Consolidated Income Statement

Sales volumes
2010 2009 Change
In thousands of units  
Two-wheeler 395.0 410.3 (15.3)
Commercial Vehicles 233.4 197.4 36.1
Total vehicles 628.4 607.7 20.7

Net revenues
2010 2009 Change
in millions of Euro  
Two-wheeler 988.1 1.065.4 (77.3)
Commercial Vehicles 497.3 421.5 75.8
Total net revenues 1,485.4 1,486.9 (1.5)

2010 2009 Change
in millions of Euro  
EBITDA 197.1 200.8 (3.7)

2010 2009 Change
in millions of Euro  
EBIT 111.1 104.4 6.7

Net income
2010 2009 Change
in millions of Euro  
Net income 42.8 47.4 (4.6)

During 2010, the Piaggio Group sold 628,400 vehicles worldwide, registering a growth of 3.4% in volume over the previous year (607,700 units sold). This increase is the result of different business trends in the Two-wheeler and Commercial vehicles segments. The Two-wheeler segment was affected by a downturn compared to 2009, with the total number of vehicles sold equal to 395,000 (-3.7%), while the Commercial vehicles segment performed extremely well compared to the previous year (233,400 units, +18.3%).

The performance of the Two-wheeler segment took place in a particularly complex market context and competitive scenario, at least as concerns the European and American markets. In particular, the EMEA two-wheeler market declined by approximately 12.8% (13.2% for scooters and 12.1% for motorcycles), while the US market registered a decrease of approximately 15.8% (9.6% for scooters and 16.1% for motorcycles). The negative trend of the EMEA reference market was accentuated in 2010 by the fact that the government funds provided for most of 2009 in Italy were no longer available. Within the EMEA area, the Piaggio Group maintained its 20% share, in line with the previous year, while in the USA, its share fell, particularly on the scooter market (from 30.9% to 27.1%). On the two-wheeler market, its share remained at 2.1%, in line with 2009. On the Asian market, the Group’s performance was positive (59,500 units, +60.4% compared to 2009), due in particular to the success of the Vietnamese subsidiary, where production got underway at its site in June 2009.

The Commercial vehicles business performed particularly well on the Indian market, where the subsidiary Piaggio Vehicles Private Limited sold more than 200,000 units, and with a total of 219,600 units it increased its excellent sales figure of the previous year by 20.9%.

In terms of consolidated turnover, the Group ended 2010 with net revenues basically in line with 2009 figures, equal to 1,485.4 million euro (-0.1%). In particular, the Two-wheeler segment was affected by a downturn compared to the previous year, with a total turnover of 988.1 million euro (-7.3%), while the Commercial vehicles business performed excellently compared to the previous year, with a turnover of approximately 500 million euro (497.3 million euro, +18.0%). Although turnover was more or less the same as 2009, the composition changed considerably. In particular, sales in the Two-wheeler segment fell from 71.7% of total turnover in 2009 to 66.5% of total turnover in 2010, whereas, the same parameter in the Commercial Vehicles segment rose from 28.4% in 2009 to 33.5% in 2010.

Turnover from the Two-wheeler segment basically reflects the trend for volumes: turnover from the EMEA and America markets fell due to a market downturn, while the growth in turnover from the Asia market reflects the increase in sales thanks to the steady rise in sales on the Vietnamese market.

Likewise, the trend for turnover from the Commercial vehicles business reflects the trend for volumes: the European market basically remained stable, while the excellent performance of the subsidiary Piaggio Vehicles Private Limited in terms of units sold (+20.9% compared to 2009) was reflected in turnover, thanks also to price increases and rupee/euro exchange rates. As a result, the increase in turnover in India was equal to 35.6%.

The Group’s gross industrial margin defined as the difference between “net revenues” and “cost of sales” decreased slightly compared to the previous year. In absolute terms, the margin was equal to 462.3 million euro (4.8 million euro down compared to 2009), while in relation to net turnover, it was equal to 31.1% (31.4% in 2009). The decrease in percentage terms, due mainly to the different business mix between the Two-wheeler and Commercial vehicles businesses, described previously, remained within 0.3 percentage points, thanks to important actions taken to curb product costs.

For example, the “cost to sell” includes costs for materials (direct and consumables), accessory purchase costs (transport of incoming material, customs, warehousing), employee costs for direct and indirect manpower and relative expenses, work carried out by third parties, energy costs, depreciation of property, plant, equipment and industrial equipment, maintenance and cleaning costs net of sundry cost recovery recharged to suppliers. Amortisation/depreciation included in the gross industrial margin was equal to 31.7 million euro (33.0 million euro in 2009).

Operating expenses in 2010 were equal to 351.4 million euro, down by 11 million euro compared to the previous year (362.6 million euro). This figure is particularly significant as these expenses include costs relative to Piaggio Vietnam Ltd, which was operative throughout 2010, but only operative for 7 months in 2009. The trend of lower operating expenses is basically the same as that of 2009, when expenses fell by approximately 11.7 million euro compared to the previous year, and highlight the Group’s constant focus on keeping costs down and maintaining high profitability levels.

For example, operating expenses include employee costs, costs for services and lease and rental costs, as well as operating costs net of operating income not included in the gross industrial margin. Operating expenses also include amortisation/depreciation not included in the gross industrial margin, amounting to 54.3 million euro (63.4 million euro in 2009).

These trends in the income statement resulted in a consolidated EBITDA – defined as operating income gross of amortisation/depreciation – just below the figure of the previous year, and equal to 197.1 million euro (200.8 million euro in 2009). In terms of turnover, EBITDA was equal to 13.3%, aligned with budget estimates and just below the figure of 13.5% recorded the previous year. In terms of Operating Income (EBIT), performance in 2010 improved compared to 2009, with a consolidated EBIT equal to 111.1 million euro, up 6.7 million euro from 2009; in relation to turnover, EBIT was equal to 7.5%, compared to 7.0% for the previous year.

The result of financial assets improved considerably compared to the previous year, with Net Charges amounting to 27.3 million euro (30.3 million euro in 2009). This improvement is mainly due to the reversal relative to the Chinese joint venture Zongshen Piaggio Foshan (5.3 million euro). The balance of financial income (borrowing costs) was negative amounting to 32.5 million euro.

Consolidated net profit stood at 42.8 million euro (2.9% of turnover), slightly down on the figure for the previous year of 47.4 million euro (3.2% of turnover). Taxes for the period were equal to 41.0 million euro, while they amounted to 26.7 million euro in 2009. The tax burden increased considerably compared to 2009, due to improved earnings before tax (83.8 million euro, + 9.7 million euro), and because of lower net deferred tax assets compared to 2009.