Profits at Pirelli Tire fall slightly in first half

ERJ staff report (DS)

Milan, Italy, Pirelli & C. SpA made a loss in the first half, on its involvement with Telecom Italia. The tyre division fared much better, however.

Revenues of Pirelli Tyre in the six months to 30 June 2008 amounted to 2166 million euros, up by just 0.7 percent on the same period a year ago. Pirelli said the strength of the euro affected this, adding that excluding exchange rate effects, revenues were up by 3 percent. The compny said the European and North American markets had contracted, and Pirelli had achieved roughly 4.3 percent increase in sales through a focus on high value added segments and higher selling prices.

Earnings (EBITDA) before restructuring charges amounted to 286.5 million euros (13.2% of revenues), down 5% compared with 301.7 million euros in the first half of 2007.Pirelli blamed the decline in operating results on a significant increase in the cost of raw materials and energy and lower sales volumes in replacement channels in Europe and North America. Offsetting this, said Pirelli, were greater volumes in original equipment, especially in Latin America.

In the Consumer business (Car/Light Truck and Motorcycle tyres), revenues as of 30 June 2008 amounted to 1,494.3 million euros (+3.1% at constant exchange rates). earning fell by 22 percent due to four factors, said Pirelli: a negative trend in volumes, an unfavorable mix of sales channels, not completely recovering production factors cost increases and start-up costs for the car tyre factories in China and Romania.

In the Industrial business (tyres for Industrial Vehicles and Steelcord), revenues in the first half amounted to 672 million euros, with an increase of 2.5% at constant exchange rates compared to the first half of 2007. EBIT, which stood at 64.2 million euros, rose by 7 million euros compared with the same period of the previous year.

In the tyres for Industrial Vehicles segment, strong sales growth in Latin America and in other rapidly developing markets more than offset the negative situation in the European market, which has become accentuated in recent months. Sales in the Steelcord segment were substantially stable compared with the same period the previous year.

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Press release from Pirelli