Italian tyremaker Pirelli rejected a report by US-based short-seller Grizzly Research, in which it questioned whether the tyremaker was making more money from Russian operations than it was disclosing.
The hedge fund said in a report published on its website on Thursday that it has taken a short position in Pirelli, suspecting growth in the Russian business may be driven by demand from the Russian invasion of Ukraine.
Russian filings obtained by the short-seller imply about 10% of Pirelli’s net profit comes from operations in the country, Grizzly Research said in its report.
“The content of the note from Grizzly Research does not reflect the truth,” Pirelli said in a statement, adding it does not produce tyres intended for military use.
The tyre maker added that it had asked its legal representatives “to take action in all jurisdictions against those who have spread this false information.”
As of March 31, Pirelli attributed less than 6% of its revenue to Russia, the Middle East, Africa and India combined, according to the company’s quarterly report published in May.
Grizzly Research claimed a tyre centre located in an occupied part of Ukraine was supplying Russian forces fighting in the country, with Pirelli’s employees aware of the buyer’s identity and aims.
“We are concerned that Pirelli’s relationship with the Russian state may pose security risks for the West,” the short-seller said, adding that Russia could gain access to critical technology.
At the market open in Milan, the stock fell by as much as 13.4%, hitting a one-year low, before paring its losses to 1.6% after the company statement.
In March 2022, after Russia’s invasion of Ukraine, Pirelli said it had halted investments in Russia, aiming to limit activities in local factories to those needed to guarantee the financing of salaries and social services for employees.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.