UPDATE 3-Italy's Pirelli at high-end of FY forecasts after topping estimates in Q1

(Adds quotes)

MILAN, May 12 (Reuters) - Italy’s Pirelli said on Wednesday it was at the high end of its full-year forecasts for revenue and profitability after first-quarter results topped estimates, helped by stronger sales of high-value tyres.

Chief Executive Marco Tronchetti Provera told analysts the tyre-maker was enjoying robust demand and a favourable pricing environment, though it was “strictly monitoring” a global chip shortage affecting the automotive industry.

“A possible upside in revenue forecasts will depend on two elements: the impact of semiconductor shortage on our original equipment business and the speed of sales pick-up, especially in Europe,” he said.

Tronchetti Provera added that the group’s forecast on its adjusted operating profit (EBIT) margin included higher raw material prices than in previous estimates, which will be fully offset by a better price mix.

“We expect an impact of an increase in prices of raw materials on our adjusted EBIT this year equal to 2.5% of revenues,” he said.

Pirelli on Wednesday confirmed targets for this year it gave in late March in its business plan to 2025, including revenue between 4.7-4.8 billion euros and a margin on its adjusted EBIT between 14%-15%.

In the first quarter, Pirell’s adjusted EBIT rose 19.6% to 168.8 million euros ($203.9 million), slightly topping a company-provided analyst consensus of 160 million euros. Margin on adjusted EBIT grew to 13.6% from 13.4% a year ago.

The manufacturer of tyres for Formula One and high-end carmakers such as BMW and Audi said high-value tyres - those of 18 inches and above, used in popular sport utility vehicles - amounted to 72.6% of its total sales in the first quarter, up 3 basis points from the same period of 2020.

They grew 33% in volume, topping a 20% growth rate of the market.

“Over coming quarters, profitability is seen improving,” the group said.

In the first quarter the price mix had a positive effect on the group’s adjusted EBIT worth 16 million euros, which more than offset a 11.1 million euro negative impact from an increase in raw material costs.

“Price increases will kick-off mainly from the second quarter,” Tronchetti Provera said.

$1 = 0.8278 euros Reporting by Giulio Piovaccari, editing by David Evans and Ed Osmond