Strong Revenue Growth Amidst …

This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Pirelli & C SpA (PLLIF) reported organic revenue growth of 3.7% for the first nine months of 2025, driven by a strong commercial strategy in the high-value segment.

• The company maintained a high profitability margin of 16.1%, outperforming peers and demonstrating effective internal management.

• Pirelli’s technological leadership was reinforced through product innovation, including the development of the Cyberdyne technology, which received recognition for its innovation in smart mobility.

• The company has made significant strides in sustainability, with 100% of electricity for its plants sourced from renewables and a focus on eco-friendly products.

• Pirelli successfully reduced its debt by approximately 280 million year-on-year, showcasing effective financial management and cash generation.

• The macroeconomic environment remains volatile, with challenges such as geopolitical tensions, trade tariffs, and exchange rate fluctuations impacting operations.

• Pirelli faces a negative impact from US tariffs, with an estimated gross impact of 60 million for 2025, despite mitigation efforts.

• The company experienced a decline in standard tire sales, particularly in South America, due to increased competition from Chinese imports.

• Exchange rate depreciation negatively impacted financial results, with a 3.4% adverse effect on revenues.

• The automotive market remains uncertain, with volatility in original equipment demand and disruptions in the supply chain affecting future projections.

Q: How do you see the inventory levels overall and for high-value tires, and do you expect any softening in replacement demand? A: Unidentified_3: The stock levels are quite normalized globally. In Europe, due to the winter season, stock levels are high, which is normal. The market replacement in Q4 is expected to be positive, around 4-5% in high-value replacement, with good performance expected in China and Europe, depending on weather conditions.

Q: Are there plans for further efficiency improvements next year, and what impact do you expect from raw materials in 2026? A: Unidentified_3: We plan to continue our efficiency programs, focusing on automation, digitization, and electrification of factories. We expect a tailwind from raw materials, with an estimated benefit of 30-40 million concentrated in the first half of 2026.

Q: What is your perspective on competition from Asian tire manufacturers, particularly in the high-tech segment? A: Unidentified_3: Chinese tire makers are growing in volume and market share but are not affecting the high-tech segment. The technology gap remains significant, with limited presence in the premium segment. In the high-value segment, Pirelli remains well-protected.

Q: Can you provide insights into the governance situation and whether a stock-funded acquisition is being considered? A: Unidentified_2: No stock-funded acquisition is being considered. The government is negotiating to resolve governance issues, but no extraordinary transactions are on the table.

Q: How do you view the pricing environment in the US, and are there any imbalances in the sector? A: Unidentified_3: We are renegotiating commercial conditions in the US to mitigate duties impact, reviewing terms with carmakers and distributors. We do not perceive any significant imbalance in the sector and are managing challenges effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.