Pirelli posts 7% profit increase despite lower sales

Milan – Pirelli C & SpA has posted strong growth in earnings (adjusted EBIT before start-up costs) for the first six months of the year, despite a decline in sales.

In the six months to end of June, the Italian tire maker posted a 6.8% rise in earnings at €473.3 million compared with the same period last year.

The improvement, said Pirelli in a 7 Aug financial statement, is linked to internal levers such as price/mix and efficiencies, which “more than offset” an increase in the cost of raw materials and decrease in volumes.

Sales for the first half of the year fell 2% to €2.63 billion, primarily due to negative foreign exchange effects and lower demand for standard tires.

Pirelli, which has shifted focus on ‘high value’ products, posted 7.8% growth in the segment at €1.68 billion. This, however, was offset by a 15.7% decline in standard tires sales which fell to €946,000 during the six-month period.

Volumes for high-value products rose 13.1%, but was levelled off by an 11.3% decline in standard tires volume sales. Total volumes posted a decrease of 1.2%.

During the first half of the year, Pirelli was also hit by a 6.9% negative impact of currency exchange rate. This, the company said, was primarily due to stronger Euro against the dollar as well as the volatility of Chinese and other emerging markets’ currencies.

As a result of such developments, Pirelli has revised its full year currency exchange expectations from -5%/-4.5% to -6%/-5%.