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Europe needs a common policy: Pirelli Chairman

Wednesday, 6 Nov 2013 | 11:58 AM ET
Pirelli has 'all the tools to deliver': Chairman
Wednesday, 6 Nov 2013 | 11:00 AM ET
Marco Tronchetti Provera, chairman at Pirelli Group, comments on the group's performance and says it has "all the tools to deliver," including new products and efficiency measures.

Pirelli Chairman Marco Tronchetti Provera has told CNBC that a lack of competitiveness is at the heart of Europe's economic weakness, and that a "common policy" is needed as the region emerges from recession.

Provera said he thought Europe's ongoing economic crisis would continue, but added that he was confident action would be taken next year to boost the economy.

"The issue is to rebalance the value of the euro. It's a contradiction. We have the weakest part of the world in terms of growth but the strongest currency which is wrong. But this is one of the weaknesses of Europe, the inability to have common projects, to be competitive," he said.

(Read more: Pirelli sticks to premium market as Europe struggles)

"We have to compete with other regions of the world and it's not enough to have a common currency. We need a common policy."

The euro zone exited recession in the second quarter - with gross domestic product expanding by 0.3 percent from the first three months of the year. The data signaled the end of the longest contraction in continental Europe in over 40 years, but growth is expected to be sluggish at best until at least 2015.

Provera's comments came after the Italian tire maker - the world's fifth-largest in the sector by sales - unveiled its new business plan, which will target an operating profit margin of more than 15 percent by 2017, despite the continuing malaise in Europe.

(Read more: Vroom! Vroom! Auto sales jump in August)

The company said it was targeting tire revenues of 7.5 billion euros ($10.1 billion) in 2016, from about 6.2 billion euros this year.

Asked how he would achieve aggressive cash returns, Mr Provera said: "The achievement we think is based on three main pillars. One is the organization we set. The second is the launch of new products we are going to make in the next few years. And third, efficiencies we have put in our plan. So we have to deliver, and we have all the tools to deliver."

Pirelli aims to accelerate the company's focus on the premium tire market, hoping to increase its shares of sales from the current 38 percent to 44 percent by 2016. Pirelli began to produce more expensive tires for Mercedes, Audi, BMW and others in 2010, helping the firm maintain strong margins as Europe's car market continued to struggle.

(Read more: 'Yellow flags' appear in auto stocks: Analyst)