MILAN, Italy—Pirelli & C. S.p.A. reported improved earnings and sales for fiscal 2014 in line with projections, and management is projecting continued earnings growth in 2015 despite difficult economic conditions in South America.
Pirelli's pre-tax operating income rose 6.8 percent last year to $1.11 billion on 5.9 percent higher sales of $7.99 billion, for a 14.4 percent operating margin. Pirelli did not disclose net earnings at this time.
Pirelli attributed the earnings increase to an improved price/mix component, lower raw materials costs, manufacturing efficiency gains and higher sales volumes.
The company chalked up the revenue gain entirely on its consumer tire business unit, where sales of car, light truck and motorcycle tires and related activities grew 2.9 percent to $5.95 billion. Volumes increased 5 percent but negative foreign exchange differences held the revenue figure down.
Offsetting the gains in consumer tires was a sales drop in the industrial tire business unit (truck and agricultural), where revenue fell 10 percent to $1.86 billion. Pirelli said the lower sales reflected its progressive exit from the conventional tire business in Latin America and contracting OE demand in South America for commercial tires.
Pirelli's sales in North America grew 4.7 percent to roughly $950 million, or 12 percent of the firm's global sales revenue. Sales in South America, by contrast, fell 9.5 percent, affected heavily by currency exchange and other local economic issues in Argentina and Venezuela.
Pirelli is divesting its steel cord business, and the sales and earnings data for the industrial business unit are affected accordingly.