This article first appeared on GuruFocus .
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Revenue:Approximately EUR 3.5 billion, with organic growth of 2.5%.
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Adjusted EBIT:EUR 558 million, with a margin of 16% (stable year-on-year).
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Net Profit:EUR 299 million, up 13% year-on-year.
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Net Financial Position:Approximately EUR 1.9 billion negative.
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Second Quarter Net Cash Flow (before dividends and M&A):Positive at EUR 148 million.
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High-Value Segment Revenue:Accounted for 82% of group sales.
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High-Value Volume Growth:3.5% in the first half.
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Standard Segment Volume Change:Minus 8% in the first half.
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Price/Mix:Positive 2.5% in the first half; positive 2.9% in the second quarter.
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Efficiency Plan Gross Benefits:EUR 81 million in the first half (54% of full-year target).
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Capital Expenditures (CapEx):EUR 177 million in the first half.
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Cost of Debt:3.89% over the last 12 months.
Release Date: July 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Pirelli & C SpA ( PRLLY ) reported solid first-half 2026 results with revenues of approximately EUR 3.5 billion, organic growth of 2.5%, and an adjusted EBIT margin of 16%, maintaining profitability among the best in the industry.
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The company gained market share in the high-value segment, with volumes growing 3.5%, driven by strong performance in the United States and China replacement channels.
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Net profit rose 13% year-on-year to EUR 299 million, benefiting from lower financial expenses due to debt reduction and a greater contribution from equity participations.
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Pirelli's Cyber Tyre technology demonstrated tangible safety benefits, including a 5-meter reduction in braking distance from 100 km/h, positioning it as a key enabler for connected mobility and autonomous driving.
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The efficiency plan generated EUR 81 million in gross benefits in the first half, achieving 54% of the full-year target, with progress in digitalization and automation reducing development time by 30%.
Negative Points
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The macroeconomic environment remains highly uncertain, with Middle East tensions increasing energy costs (Brent above $90/barrel) and pressuring input costs, leading to a negative raw material impact expected in H2.
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Standard segment volumes declined 8% in the first half, with a steeper 11% drop in Q2, as Pirelli reduced exposure to lower-profitability segments, particularly in South America.
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Foreign exchange volatility negatively impacted revenues by 2.1% in the first half, primarily due to U.S. dollar depreciation, though this improved in Q2.
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U.S. tariffs and the Middle East crisis contributed to higher other costs, including logistics and inventory management, with a EUR 43 million increase in other costs in H1.
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The company revised its full-year market outlook downward, with car tire demand now expected between -3% and -1%, reflecting weaker original equipment demand in China and standard segment weakness.
Q & A Highlights
Here are the key highlights from the Pirelli & C SpA ( PRLLY ) H1 2026 earnings call, focusing on the most significant Q&A exchanges.
Q: Can you provide an update on the U.S. investment plan, specifically the size and rationale? Is this a change in strategy from growing through mix improvements to chasing volume? A: (Marco Tronchetti Provera, Executive Vice Chairman & Andrea Casaluci, CEO) There is no change in strategy. The investment in the U.S. is driven by our strong growth and market share gains in the region, where we are currently underrepresented. The plan, which is not yet fully approved by the Board, is in the ballpark of $1.2 billion to $1.3 billion. It will target the highest level of automation and innovation, creating a highly flexible plant with a capacity of around 6 million fully high-value tires. This capacity will support local growth and potentially reduce imports from Europe and South America, with the freed-up capacity used to support local growth in those regions.
Q: What gives you confidence that U.S. volume growth will improve in the second half of the year? A: (Andrea Casaluci, CEO) We are optimistic for several reasons. First, we have seen six consecutive months of negative markets, which typically sets the stage for a demand recovery. Second, we have a more favorable year-over-year comparison. Most importantly, we have long-term agreements with our distribution partners, and our order book provides clear visibility for the next 3-4 months, which is very positive.
Q: Regarding the price/mix performance, can you confirm that the 2.9% in Q2 was mostly mix and that pricing will become a factor in H2? What is the expected drop-through? A: (Fabio Bocchio, CFO) You are correct. The Q2 performance was mainly driven by product and regional mix. In the second half, we expect another roughly 3% price/mix performance, but this time it will be split roughly 50/50 between price and product mix. The price increases announced in May and June will become effective in H2. We expect an improved drop-through of around 80% in the second half.
Q: What is the outlook for raw material costs in the second half of the year? A: (Fabio Bocchio, CFO) The trend will reverse completely. In the first half, we had a positive contribution of a little over EUR 30 million from raw materials. However, due to the increase in commodities after February, we expect a sizable negative impact of about EUR 70 million in the second half.
Q: Can you comment on the profitability of the standard segment, given the significant volume decline? A: (Fabio Bocchio, CFO) The standard segment profitability for 2026 is expected to be between 7% and 8%. We still have a target of double-digit profitability. The segment is more volatile, but its weight on total sales is decreasing, now at 18%. In high-value regions like Europe, the U.S., and Asia Pacific, its weight is already only 10-12%, and we are very close to double-digit profitability there.
Q: What is the status of the Cyber Tyre technology? Can you share any updates on homologations or contracts with premium automakers? A: (Andrea Casaluci, CEO) We are already delivering Cyber Tyre technology in the Prestige segment. We are now working to scale up into the premium segment and are in discussions with very important premium carmakers in Europe and China. Chinese premium carmakers are particularly interested due to the technology's potential for autonomous driving. We are confident that some good news, potentially a first contract with a premium automaker, could come in the last quarter of this year.
Q: What is the rationale behind the Xushen Tyre joint venture, and are there any further financial impacts expected on the net financial position? A: (Andrea Casaluci, CEO & Fabio Bocchio, CFO) The rationale is to fully control an asset dedicated to high-value, high-technology production, which is a positive strategic move. The financial impact has already been accounted for in the first half, including the consolidation of the JV's debt (EUR 210 million) and the payment of the call option (EUR 47 million). There are no additional impacts from this specific operation expected for the remainder of the year.
Q: How is Pirelli's digital twin and software capability differentiating the company and helping to win market share? A: (Andrea Casaluci, CEO) This is a key competitive advantage for two reasons. First, it makes us much faster in developing new products, meeting the needs of OEMs, especially Chinese ones, and helps reduce costs and accelerate the introduction of recycled materials. Second, the digital twin is a core part of our Cyber Tyre technology, allowing us to use real-time data from the tire to give precise instructions to a vehicle's control unit, which is crucial for safety and autonomous driving.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
