1.1MB - Pirelli

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Motorcycle tyres celebrate 100 years: a history of technological development in the name of sportiness, as the new-born Dragon Evo and Dragon GTS demonstrate. In line with the generalized slowdown of production, the demand for commercial vehicles also fell by approximately 10 percent. Exports to countries in the area, particularly to Columbia and Ecuador, also fell sharply. In other geographic areas, Pirelli marketed its car and recreational tyre ranges by constantly expanding distribution networks and by lending support for marketing, logistics and technical assistance to the representative offices in the main markets (Beijing, Dubai, Hong Kong, Moscow, Sydney, Singapore, East and West Africa and India). Despite the difficulties caused by the economic situation, volumes and sales maintained satisfactory levels, thanks to the complete range of products and the strong image of the brand name. One of the initiatives designed to support a further growth of volumes and presence took off in January 1999, in Japan, in the form of a joint venture, in which Pirelli has a majority interest, with Abe Shokai, formerly the local distributor for Pirelli products. Activities in the Business Units can be described as follows: • In the Agriculture Tyre B.U., 1998 saw the finalization of the incorporation of the new company Trelleborg Wheel Systems S.p.A., between the Swedish industrial group of the same name and Pirelli, which holds 40 percent of the capital. The initiative has the aim of creating a wider coverage of the various potential segments of the European market, through the integration of the Pirelli radial tyre range with the Trelleborg line, for use with farming and forestry equipment and industrial lifts. • Sales of the Motorcycle Tyre B.U. maintained the same levels as the previous year. The favorable trend in sales volumes on markets in general was neutralized by the fall in sales in Germany, caused by the unfavorable weather conditions. Although sales remained largely unchanged, the net result improved, drawing benefit from the effects of measures in the area of manufacturing, with generalized cost efficiencies and the adoption of a new kind of “lean factory” organization. Investments, aimed at revitalizing the product portfolio and processes, remained high. New products include: for high-performance motorcycles, the Dragon EVO and the Dragon GTS, in the recent Zero degree technology and with innovative materials behind a decisive improvement in performance; in the Enduro segment, the Metzeler Tourance and the new Pirelli Scorpion line; in Touring, the Metzeler Marathon ME 880; in moto-cross, the new Pirelli MT 480 Super Cross. In the context of sporting activities, there were important results, including a first place in the World Moto Cross Championship in the 500-cc category and first place in the European Supersport 600 Championship. • The Industrial Projects and Licenses B.U. acquired contracts to supply machines to licensed dealers in Egypt and Tunisia. A new contract has also come into force to double the capacity of the Hualin factory in China, supplied by us in the early 90’s. Considerable effort has also been devoted to preparing an industrial design to expand the Alexandria Tyre plant which involves doubling truck production and the introduction of car manufacture. Activities associated with existing contracts in China and India (car projects) and in Egypt (trucks) continued. • In 1998, the Steel Cord B.U. operated in a world market which showed a slight growth (+2.5 percent), characterized by stability in Europe and North America. Within this scenario it proved possible to seize market opportunities associated with the departure of small manufactures. i 33
New types and sizes of the “Scorpion” line have enriched the 4x4 range. Testing Pirelli high performance tyres in the wet. Performance of the main companies in the Sector The most significant figures as they appear in the financial statements prepared by the boards of directors and approved or being approved by the respective shareholders’ meetings are given below. The amounts are expressed in local currency and are compared to those of the preceding year: Pirelli Pneumatici S.p.A. - Italy (in millions of Lire) 1998) 1997) • Sales revenues 1,517,733) 1,479,443) • Net income 100,479) 82,874) • Net financial position (197,670) (152,066) • Shareholders’ equity 615,252) 586,197) Pirelli Reifenwerke GmbH & Co. K.G. - Germany (in thousands of DM) 1998) 1997) • Sales revenues 943,792) 921,362) • Net income 17,710) 25,520) • Net financial position 54,981) 22,764) • Shareholders’ equity 79,318) 87,128) Pirelli UK Tyres Ltd - consolidated (in thousands of £) 1998) 1997) • Sales revenues 248,011) 245,065) • Net income 4,706) 12,597) • Net financial position 14,325) 4,191) • Shareholders’ equity 65,273) 70,168) Pirelli Neumaticos S.A. - Spain (in millions of Pesetas) 1998) 1997) • Sales revenues 35,958) 32,936) • Net income (loss) 346) (5) • Net financial position (2,548) (1,235) • Shareholders’ equity 11,614) 12,266) Metzeler Reifen GmbH - Germany (in thousands of DM) 1998) 1997) • Sales revenues 189,078) 191,215) • Net income 10,813) 19,446) • Net financial position 9,211) 4,963) • Shareholders’ equity 42,813) 51,446) Türk Pirelli Lastikleri S.A. - Turkey (in thousands of US$) 1998) 1997) • Sales revenues 220,726) 251,165) • Net income 32,426) 33,648) • Net financial position (36,798) (23,160) • Shareholders’ equity 72,413) 60,823) Pirelli Pneus S.A. - Brazil - consolidated (in thousands of Brazilian reais) 1998) 1997) • Sales revenues 756,556) 746,480) • Net income 101,519) 78,434) • Net financial position (124,414) (156,501) • Shareholders’ equity 366,892) 350,941) 34 i
Page 1 and 2: Pirelli S.p.A. Milan Annual Report
Page 3 and 4: Contents Board of Directors; Board
Page 5 and 6: Structure of Pirelli Group at Decem
Page 7 and 8: Five-year Summary of Selected Conso
Page 9 and 10: Gross Domestic Product of the main
Page 11 and 12: 1997-1998 trend in raw materials pr
Page 13 and 14: Distribution of Pirelli Group 1998
Page 15 and 16: The added value of submarine system
Page 17 and 18: Cables and Systems Sector Overall p
Page 19 and 20: Distribution of 1998 Cables and Sys
Page 21 and 22: Advanced studies within the laborat
Page 23 and 24: The first submarine optical amplifi
Page 25 and 26: In Iceland, Pirelli installed 150 k
Page 27 and 28: The rotating platform of the Pirell
Page 29 and 30: The new Audi TT is fitted with ultr
Page 31 and 32: The Lamborghini Diablo is among the
Page 33: The trend of truck tyres in Brazil
Page 37 and 38: Pirelli supplied the Berlin electri
Page 39 and 40: The Pirelli Corporate Web, the Intr
Page 41 and 42: Certification activities in line wi
Page 43 and 44: Distribution of Group personnel by
Page 45 and 46: • revenues for goods and services
Page 47 and 48: Corporate Governance As represented
Page 49 and 50: Results of operations The 1998 resu
Page 51 and 52: Appointment of the audit firm Upon
Page 53 and 54: Consolidated balance sheets Assets
Page 55 and 56: Liabilities and shareholders’ equ
Page 57 and 58: Consolidated statements of income (
Page 59 and 60: - positive differences, where not a
Page 61 and 62: • Provision for income taxes The
Page 63 and 64: "Investments in associated companie
Page 65 and 66: - Other receivables Other receivabl
Page 67 and 68: Provisions for income taxes The pro
Page 69 and 70: An analysis of payables by due date
Page 71 and 72: MEMORANDUM ACCOUNTS Memorandum acco
Page 73 and 74: Personnel costs Personnel costs con
Page 75 and 76: for liabilities and expenses accrue
Page 77 and 78: R&D expenditures In 1998 the Group
Page 79 and 80: Consolidated statements of cash flo
Page 81 and 82: Reconciliation of net results and s
Page 83 and 84: Assets (continued) (in thousands of
Page 85 and 86:
Memorandum accounts (in thousands o
Page 87 and 88:
List of investments Companies conso
Page 89 and 90:
Percentage Company Activity Headqua
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Percentage Company Activity Headqua
Page 93 and 94:
Other investments in subsidiaries a
Page 95 and 96:
improvements and loan acquisition c
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Extraordinary part of the sharehold
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the two companies, given that that
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the formation of the value in this
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The weighted average cost of capita
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Result of the valuation and the sha
Page 107 and 108:
Entering into the merits of the mer
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Group structure at December 31, 199
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Notice pursuant to art. 10, paragra
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1.i - Evaluations by the Board of D
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December 31, 1998, with the cancell
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Amendment of the by-laws Present wo
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6. Effects of the merger The transa
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and abroad, pursuant to the terms o
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or Managing Directors, the chair sh
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e enclosed with the lists together
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Attachment 2 Pirelli S.p.A. - Milan
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Article 10 In view of the nature of
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Article 19 The Board is authorized
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Failing any lists, the Board of Sta
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