Macroeconomic and Market Situation
The Global Economy
The global economy has withstood a number of shocks in 2011 that clearly stunted growth of a world economy still recovering from the global financial crisis of 2008-2009. The uprisings in the Middle East and North Africa destabilized governments in the region and disrupted economic growth and oil supply. On March 11, the earthquake in Japan disrupted not only the Japanese economy but the global manufacturing supply chain, particularly in the electronic and automotive sectors. Europe’s sovereign debt crisis intensified throughout the year as tight fiscal policy across the region depressed consumer spending, constraining both economic growth and expectations for its recovery.
World GDP Growth, Annual % Change
Source: IHS Global Insight, December 2011
The impact of these shocks has been to depress global growth to 3.0% in 2011 following a recovery of 4.3% in 2010. In the mature economies, growth edged upwards by only 1.5% in 2011, as sustained unemployment depressed real incomes in both Europe and the United States, and confidence was undermined by the debt crisis. The Japanese economy contracted instead by 0.7%.
Emerging market growth moderated but still remained robust in 2011 offering a key source of support for the global economy. The Asia-Pacific region expanded by 4.5% in 2011, led by a 9.2% rate of growth in China. Economic growth was 4.1% in Latin America led by a 7.8% expansion in Argentina, while growth in Brazil, after a rebound of 7.5% in 2010, slowed to 2.9% in 2011 as the lagged effects of tighter fiscal and monetary policy reined in economic activity.
With respect to exchange rates, the Euro was up 5% on the dollar on average in 2011 compared to 2010. It started off 2011 at 1.34 U.S. dollars per Euro and strengthened in the spring to 1.48 U.S. dollars only to slip in the fourth quarter as a combination of weaker European growth, a cut in the policy rate and continued turbulence related to the sovereign debt crisis weighed on the exchange rate.
€ / US $
In Asia, the Japanese yen continued its appreciation against the dollar in 2011, starting out the year at 82 yen per U.S. dollar and closing out 2011 at 77 yen per U.S. dollar. The Chinese renminbi appreciated by close to 5% with respect to the U.S. dollar during 2011.
The Brazilian Real appreciated steadily against the U.S. dollar for the first half of 2011 and hit a high of 1.54 against the U.S. dollar at the end of July. In September, market turbulence and a shift by the government to growth supporting policies produced a 14% depreciation in the Real and by end 2011, the exchange rate was trading at 1.86 Real per U.S. dollar. The Argentina currency averaged 4.13 pesos per U.S. dollar in 2011, an 8% depreciation with respect to its 2010 average exchange rate. Venezuela maintained its peg with the U.S. dollar in 2011.
- General Information
- Directors' Report
- Macroeconomic and Market Situation
- Significant Events During the Year
- Group Performance and Results
- Business Outlook in 2012
- Operating Performance
- Research and Development Activities
- Highlights of Other Activities
- Parent Highlights
- Risks and Uncertainties
- Significant Events Subsequent to the End of the Year
- Alternative Performance Indicators
- Other Information
- Remuneration Report
- Resolutions
- Consolidated Financial Statements
DATAHIGHLIGHTS
(in millions of euro) |
|||||
2011 | 2010 | 2009 : | 2008 | 2007 | |
---|---|---|---|---|---|
GROUP INCOME STATEMENT | |||||
Net sales | 5,655 | 4,848 | 4,067 | 4,660 | 6,076 |
Net sales (excluding DGAG - PRE) * | 4,660 | 4,780 | |||
Gross operating profit | 807 | 629 | 453 | 252 | 573 |
% of net sales | 14.3% | 13.0% | 11.1% | 5.4% | 9.4% |
Operating income | 582 | 408 | 250 | 43 | 364 |
% of net sales - ROS | 10.3% | 8.4% | 6.1% | 0.9% | 6.0% |
Net income (loss) from continuing operations | 313 | 228 | 77 | ||
Net income (loss) from discontinued operations | - | (224) | (100) | ||
Prior period deferred tax assets - Italy | 128 | - | - | ||
Total net income (loss) | 441 | 4 | (23) | (413) | 324 |
Net income attributable to owners of Pirelli & C. S.p.A. | 452 | 22 | 23 | (348) | 165 |
Total net earnings (losses) per share attributable to owners of Pirelli & C. S.p.A. (in euro) | 0.926 | 0.045 | 0.047 °° | (0.065) | 0.031 |
TYRE INCOME STATEMENT | |||||
Net sales | 5,602 | 4,772 | 3,993 | 4,100 | 4,162 |
Gross operating profit | 858 | 661 | 501 | 341 | 549 |
% of net sales | 15.3% | 13.9% | 12.5% | 8.3% | 13.2% |
Operating income | 644 | 453 | 309 | 151 | 358 |
% of net sales - ROS | 11.5% | 9.5% | 7.7% | 3.7% | 8.6% |
GROUP BAlANCE SHEET | |||||
Non-current assets | 3,558 | 3,164 | 3,596 | 3,665 | 3,815 |
Net working capital | 399 | 303 | 427 | 600 | 551 |
% of net sales | 7.1% | 6.2% | 10.5% | 12.9% | 11.5% |
Total net working capital | 155 | 117 | 222 | 418 | 298 |
% of net sales | 2.7% | 2.4% | 5.5% | 9.0% | 6.2% |
Net invested capital | 3,713 | 3,281 | 3,818 | 4,083 | 4,113 |
Equity | 2,192 | 2,028 | 2,495 | 2,374 | 3,804 |
Provisions | 784 | 797 | 795 | 681 | 611 |
Net financial (liquidity)/debt position | 737 | 456 | 529 | 1,028 | (302) |
Equity attributable to owners of Pirelli & C. S.p.A. | 2,146 | 1,991 | 2,175 | 2,172 | 2,980 |
Equity per share attributable to owners of Pirelli & C. S.p.A. (in euro) | 4.40 | 4.08 | 4.46°° | 0.40 | 0.56 |
OTHER GROUP INFORMATION | |||||
Net operating cash flow | 156 | 310 | 496 | (147) | 299 |
Depreciation and amortization | 221 | 217 | 198 | 199 | 214 |
Capital expenditure - tangible | 618 | 433 | 225 | 311 | 287 |
Capital expenditure/depreciation | 2.80 | 2.00 | 1.14 | 1.56 | 1.34 |
Research and development expenses | 170 | 150 | 137 | 156 | 173 |
% of net sales | 3.0% | 3.1% | 3.4% | 3.3% | 3.6% |
Headcount (at 12/31) | 34,259 | 29,573 | 29,570 | 31,056 | 30,823 |
of whom temporary workers | 2,649 | 2,426 | 2,245 | 2,913 | 3,642 |
Sales * per employee (in thousands of euro) | 181 | 160 | 138 | 148 | 155 |
Operating income/Net invested capital ** - ROI | 16.64% | 11.49% | 6.33% | 1.05% | 6.33% |
Net income (loss)/Equity ** - ROE | 20.89% | 0.18% | (0.94%) | (13.37%) | 7.63% |
Net financial position/Equity - Gearing | 0.34 | 0.22 | 0.21 | 0.43 | n.s. |