The Pressure of the EU Energy Crisis on the Italian Market
When Marco Checchi stepped in to ensure that clients like Coca-Cola (NYSE: KO), Heineken (OTC: HEINY), and Guinness would continue to get bottle tops from Pelliconi, the danger of winter gas rationing had just started to make headlines in the Italian media.
Pelliconi increased the production of energy-intensive semi-finished items, invested in solar panels, and commissioned a prototype of a new digital printer for metal sheets that did not use gas ovens. Pelliconi makes 35 billion bottle tops annually, primarily in Italy, Egypt, and China. If you constantly hear on the news that gas supplies are in danger while running a business, you must take action.
When they suspend flows for two hours each day, it’s not like you can yell and pound your foot in protest, Checchi said.
Skyrocketing Energy Prices and the Italian Market
Pelliconi has seen expenses for electricity and gas more than treble revenue this year, adding to the challenges caused by increased steel prices. Pelliconi is one of several Italian companies dealing with the energy crisis brought on by the conflict in Ukraine. In certain situations, it has been able to pass on nearly two-thirds of the cost hikes to its clients, and it aims to raise prices even more over the following year. Italy recorded a 16.2% increase in manufacturing turnover in July on a calendar-adjusted basis due to higher prices, while volumes also grew by 1.7%. This roughly equates to a decline of 0.8% each year in Germany.
According to economist Paolo Mameli of Intesa Sanpaolo (OTC: ISNPY), historically the weakest of the major eurozone economies, Italy has enjoyed a stronger post-pandemic recovery in industrial production than France and Germany. The government anticipates that the Italian economy will have contracted in the third quarter after growth surpassed estimates in the first half, with the downturn expected to extend until mid-2023.