With turnaround complete, Pininfarina bets on engineering, design

Ferrari is one of Pininfarina’s main customers. Shown is a 1965 Ferrari 206 P Dino Pininfarina Berlinetta Speciale. Photo credit: Reuters

MILAN — With a profit now on its books for the first half, Pininfarina has completed its turnaround under Indian majority owner Mahindra & Mahindra and is moving forward with a new business plan.

The Italian coachbuilding and design company, which posted a 3.1 million-euro (about $3.6 million) net profit for the first six months, has a new strategy based on two business areas — engineering and design — that have been split into separate legal entities, Pininfarina Engineering and Pininfarina S.p.A.

“We are back to being a coachbuilder,” Pininfarina S.p.A. CEO Silvio Angori told investors Sept. 4 in a presentation at the Milan stock exchange.

The engineering side of the business employs 450 in Italy and Germany out of a group total of 626 as of June 30. Its four main customers accounted for 60 percent of the group revenue in 2017: BMW, 22 percent; Ferrari, 16 percent; China’s Hybrid Kinetic Group, 14 percent; and Iranian automaker Khodro, 8 percent.

The contracts with Khodro were frozen after the recently announced U.S. sanctions against Iran. Angori saw no need to alter the revenue or profit guidance because Pininfarina “has been able to replace the contract with business from other clients.”

As for the design business, Pininfarina has announced it will strengthen its presence in the United States at the beginning of 2019 with a new design center in Los Angeles. Pininfarina aims to “grow its market share and brand recognition in North America,” Angori said.

Silvio Angori: Pininfarina is back to being a coachbuilder.

The L.A. design center is part of Miami-based Pininfarina of America.

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The company also has recently strengthened its design department in China to try to attack the noncar business in the biggest Asian market.

Pininfarina also aims to build its design work outside the auto industry. Angori pointed to the launch of a Pininfarina-designed pen, which “would bring revenues of a few millions with justifiable margins.”

The design unit will work with sociologists and philosophers in the design field and has signed an agreement with the marketing company IMG to license its brand to selected customers in furniture, consumer electronics, construction, interior design of yachts and airplanes.

Pininfarina is also working to unload the last remnants of the failed project of contract car manufacturing, which contributed to the 10-year financial crisis and finally forced the sale of the company to Mahindra. Of the three production plants in the Turin region, the Grugliasco factory has been closed a long time; the Bairo plant, where the Mitsubishi Pajero Pinin small SUV was produced, has been leased to the French Bollore group until the end of 2021; and the San Giorgio plant, where the Alfa Romeo Brera coupe was produced, is for sale, Angori said.

Car production now will be limited to one-off projects such as the Ferrari Sergio, presented at the 2013 Geneva auto show. Angori did not rule out possible growth through acquisitions.

Pininfarina S.p.A. has been 76 percent owned by Mahindra & Mahindra since 2015, with the rest of the shares listed on the Milan stock exchange.

As far as relations with 100 percent Mahindra-owned Automobili Pininfarina, Angori said Pininfarina S.p.A. has licensed the brand to Automobili Pininfarina on the condition that Pininfarina design, engineer and at least partly manufacture the vehicles. Business from Automobili Pininfarina contracts is expected to be not more than 10 percent of the total.

Total business with the other Mahindra-owned companies has been 2 to 3 percent of total revenue in 2017.

Pininfarina reported revenue of 55.3 million ($64 million) euros in the first half of 2018, up from 39.6 million euros (about $46 million) in 2017. Earnings before interest, taxes, depreciation and amortization totaled 7.0 million euros ($8.1 million), more than triple the 2.2 million euros ($2.5 million) in the previous year. Net profit was 3.1 million ($3.6 million), while the group lost 0.6 million euros ($700,000) in the first half of 2017.

Angori said the order backlog is “probably three times our 2017 revenues.”

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