MILAN, Italy (March 11, 2010)—Pirelli Tyre S.p.A. doubled its pre-tax operating earnings last year thanks to the firm's restructuring efforts and the positive impact of lower raw material costs, the company's board of directors reported today.
Pirelli Tyre posted fiscal 2009 earnings before interest and taxes of $429 million on 2.6-percent lower sales of $5.55 billion, yielding an operating ratio of 7.7 percent, 4 percentage points ahead of 2008 on a post-restructuring charge basis.
Pirelli Tyre cut costs last year by more than $275 million through efficiencies in labor and reduced spending on raw materials, the firm said, offsetting the negative effects of a 5.8-percent drop in unit sales.
Pirelli also cut its research and development investments by about 9 percent, although the company stressed its R&D/sales ratio of 3.3 percent is still on par with its key competitors.
Pirelli pointed to a strong fourth quarter for shoring up the firm's financial performance for the year. Sales during that period jumped nearly 14 percent to about $1.4 billion and the pre-tax earnings more than doubled.
The firm's consumer business—passenger, light truck and motorcycle tires—fared much better than the industrial business—tires for commercial vehicles and steelcord—reporting a 34.7-percent increase in pre-tax operating income and 0.9-percent sales growth vs. no improvement in earnings and 10.3-percent lower sales.
For fiscal 2010, Pirelli Tyre is forecasting 6- to 8-percent revenue growth with the operating margin holding steady.