Pirelli to concentrate on tyres business after returning to profit

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By Alex Kapadia

Pirelli is set to concentrate more efforts on its tyres-related business after reporting a return to profit in 2009 helped by restructuring.

The news has paved the way for the Italian tyres manufactures to spin off its non-tyre activities.

The company announced in a statement: “In the course of 2010, the group will concentrate further on its core business and become more of a pure tyre company.”

Pirelli’s share price has more than doubled in a year, benefiting from prospects for increased focus on its core tyre business even though a planned merger of its Pirelli Real Estate unit with Italian peer Fimit fell through in January.

No details were forthcoming from the company about plans to split the real estate side of the business from tyres.

However, one analyst said he expected a proposal in April with the most likely option a distribution of shares in Pirelli RE to shareholders in the parent company.

Like many other tyre manufacturers, Pirelli hiked the prices of their tyres this year to offset higher raw material prices.

The company said it expected a 6 to 8 percent rise in its tyre unit revenues this year with an EBIT margin in line with 2009 taking account of higher raw material prices.

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