MILAN, Italy—Pirelli & C. S.p.A. reported double-digit increases in operating and net profits in the first half of fiscal 2014 on the strength of above-average growth in premium tire sales and the positive effects of efficiency measures Pirelli is implementing.
Operating income jumped 12.6 percent to $584.6 million and net income was up 28.5 percent to $263.5 million. Sales revenue fell 3.3 percent to $4.1 billion, with foreign-exchange losses accounting for the decline, Pirelli said.
Revenue from the sale of premium products leaped 56.2 percent in the period to $1.76 billion, or 43 percent of overall sales. By contrast, revenue from Pirelli's commercial tire business fell, both in real terms and including the foreign-exchange loss.
Consumer tire volumes rose 5.1 percent and commercial tire volumes fell 7.4 percent, yielding an overall 1.8-percent volume growth, Pirelli said.
The efficiencies plan yielded economic benefits of $67 million in the period, Pirelli said.
Business performances in Europe and the Asia Pacific region were positive. The firm said it experienced revenue growth of about 10 percent and profitability above the group's average, mid-teens for Europe and around 20 percent for Asia-Pacific.
In South America—despite what it said were slowdowns in the industrial market and car original equipment—mid-teen profitability was confirmed thanks to price increases to offset foreign exchange volatility, mix improvement (product and channel) and the contribution from efficiencies, the firm said.
In Russia Pirelli said the turnaround process continued with an increase of market share because of a broadening of the product range and greater territorial coverage and positive high-single-digit profitability.
The results in North America and Middle East/Africa/ India areas also improved, Pirelli said.
For the full year, Pirelli confirmed its previously released targets of a pre-tax earnings ratio of nearly 14 percent, sales growth of about 1 percent and cash generation of nearly $350 million.
The company raised its revenue target slightly for the consumer tire business and lowered it for the commercial segment, citing the strong growth in premium product demand on the consumer side and an anticipated lower volume demand in Latin America for truck and agricultural tires.