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Pirelli Q1 profit falls 60% on flat revenue

Pirelli & C SpA posted a 60% drop in first-quarter operating profit on virtually flat revenue, due to the economic crisis and restructuring costs at its tire and real estate businesses.

The Italian holding company, whose businesses carry the same name, said the results were in line with the objectives set out under its 2009-2011 industrial plan.

In a statement, it forecast revenue reaching about €4.3 billion ($5.6 billion) for the year, slightly below the €4.66 billion for 2008.

“The first-quarter EBIT number was higher than our expectations, though the reason for the outperformance is not clear - it may be linked to cheaper raw materials or labor costs,” one Milan trader said.

First-quarter operating profit, or earnings before interest and tax (EBIT), totaled €46.8 million, compared with €115.1 million for the same period last year.

Revenue was €1.04 billion against €1.2 billion.

Net debt rose to €1.28 billion, from €1.03 billion at end-2008.

Pirelli Chairman Marco Tronchetti Provera denied rumors that its real estate unit Pirelli & C Real Estate SpA was considering selling a stake in real estate funds to insurer Assicurazioni Generali SpA.

“There's been nothing with Generali, only rumors that do not correspond to reality,” Tronchetti Provera said during the Pirelli shareholders meeting.

He again said the group did not plan to delist Pirelli RE.

Pirelli also pared its stake in Telecom Italia to 0.9% from 1.2% after shares were sold in April. (Reuters)