1.1MB - Pirelli

The acquisition of the Siemens energy cables
division has provided Pirelli Cables and
Systems with the advanced R&D laboratories
in Berlin.
A P6000 Powergy in the semi-anechoic room
to test its levels of silence.
The Group
1998 economic and financial performance
1998 saw fiercer price pressure and strong competition on all markets in which the Group
operates.
The strategic and operating guidelines outlined in the 1997 annual report continued to be
applied into 1998 and significant improvements in efficiency were achieved, which were
reflected in the level of variable and fixed costs. The development objectives were also
pursued, which led to the acquisition, among other things, of the Power Cables Division of
Siemens A.G., announced on October 30, 1998, and described in the six-month report on
the financial statements at June 30, 1998 as a significant subsequent event. The German
units were consolidated line-by-line in the 1998 balance sheet, while the units in Hungary,
Turkey, Rumania and South Africa were valued at cost in the consolidated financial
statements since effective control was only obtained during the last days of 1998.
The results of the consolidated financial statements can be summarized as follows:
(in billions of lire) 1998) 1998) (1) 1997)
• Sales revenues 10,624) 10,624) 11,265)
• Gross operating profit 1,397) 1,397) 1,329)
% of sales 13.1%) 13.1%) 11.8%)
• Operating profit 798) 798) 760)
% of sales 7.5%) 7.5%) 6.7%)
• Extraordinary items, net (15) (15) (57)
• Net income 534) 534) 512)
% of sales 5.0%) 5.0%) 4.5%)
• Shareholders’ equity 4,750) 4,836) 4,421)
• Net financial debt 513) 243) 478)
• Capital expenditures 804) 699) 619)
• R&D expenditures 379) 379) 355)
• Personnel (number) 38,209) 36,226) 36,211)
• Factories (number) 73) 70) 72)
(1) Considering the same companies in consolidation, excluding the effect of the acquisition of the Power Cables Division
from Siemens A.G..
• Sales revenues – the decrease of 5.7 percent can be explained as follows:
– Currency exchange effect (0.4%)
– Prices (7.5%)
– Volumes (1.1%
– Mix and other (1.1%
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