Pirelli cuts revenue guidance for second time this year

MILAN (Reuters) – Italian tire manufacturer Pirelli cut its revenue guidance for the second time this year, joining a string of suppliers hit by a broader auto industry downturn during the last quarter.

Pirelli, which makes Tires for Formula 1 and automakers like BMW and Audi, on Thursday cited prolonged weakness in the new vehicle market and the tougher competitive environment.

It now expects its revenue to grow between 1.5% and 2.5% this year, versus an already-lowered guidance of between 3% and 4% set after releasing first-quarter results.

Last month German auto supplier Continental cut its 2019 outlook, also citing expectations for a fall in global vehicle production, while France’s Michelin said its earnings felt the effects of shrinking vehicle production.

Releasing first half results, Pirelli also cut its forecasts for its margins on adjusted earnings before interest and taxes before start-up costs to 18-19% versus a previous target of at least 19%.

The Milan-based company said its adjusted earnings before interest and taxes before start-up costs were slightly down in the January-June period to 462.4 million euros ($512.6 million), in line with a market consensus provided by the company.

Chinese chemicals group ChemChina this week committed to retaining its major stake in Pirelli until 2023.