1.1MB - Pirelli

Tyres Sector
In 1998, the world automotive market showed a slight gain, but with very varied trends in
the different geographic areas.
In Europe, the increase in the market was the result of the satisfactory trend by Spain,
followed by France, Germany and the United Kingdom; however this was set against the
negative performance of Italy, owing to the end of the program of government incentives
for the purchase of new cars.
In North America, the market remained fairly stable, while the South American market
showed a slight fall, being affected by the crisis in Brazil during the second half of the year.
Finally, in Turkey, after two years of sustained growth, the economic and political crisis in
the country led to a marked fall in internal demand.
Overall performance
The consolidated balance sheet and statement of income of the Tyres Sector are presented
as follows:
(in billions of lire) 1998 1997)
• Sales revenues 5,218 5,417)
• Gross operating profit 657 626)
% of sales 12.6% 11.6%)
• Operating profit 340 313)
% of sales 6.5% 5.8%)
• Extraordinary items, net 16 28)
• Net income 231 233)
% of sales 4.4% 4.3%)
• Net financial debt 602 425)
• Capital expenditures 373 336)
• R&D expenditures 199 187)
• Personnel (number) 20,697 21,361)
• Factories (number) 21 23)
Sales revenues, in nominal terms, have registered a drop of 3.7 percent from 1997 due to
price reductions (-4.6 percent) that were only partly compensated by the positive gains in
volumes and mix (+1.5 percent); the exchange effect is only marginal (-0.6 percent).
The breakdown of sales revenues by geographic area and product is as follows:
Italy
Other European
Countries
North America
South America
Asia
Other areas
Geographic area 1998 1997
Italy 15% 13%
Other European countries 45% 42%
North America 7% 8%
South America 24% 26%
Asia 7% 9%
Other areas 2% 2%
Product 1998 1997
Car tyres 52% 51%
Industrial and comm. vehicle tyres 30% 30%
Motorcycle tyres 7% 7%
Agriculture tyres 4% 5%
Other tyres 7% 7%
Car tyres
Industrial and
commercial
vehicles tyres
Motorcycle tyres
Agriculture tyres
Other tyres
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