Consolidated income statement

Consolidated income statement (reclassified)
2011 2010 Change

In millions
of Euro
for a %
In millions
of Euro
for a %
In millions
of Euro
Net sales revenues 1,516.5 100.0% 1,485.4 100.0% 31.1 2.1%
Cost to sell 1,061.9 70.0% 1,023.1 68.9% 38.8 3.8%
Gross industrial margin 454.6 30.0% 462.3 31.1% (7.7) -1.7%
Operating expenses 349.1 23.0% 351.1 23.6% (2.1) -0.6%
EBITDA 200.6 13.2% 197.1 13.3% 3.4 1.7%
Depreciation 95.1 6.3% 86.0 5.8% 9.1 10.5%
Operating income 105.5 7.0% 111.1 7.5% (5.6) -5.0%
Result of financial items (26.2) -1.7% (27.3) -1.8% 1.1 -4.0%
Earnings before tax 79.3 5.2% 83.8 5.6% (4.5) -5.4%
Taxes 32.3 2.1% 41.0 2.8% (8.7) -21.2%
Net income 47.0 3.1% 42.8 2.9% 4.2 9.8%
In thousands of units   
Two-wheeler 415.0 395.0 20.0
Commercial Vehicles 238.3 233.4 4.9
Total vehicles 653.3 628.4 24.9

EMEA and Americas 323.5 349.2 (25.7)
India 225.0 219.6 5.3
Asia SEA 104.8 59.5 45.2
Total vehicles
653.3 628.4 24.9
Net revenues
In millions of Euro   
Two-wheeler 1,025.3 988.1 37.2
Commercial Vehicles 491.1 497.3 (6.2)
Total net revenues 1,516.5 1,485.4

EMEA and Americas 933.9 963.2 (29.3)
India 395.0 388.9 6.2
Asia SEA 187.5 133.2 54.3
Total net revenues 1,516.5

During 2011, the Piaggio Group sold 653,300 vehicles worldwide, registering a growth of 4.0% in volume over the previous year (628,400 units sold). This is mainly due to the increase in Two-Wheeler sales in Asia SEA, thanks to an improved production capacity at the Vietnamese plant, and sales starting on the Indonesian market. India also reported a good performance, where sales of Commercial Vehicles grew by 2.5%. Sales of Two-Wheeler and Commercial Vehicles in EMEA and the Americas decreased (–25,700 units, -7.4%).

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 10% (-11% for scooters and -7% for motorcycles), while the US market registered a decrease of approximately 1% (+6% for scooters and -2% for motorcycles). In the EMEA area, the Piaggio Group increased its share by approximately 20.1%, to consolidate its leadership position. In the USA, and particularly on the scooter market, the Piaggio Group reported a positive growth trend (from 27.1% to nearly 30%). On the Asian market, the Group's performance was very good (+45,200 units, +75.9% over 2010), due in particular to the success of the Vietnamese subsidiary.

The Commercial Vehicles business performed extremely well on the Indian market, where the subsidiary Piaggio Vehicles Private Limited sold more than 225,000 units and increased its excellent sales figure of the previous year by approximately 2.5%.

In terms of consolidated turnover, the Group ended 2011 with net revenues up by 2.1% compared to 2010, equal to 1,516.5 million Euro. The Two-Wheeler business grew, with total turnover equal to 1,025.3 million Euro (+3.8%), while the Commercial Vehicles business, with a turnover of approximately 491.1 million Euro recorded a decrease of 1.2%. The turnover mix changed slightly. In particular, sales in the Two-wheeler segment went up from 66.5% of total turnover in 2010 to 67.6% of total turnover in 2011, whereas, the same parameter in the Commercial Vehicles segment decreased from 33.5% in 2010 to 32.4% in 2011.

Turnover by geographic segment basically reflects the trend for volumes: turnover from the EMEA and Americas market fell, due to the market downturn, while turnover increased in India and Asia SEA, reflecting the growth trend in sales.

The Group's gross industrial margin defined as the difference between “net revenues” and “cost to sell” decreased slightly compared to the previous year. In absolute terms, the margin was equal to 454.6 million Euro (- 7.7 million Euro compared to the first half of 2010), while in relation to net turnover, it was equal to 30.0% (31.1% in the first half of 2010). The decrease as a percentage, due mainly to the different mix of products sold on markets in EMEA and the Americas, and in India and Asia SEA, was within 1.1 percentage points, thanks to important actions 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 (31.7 million euro in 2010).

Operating expenses in 2011 were equal to 349.1 million Euro, down by approximately 2.1 million Euro compared to the previous year (351.1 million Euro). This figure is particularly significant as these costs also include start-up costs relative to Piaggio Indonesia, which has been operative since March 2011. The trend of lower operating costs confirms the Group's constant focus on reducing costs 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 63.4 million euro (54.3 million euro in 2010).

These trends in the income statement resulted in a consolidated EBITDA – defined as operating income gross of amortisation/depreciation – which was better than the previous period, and equal to 200.6 million Euro (197.1 million Euro in 2010). In terms of turnover, EBITDA was equal to 13.2%, aligned with budget estimates and the figure of 13.3% recorded the previous year. In terms of Operating Income (EBIT), performance was negative compared to 2010, with a consolidated EBIT equal to 105.5 million euro, down 5.6 million euro from 2010; in relation to turnover, EBIT was equal to 7.0%, compared to 7.5% for the previous period.

Net income from financial operations, which improved by 1.1 million Euro compared to 2010, includes savings from net borrowing costs that considerably offset the lower income from investments.

Consolidated net profit stood at 47.0 million euro (3.1% of turnover), considerably higher than the figure for the previous period of 42.8 million euro (2.9% of turnover). Taxes for the period were equal to 32.3 million euro, while they amounted to 41.0 million euro in 2010. The major decrease compared to 2010 is due to lower earnings before tax and to the recognition of deferred tax assets on losses that can be carried forward to future periods.