By Denna Bowman
Pirelli’s decision to focus on its tyres business and spin off the real estate activities side of the company has had a positive effect on its share price.
Investors signaled their approval of the Italian company’s move to focus on what its best known for – tyres – causing the stock to surge earlier this week.
Pirelli confirmed a spin-off of its Pirelli and C Real Estate unit and said the timing of the separation was motivated by a pick-up in first quarter results for both parts of the group.
The spin-off should complete in October as Pirelli assigns its 58 percent stake in Pirelli RE to its own shareholders, the company said.
Pirelli’s strong first quarter tyre performance will also support its share price. Pirelli Tyre’s sales were up nearly 20 percent in the quarter with earnings before interest and tax jumping 66 per cent.
The company raised its full-year growth target for revenues in the tyres business to 10 per cent from 6-8 percent previously.