy. Profitability at 16%, up year on year supported by the effectiveness of internal letters with the tariff mitigation plan already in place from the second quarter. Net profit significantly improved to 14%, thanks to lower financial expenses.

The deleveraging process is progressing with a year on year reduction in debt of €300,000,000 Solid cash generation before dividends in the second quarter, €193,000,000 stable year on year when we exclude the impact of the sale of data to CTS. Significant progress was also achieved on sustainability. The accident rate was reduced by 3% compared to the 2024, thanks to actions on prevent accidents and rise awareness about safety at work. The decarbonization plan continues in line with the net zero targets for 2040. Energy efficiency and machinery electrification projects have led to reduction in our absolute emission of 16.5% year on year.

The reduction of scope three emissions is in line with 2025 target. In cooperation with Jaguar and Rover, we developed the first tire with over 70% bio based and recycled materials. Finally, still on the environmental front, we reduced the water withdrawal at group level by 7.2% compared to the 2024. These results confirm our global leadership in the sector as recognized by the most important indices like Standard and Poor’s Global Sustainability Yearbook 2025, where we are the only tire maker ranking in the top 1%. Let us now take a closer look at our performance.

As we will see in the next few slides, we strengthened our position in the high value segment. We consolidated the technological leadership, especially by introducing new products, enlarging the homologations portfolio and accelerating the cyber tire development. At the same time, we continued with operational efficiency programs to support profitability, which is confirmed to be the highest in the industry among Tier one. The 2025 confirms the effectiveness of our commercial strategy with growth in car 18 inches up exceeding that of the market. We gained market share in both channels.

In original equipment, particularly in Asia Pacific and North America, due to the strengthening of partnership with local carmakers. In replacement, we outperformed the market in all regions, leveraging the effectiveness of our pull through strategy and product innovation. In cars 17 inches and below, we continue to reduce our exposure, in particular in South America, where we accelerated our exit from less profitable distribution channels. Let’s now move to the innovation programs that helped boost our technological leadership. In the first six months of this year, we got around 110 new technical obligations, focuses on 19 inches and above specialties and EDs.

These were obtained from leading premium and prestige OEMs like Ferrari, Porsche, BMW, and Aston Martin, and pure electric vehicle carmakers such as Tesla, ZEC, Neo, IsoCerus and Lucid. We have the broadest portfolio of market homologations around 1,300 in car 19 inches and above, more than three times the average of our peers. These results lay the foundations for future growth in high value replacement due to a loyalty rate that remains around 80%. Let’s move on product innovation on slide number nine. At the May, we presented the fifth generation of the PZero, a brand in brand that in the last forty years has been a synonymous of ultra high performance.

Developed from our experience in motorsport, Pit Zero has always been able to anticipate the needs of the premium and prestige segment. The market has already responded positively. Over 150 homologations have already been obtained, more than 380 planned, and the product has been chosen by the most, sorry, most important premium and prestige car manufacturers. The most advanced artificial intelligence and vehicle design techniques were used to develop the fifth generation. These allowed us to test every single detail of the product well in advance, optimize development times, and improve grip, braking, and handling both on dry and wet roads.

Tire reviews awarded the new PZero best ultra high performance tire as it offers the highest level of performance and safety. Furthermore, as testimony of Pirelli’s ongoing commitment to sustainability, the version of P Zero developed for Jaguar and Land Rover is made from more than 70% natural and recycled materials. In the two wheels business, our offering expanded with the launch of two motorcycle tires and four dedicated to cycling. For motorcycles, where Pirelli is the leader in the high value segment, we expanded our range with Diablo Power Cruiser and Scorpion MX 32, both the result of our experience in racing where we hit the best teams. In cycling, innovation continues with the launch of Cinturato EVO TLR, PZero Race TLR Nero, and two new versions of the Scorpion XC.

Here too, the driver for innovation comes from the world of racing where we collaborate with the best professional teams like Trek and Alpecin, and the success of Pirelli products is proven by recent wins in the most prestigious competitions such as Paris Roubaix, Milanos del Reymo, and several legs of the Tour de France. Finally, we accelerated the development of CyberTire by implementing several projects. The partnership with Bosch started in 2024 was renewed and technological cooperation strengthened. Our cyber side is already integrated in premium and prestige vehicles, and at the same time, faster projects are being accepted. In addition, agreements and contracts were signed for infrastructure monitoring.

The first agreement was signed by with Movion, a company of the Group for the mapping of motorway sections managed by us. An agreement has been signed with the Puglia region to implement an innovative monitoring system for the regional road network. This system will combine data collection from files processed by Turelli CyberClad hardware and software system, visual data collected with the university technology using the onboard cameras, and sensor fusion software and algorithm that will provide integrated mapping of asphalt and road signs, creating a detailed map of roads and their state of repair. In addition to innovation, our brand is one of the key factors driving the choice of high value customers. Through new strategy partners strategic partnerships with major international sporting competitions, we are aiming to further increase the visibility of our brand.

Formula One plays a key role in this with a strong growth globally and especially in The United States. 2025 also saw the renewal and expansion of our partnerships in the world of sports, such as the twenty twenty six Winter Olympics and Paralympics in Milano Cortina. MotoGP, where Pirelli will be the sole tire supplier from 2027, Luna Rossa, where we are continuing our collaboration as a sponsor and technical partner, and the Australian Open Tennis Championship. All these contributes to making the Pirelli brand increasingly distinctive, internationally recognized as synonymous of performance, sport, and high technology. Let’s now move to the operations programs that have contributed to improving our profitability.

In the first half of the year, they generated gross efficiency of 70,000,000, 45% of the full year target. The greatest benefit comes from the manufacturing product cost programs through increasing the commission in factories, reduced energy consumption, and innovation in product design. Both programs are set to accelerate faster in the coming months in line with project development and will be the main sources of efficiency gains in the second half of the year. The SG and A and organization projects are also making a positive contribution with benefits deriving from the rationalization of the supply chain and optimization of logistics and the digitization of processes and upscaling of personnel. Let’s focus on the manufacturing program, which will continue to play a key role in future efficiency programs.

We are paving the way for the factory of the future, making our plants increasingly competitive, efficient, and sustainable. Automation, digitization, and electrification will enable us to optimize production processes, reduce operating costs, and improve the group’s profitability in the medium term. The transformation of our factories developed along four strategic access. First, the manufacture the mass manufacturing, which through the virtualization and digitization of control systems will enable real time monitoring of the plant’s PPI, the optimization of processes, and the development of innovative solutions in a very short time. Second, energy efficiency through the ongoing electrification of the curing phase and the adoption of continuous monitoring systems for intelligent consumption control.

Third, process innovation through advanced technologies such as the side effect detection system, which uses AI and computer vision to identify and analyze the fact that with greater precision. And finally, automation, which we are adopting in the handling of products in the factory with benefits in terms of efficiency, flexibility, but also safety. Last but not least, are still working on making our supply chain even more resilient. We are developing an integrated planning system that goes from the raw material suppliers to the end consumers to ensure ensure the faster response time. Our footprint is now 86% local for local, which has has reduced logistics to risk and response time.

The US remained the only area with a low local for local supply. We are promoting the transition to a sustainable value chain with the aim of reducing environmental impact and increasing transparency throughout the supply chain in line with our 2014 net zero target. And finally, logistics excellence. We already guarantee 98% coverage of all requests within twenty four hours, and we will continue to optimize flows to improve customer service and keep operating costs down. I will now hand over to mister Bock.

: Thank you, Mr. Casaluci. Let’s now turn to the dynamics that shaped our performance in the 2025 compared to the same period of last year. Solid commercial performance resulted into an organic growth of 4.4%. Volumes were positive, plus 0.5%, with growth in the high value segment more than offsetting the reduction in exposure to standard.

High value now accounts for approximately 80% of total sales, up three percentage points compared to previous year. The price mix improved. It was plus 3.9%, mainly supported by the product and region mix and marginally by the price component. The latter reflects the indexation of original equipment prices to raw material costs and the first commercial renegotiations in response to US tariffs. On the other hand, the impact of exchange rates was negative 2.9%, affected by the sharp depreciation of the U.

S. Dollar and the volatility of emerging market currencies against the euro. As shown in Slide 17, in the first half, profitability improved by 0.4 percentage points year on year, reaching 16%. In the 2025, adjusted EBIT was €558,000,000 up 3.6% due to the effectiveness of internal levers. More specifically, the positive contribution of price mix for €94,000,000 more than offset the increase in the cost of raw materials for €51,000,000 and the negative impact of the trade trade for €19,000,000 due to the dynamics already described.

The balance between efficiencies and inflation was positive, thanks to the acceleration of competitiveness programs in the second quarter. Finally, the contribution of volumes for €6,000,000 limited the impact of depreciation and amortization, which were negative for €15,000,000, and other costs, negative for €4,000,000. It should be noted that on May 3 came into force The US tariffs of 25 on imports of car tires from Europe and Brazil, as well as universal tariffs on motorcycle and cycling tires with different percentages depending on the country of production. The overall impact of these tariffs in the first half of the year was €15,000,000. But thanks to the mitigation measures in place, the net impact was negative by €6,000,000.

This figure is included in the bridge in this slide under the item other. Let’s now review the performance of net profit, which was €264,000,000 up from €231,000,000 in the 2024. This trend reflects the improvement in operating performance of €19,000,000 whose dynamics I’ve just described, a slight increase in nonrecurring cost of 6,000,000 due to higher layoff and write off charges, and the reduction in net financial expenses of €53,000,000, mainly attributable to a lower nonmonetary impact related to hyperinflation accounting. Finally, the increase in taxes of €34,000,000 compared to the 2024 is due to an unfavorable year on year comparison as the value for the 2024 included the benefits of the Patent Box and the impact of the positive settlement of tax disputes. Kirelli closed 2025 with a negative net financial position of approximately €2,680,000,000 Operating net cash flow was minus €217,000,000 in line with the seasonality of the business and improving by 62,000,000 compared to the 2024.

This was mainly supported by the operating performance committed in the previous slide and lower working capital absorption due to the efficient inventory management and to the usual seasonality of trade receivable and trade payables, which accounted respectively 1323% of revenues. Net cash flow before dividends at minus $5.00 €4,000,000 was affected by the impact of tariffs and currency devaluation as well as extraordinary transactions completed during the first six months of the year, plus €43,000,000 from the sale of Deca, minus 19,000,000 related to other transactions, the main one being the capital contribution payment to the joint venture with the public investment fund of Saudi Arabia. Net cash flow before dividends in the 2025 was positive at €193,000,000. Excluding the aforementioned positive effect related to the sale of data to CTS, it was essentially in line with the figures for the 2024, which was €164,000,000 Let’s now move to Slide number 20. Okay?

As of 06/30/2025, the gross debt of the group was approximately 3,870,000,000.00. Considering financial assets of approximately 1,190,000,000.00, the net financial position was therefore approximately 2,680,000,000.00. The liquidity margin is at €2,400,000,000, of which 1,500,000,000.0 in committed credit lines not drawn. This margin covers debt maturities for approximately three and a half years, that is until q four twenty twenty eight. The cost of debt calculated over the last twelve months stood at 4.88%, down from 5.06% at the end of last year.

The reduction is attributable to the decline in interest rates in the Eurozone. Finally, at the end of last June, sustainable finance continues to account for approximately 70% of the group’s gross debt or 84.4% if we consider the holding company’s debt in line with the 100% target announced before the 2025. And I hand back over to mister Rizaluci.

Francesco Casaluci, CFO/Executive, Pirelli: Thank you, Mr. Borchio. Let’s now turn to the market outlook for 2025. We confirm a substantially flat Qatar market, minus one plus one. High Value remains the most resilient segment with mid single digit growth expected in line with the first half.

In car 17 inches and below, demand for the year is expected to decline by low single digit. In this scenario, Pirelli confirms its strategy of strengthening the car 18 inches and above segment with market share gain in both channels. In the second half, in original equipment, we will benefit from the reinforced partnerships with premium local manufacturers both in Asia Pacific and North America. In replacement 18 inches and up, we target to outperform markets in all regions. Finally, in cars 17 inches and below, we continue to reduce the exposure to the less profitable products and channels.

The tariff scenario is still evolving. An agreement was reached between Europe and the United States administration on July 27. Meanwhile, regarding Brazil, Kirelli is analyzing the measure concerning the tariffs announced on July 30 yesterday to verify its application to the various product segments. Based on current regulations, The US tariff scenario is as follows. 25% on car fire imports from Europe from May 3 to July 31 and fifteen percent from August 1 subject to ratification.

25% from May 3 on imports from Brazil. The measure announced yesterday by the US administration is currently under analysis. From a preliminary internal analysis, it appears that car tires continue to be subject to a 25% tariff, while motorcycles are subject to 50%. No tariffs on imports from Mexico as our products are USMCA compliant. Finally, universal tariffs on imports of motorcycle and bicycle tires from all countries with different percentage depending on the search.

In this context, in light of the uncertainties on Brazil, we confirm the gross impact of €60,000,000 for the year and €30,000,000 following the mitigation plan implementation already launched in the second quarter, so €30,000,000 net impact. Let us now move to our targets. Despite the worsening of the ForEx scenario compared with May expectations, we confirm our targets for profitability and cash flow due to the solid organic growth and the effectiveness of the mitigation plan. For the full year 2025, we forecast revenues between €6,700,000,000 and €6,800,000,000 Volumes growing by approximately 1%, pricemix improving between 33.5% compared to the plus two to plus 3% previously indicated, and negative exchange rate impact now expected at minus 4.5 to minus point four compared to the previous minus 2.5 to minus 1.5%. Profitability is expected to be 16% with improved price mix and the mitigation plan helping to reduce the impact of tariffs and the more negative exchange rate.

The guidance implies an adjusted EBIT of approximately 1,080 million dollars at the midpoint, in line with the figure indicated in May in case of tariff application for the rest of the year. Investments are considered at 420,000,000, roughly 6% on revenue, and cash generation of approximately 550,000,000 is confirmed as well as the resulting deleverage target. And now I’ll give the floor to mister Tronchetti for the final remarks.

Marco Tronchetti, CEO, Pirelli: Thank you, mister Casaluci. The first half results confirm the effectiveness of our strategy, which has produced solid results despite the difficult external context, perceived the challenges from the environment with determination, reacting quickly, and in a coordinated manner. This confirms our ability and the strength of our business model. Thanks to a clear vision, strong execution capabilities, and the derisking actions we are implementing, we look for the future with confidence. We’re ready to face the external complexities and to outperform our peers, both in terms of profitability and cash generation.

This will allow us to achieve our delivery to a target by year end, ensuring greater flexibility and laying solid foundation for growth in the coming years. And this ends our presentation, so we may open the q and a session. Thank you.

Event Moderator: This is the again, the event moderator. Thank you, mister Troncetti. We will now begin the question and answer session. To answer the queue for questions, please click on the q and a icon on the left side of your screen. When announced, please click continue on the pop up window.

If you are connected in audio only, please press star one on your telephone. The first question is from Akshat Kakar of JPMorgan. Please go ahead.

Akshat Kakar, Analyst, JPMorgan: Good evening. Akshat from JPMorgan. I have three questions, please. The first one is a clarification on tariffs. So if I understand you correctly, you have reiterated the growth and net impact from tariffs for this year despite mentioning that we have lower tariffs from Europe to The U.

S, down from 25% to 15%, and that’s where initial assessment on Brazil is that it stays at 25%. So could you just tell me how is the total or the cost of a net impact the same as your previous assessment? That’s the first question. The second one is on pricing. We have clearly seen an improvement on the profit bridge in the second quarter.

Could you talk about the general inventory situation in Europe and North America as you see it today? And what is your pricing or commercial strategy as you go into the second half, please? And the last one is on the standard business. Could you just generally talk about the changing market dynamics in the South American market, particularly the Brazilian market and what that means for your Standard business going forward and the margins?

Marco Tronchetti, CEO, Pirelli: Mr. Casaluci?

Francesco Casaluci, CFO/Executive, Pirelli: Yes. Thank you for your questions. So tariff impact, based on our estimation done on May, where we were we were expecting a 25% from Europe import, moving from 25 to to to 15, which is anyhow something that is still to be finally confirmed by executive orders, will not will improve, of course, the situation on the second half from August on, not not the the entire second half, but not significantly because we already paid the 25 starting from May till July, and we already have stocks partially covering the demand of the following month. So, of course, there is an improvement, but not meaningful and partially compensated by the worsening scenario of the duties from Brazil. So all in all, we are confirming the expectation done in ’20 sorry, May.

Clearly, we welcome the news of the reducing from 25 to 15 also because this will benefit on the next year impact. If things will remain as for today, but there is a high level of volatility. Pricing wise, we in our price mix of the first half, we have a slightly positive impact mainly driven by the original equipment in this edition because of the raw material negative trend over the previous months. All in all, we see a price discipline all around. Clearly, in The United States, the duties on import considering that the total demand of the country is around 300,000,000 tires on a yearly base.

And then solid capacity is around 170,000,000 tires. It it is logic to managing an inflationary environment, but it’s too early to arrive at any kind of conclusion on that. So we will we are monitoring carefully. As far as standard is concerned, we are accelerating our exit strategy of the standard in the lowest in the less profitable channel in South America, both in Brazil and Argentina. I would say mainly in Argentina because the imported ties from Asia is increasing.

And and so we we see we face the trade down accelerated in the region and adding the steel opportunity to reduce our exposure to standard, we are accelerating. This is the main reason why you see a slight re a lower slightly lower performance in terms of volume compared to our previous guidance. Thank you.

Akshat Kakar, Analyst, JPMorgan: Thank you very much.

Event Moderator: The next question is from Monica Bosio of Intesa Sanpaolo. Please go ahead. Yes.

Monica Bosio, Analyst, Intesa Sanpaolo: Good evening and thanks for taking my questions. I have three questions. The first is is if you can remind me what is your capacity production in Brazil and how much is standard and how much is high value? And what will be the strategy from now on? I’m just wondering, as you are exiting the less profitable segment, the distribution segment, Are you willing to convert part of the standard capacity into high value?

Or are you going to restructure some capacity production in Brazil? That’s my first question. The second one is on the originally key brand market in USA. I was wondering if you have seen some pre buy effect in the first half or in the second quarter. And what are you expecting for the original market in the last part of the year?

Because according to the most of the providers, The US market should go down in the fourth quarter. And the very last question is on the raw material impact, it was roughly €51,000,000 in the first half. Should we expect a reversal in the second half? So if you can indicate as the total impact for the full year. Thank you very much.

Francesco Casaluci, CFO/Executive, Pirelli: Okay. Thank you. Thank you also for your questions. So Latin America, Brazil, you you asked us for Brazil. Our total production capacity in Brazil today is around 11,000,000 tires.

50% already converted in high value, while 50% still remaining in standard. And, of course, our target is to accelerate the conversion of the standard capacity into high value. And in the following years, we plan to go go basically to zero standard capacity also in South America, improving the high value capacity. We don’t have restructuring plans in the coming years. I remind you that we already did the restructuring day in 2019

: Mhmm.

Francesco Casaluci, CFO/Executive, Pirelli: In Brazil, and we closed the one factory in Rio Grande do Sul. And to and today, we have our actual footprint that we do consider the right one, both supporting the conversion to high value of the local demand, which is already visible in the road map of the carmakers in Brazil and the export into United States. As far as United States market is concerned, we a second half of the year with an high value market remaining mid single digit positive with an original with an original equipment improving its performance and moving from negative into positive also thanks to a favorable comparison versus last year. You most probably remind that in the last month of 2024, the original equipment in United States lost a lot of volumes because the car makers decided to reduce the stock in in the trade in the trade. And so we see the opportunity of recovery in the regional equipment.

While the replacement, we do expect it to remain around a mid single digit growth in the second half exactly as it happened in the first half. We haven’t seen significant pre buying behavior in the customers, maybe something in April before the the application of the duties that has started in May, but then with a negative impact on May, June. So all in all, the second quarter, I would see I would say there’s been a stable stable trend. Raw material impact in the second whole half is expected to be slightly negative slightly negative. Of course, it’s improving compared to first half, but it has been 53 €51,000,000 negative headwind.

We do expect a slightly negative impact on the second half.

Monica Bosio, Analyst, Intesa Sanpaolo: Perfect. Thank you very much. Thank you.

Event Moderator: The next question is from Thomas Busson of Kepler Cheuvreux. Please go ahead.

: Thank you very much. Good evening. I have a couple of questions for this. Firstly,

Marco Tronchetti, CEO, Pirelli: could you give us

: an update on the topic of the first half which has been your, let’s say, your attempt to to change the stake of your larger shoulder or your your let’s say, the willingness to have them lower the stake to have the possibility to not be eventually seen as controlled by a Chinese investor. Is there anything new on that front? Because I unless I’ve missed it, I I didn’t hear anything on the topic. And my second question is on some of the nonoperating lines of of your p and f. Could you just confirm confirm what we should expect for 2025 in terms of net financial charges and tax rate?

Thank you.

Marco Tronchetti, CEO, Pirelli: Thank you for for your question, Cheryl, the structure control, etcetera. No news for the time being. The discussions are ongoing, and we expect that at the end, the the company could continue without any restriction this growth in any in any region. So we we are dealing with this and we are we are in an open dialogue. So and until now, there is nothing new.

There is nothing urgent and nothing new that there is the certainty that this problem will be solved. Thank you. And then I leave the floor to mister Bokce.

: Yeah. Thank you for the the second question. I will take it. Related to the nonoperative lines below the adjusted EBITDA, We can confirm that the nonrecurring is expected to be in the ballpark between fifty five to sixty million for the full year. Financial charges, we’re expecting to be between 220 to 230,000,000, and we confirm our original guidance for the for the tax rate, which would be between 28 to 30% on the on the full year.

Thank you very much, both of you.

Event Moderator: The next question is from Stephane Benamo of BNP Paribas Telecom. Please go ahead.

Marco Tronchetti, CEO, Pirelli: I have three questions, if I may. The first one is regarding the efficiency gains. So can you please elaborate on the crush program coming on the top of the efficiency gains? And what could be the contribution in H2? The second question is regarding the pricemix.

So can you please give us the breakdown between price and mix in Q2? And you revised up your pricing objective for the full year. So how much of this is structural versus temporary? This is my second question. And the last question is regarding the cyber tire.

So you did a focus today on this tire. So can you please give us an indication of the contribution of those tie off globally and in The US in terms of volumes and revenues? Thank you.

Francesco Casaluci, CFO/Executive, Pirelli: Thank you. So as far as the efficiency program, we have divided in two as we presented the all in all growth efficiency program, which has been already part of our initial plan accounting for €150,000,000, is is divided among the different plan presented product cost that is roughly on the full year base 50 70 €60,000,000. Sorry. Another €50,000,000 roughly coming from manufacturing, $2,323,000,000 euros from organization impact, and 33 roughly from the s g and a. This is the 150,000,000 growth efficiency part already part of of our plan.

On top of that, we have faster cost tightening activities all around the world to support us in the mitigation plan. And here we are talking about cost discipline and cost reduction at 360 degrees in all regions, not necessarily concentrated in United States because we are asking to all the countries to support the mitigation plan with positive results so far. So we are on track with with this. Price mix, the impact in the first half of the price is slightly positive, as I said before, due to the original equipment in utilization. And all in all, the major driver in the first half has been the product mix with roughly 2.5 percentage points out out of the 3.9.

And we also had a positive region mix of roughly one point, mainly due to the acceleration of the exit strategy in the standard segment in South America already mentioned. If we target the full year as we as we presented in our guidance, we do expect a second half, which is the expectation of the second half between 22.5% improvement with a stable performance on the product mix. And in this case, we do expect a slightly negative channel mix impact because we do expect the recovery of the regional mainly driven by North America and Europe in the second half. Price remains slightly slightly positive with a reduction of the initialization impact of the original equipment because of the well known trend on raw material. CyberTire, still very the numbers we don’t communicate in detail the numbers, but in terms of impact is still minimum because it’s a technology in the introduction phase.

We do expect a significant growth in terms of penetration in the coming years. We are happy working with a lot of carmakers to introduce the technology, and this will be well explained during our next industrial plan. Thank you.

: Thank you, Natasha. The

Event Moderator: next question is from Martino Lianbroggi of Editor. Please go ahead.

Marco Tronchetti, CEO, Pirelli: Thank you. Good evening, everybody. Again, on the issue for the major shareholder. If I remember correctly, the government had a time limit. It was July today.

So to provide a decision on the golden power exercise and so on. Am I wrong? Thank you for for for the question. I think that the process is ongoing. And so we we believe that being also August starting from tomorrow, a a time in which, obviously, there are a lot of people going holiday, including us.

And and so we we believe that it will be postponed for another month or two.

: But it is not a precise time limit?

Marco Tronchetti, CEO, Pirelli: Now there is no no specific because it is in the hands of the government. It continues this deep analysis and the golden power obviously continue the deep analysis and they they are defending to to many many different sources. So I I think that we’ll keep August and we will go to September. That’s my view. Okay.

And concerning if there are still too many moving parts for tariffs, what’s the likelihood to see extra CapEx to fix the imbalance in your footprint considering the current definition of tariffs, if any? No. There is no extra CapEx in the plan that we presented. We we will see the evolution of the investment, which will remain within the framework of the percentage of sales that we had until now. So there are, for the time being, no extraordinary investments when we talk when we talk about new capacity, new investments.

These investments are deployed in the next years. So it’ll be year after year absorbed, and we don’t have a different policy of investment now, And we don’t need, as far as we can see, any any possible extraordinary investment. Thank you. Thank you. And very last on pricing in North America.

I don’t know if you can provide any additional comment on the pricing environment in this area.

Francesco Casaluci, CFO/Executive, Pirelli: No. It’s too early to to have a clear understanding. The only comment we can do is is a general comment based on what I said before that the total installed capacity in US is around 170,000,000 tires, while the the total demand of the market on a yearly basis, 300,000,000. So the the if the duties will remain, it’s it’s logic to imagine an inflationary environment. But till now, no no major information.

Thank you.

Marco Tronchetti, CEO, Pirelli: And also you are not moving anything?

Francesco Casaluci, CFO/Executive, Pirelli: We we are we are evaluating the commercial conditions, the customer by customer, both the replacement and original equipment because as you can imagine, it’s not the only personal price. It’s also related to the income terms, to the stock level. So we are in a phase of evaluation of everything. But you can imagine it’s it’s very early. We are in the first stage because the duties with Europe, for example, is not yet finally confirmed by the US administration.

So everything is under under development.

: Okay. Thank you very much.

Event Moderator: The next question is from Christophe Laskawi of Deutsche Bank. Please go ahead.

Marco Tronchetti, CEO, Pirelli: Good evening. Thank you for taking my questions. The first one, again, coming back to the topic of tariffs. Assuming that the 15% from Europe into US are confirmed and the 25% from Brazil as well, Do you have the the ability or would it make sense also with regards to production cost in the two regions to shift more volumes from Europe into The US and sort of lower the exports from Brazil? Is this potentially a sizable mitigation opportunity that you have or because of, again, cost imbalances or obviously shipping, etcetera, it doesn’t make sense?

But Greg, if you could comment on that. And then a clarification question on pricing. I’m sorry to come back to that. Did I understand it correctly that you say essentially pricing slight positive in h two as in h one despite indexation fading and

Francesco Casaluci, CFO/Executive, Pirelli: as

Marco Tronchetti, CEO, Pirelli: a delta that obviously replacement pricing would be slightly positive? And then last question just on the inventory situation in The US. Has the tariffs had any more significant implications for the inventory there? Or is this basically as as you saw it before? Thank you.

Francesco Casaluci, CFO/Executive, Pirelli: So thank you for your questions. Yes. We have a certain degree of flexibility in the allocation among Brazil, Mexico, and Europe, and we are trying to optimize the global supply chain for United States. And in case environment will remain as for today, so 15% duties from Europe and the 25 on car tires from Brazil, we will try to optimize the the different source of production for United States. Nevertheless, Mexico will remain by far the most important source of production for us representing roughly 55% of the sold volumes in United States.

And I remind that this is so far a duty free area for the USMCA compliant product. On price, we don’t give a disclosure on the second half between price mix and the and price mix. And what I can tell you is that the original equipment in utilization will be less significant compared to the first half, and so is is in reduction. So that’s that’s logic because it’s linked to the trend of the raw material. Inventories in United States today are, I would say, in a at a normal level.

We don’t see major impact of the duties because that has been, as I said before, a slight anticipation on the pre buying approach in April compensated by a re rebalance of the inventories during the month of May and and June. Thank you so much.

Event Moderator: The next question is from Gianluca Berthutso de Intermonte. I

: have a couple on tariffs. This is one that relates to the spare capacity Mexico. As you said, it is a duty free first country. One What is the level of flexibility you are here to increase exports? And second one relates still to on still on tariffs, but to the competitive environment.

Where do you see Pirelli position at the in in all these environment? I mean, it seems that you maybe have some disadvantage to to more localized players, but at the same time, you may be at an advantage compared to other other players of the of the market. Can you maybe provide us a description, a framework for that? Yes.

Francesco Casaluci, CFO/Executive, Pirelli: Thank you so much. Is Mexico today for Pirelli is fully separated, you can imagine. It’s been always the the the the case, but now even more. So we have two two activities in place. The first is that we can keep on growing in terms of capacity.

It was already in our industrial plan. So we are still investing in production capacity growth in Mexico. And this is a mid long term plan. In the short term, we are trying to reduce as much as possible all the production done in Mexico, not dedicated to United States. So we are trying to free capacity for for production today, address it to market different than US, like Europe or Mexico itself.

And to reallocate this demand to other plans, not not being subject to to duties. I would say compared to the other players, I would consider Pirelli more or less on an average situation. There are players able to satisfy their demand with the local capacity in United States. There are players even more exposed to duties than us. Clearly, for us, it’s key.

The the The US and CA agreement and to assure that Mexico remains not subject to duties. In this environment, I feel that we are in average average situation compared to our competitors.

: Okay. Thank you very much.

Event Moderator: Mister Franchetti Provera, there are no more questions registered at this time.

Marco Tronchetti, CEO, Pirelli: Thank you, so this ends our presentation. And happy summer to everybody, and I wish you a very good evening. Bye bye.

Event Moderator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.

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