Italian tyre maker Pirelli has announced plans to invest €1.9 billion over the next five years in its core tyre business, with a focus on its premium range as well as emerging markets.
Revealing its 2011-2013 Industrial Plan and Vision to 2015, Milan-based Pirelli, Europe’s largest tyre maker, forecast annual revenue growth of eight per cent over the next three years, with profitability expected to rise to between 10.5 and 11.5 per cent.
The company is also planning a rise in total output to around 88 million units in 2015 from 61.8 million this year.
Pirelli is viewed as a tyre specialist, with 98 per cent of its revenue coming from that activity.
Commenting, chairman Tronchetti Provera said: “Pirelli has concluded its transformation into a pure tyre company and reached its targets ahead of schedule. In a world that is changing fast and in which new areas of growth are emerging, we have developed a plan which puts the company in the best possible position to compete.”
Price rises in raw materials are expected to cost Pirelli €500 million over the next three years. It is thought that the company may be considering joint ventures with partners in Russia and Brazil to process rubber.
The company plans to spend €155 million in Italy next year on the development of ‘eco-friendly’, high-performance tyres.
Pirelli has said that the ‘luxury’ sector would represent 73 per cent of group sales in 2015, up from 66 per cent this year.
The emerging markets of Latin America and Asia-Pacific are expected to account for around two-thirds of Pirelli’s earnings by 2013. It plans to invest $210 million (approximately €147 million) over the next two years in a new Mexican production plant, aimed at supplying both the domestic market and North America.
Meanwhile, Pirelli’s production plant in China is expected to increase truck tyre capacity by 40 per cent and double its car tyre capacity by 2013.
Pirelli was founded in 1872 and operates in more than 160 countries worldwide.
