MILAN (Reuters), – Pirelli, an Italian tyremaker, assured Wednesday that it is taking measures to mitigate higher costs and the effects of Ukraine’s crisis. It also had a plan in place for the event that the situation should worsen.

Pirelli, a peer in the struggle for rising raw material, energy and labor costs, lowered its outlook on operating profit margins for 2022.

The statement stated, “Pirelli will react to 2022’s challenging times by strengthening the mechanisms already planned in the industrial plan.”

It stated that it would adopt “an even more selective approach… in original equipment”, and will focus on “bigger rims size and specialties,” especially electric.

From a range of 5.1 to5.3 billion, the manufacturer of Formula One tyres and top-end cars such as BMW and Audi raised its 2022 revenue forecast to around 5.6 billion-5.7 billion euro ($6.34-$6.45billion).

The company stated however that the adjusted operating profit margin of its business would range from 16% to 16.5%.

This compares to the 16%-17% that was previously.

Pirelli predicted a net cash flow before dividends between 450 and 480 millions euros.

Pirelli manufactures 10% of its worldwide tyres production in Russia. Pirelli said that it has analysed the possible impact on local operations related to export and import to Russia of finished goods.

According to it, “Assuming the price of oil and other energy remains at the current level from March 2022 until the year’s end… it is expected that the guidance for profitability will be in the lower portion of this range.”

According to it, this would lead to an adjusted operating profit in the range of 890m euros and cash generation after dividends around 450m euro.

Pirelli is based in Milan and runs Russia’s Voronezh, Kirov, and Voronezh plant. The country accounts for around 3-4% overall turnover.

A 2021 operating profit was 815.8 millions euros. This is an increase of 62.8% over 2020. It’s slightly lower than the company-provided analyst consensus (807 million euros) due to price/mix improvements and cost reductions.

($1 = 0.8839 euros)