MILAN, Italy—Pirelli & C. SpA has reported a 5.9 percent increase in first-half revenues to $3.3 billion, reflecting price increases in emerging markets, higher replacement sales and different geographic and product mixes.
Tires accounted for virtually all revenue, with organic growth of 6 percent due largely to a positive performance of the tire maker's consumer business. This contrasted with flat sales growth at Pirelli's industrial business due in part to a slowdown in South America.
Over the first six months of 2016, Pirelli's consumer business delivered 7.4 percent organic growth. This included a strong performance in the premium segment and mature markets, which more than offset weakness in tire markets in South America and other emerging markets.
In the premium segment, Pirelli reported volume growth of 13.4 percent—15 percent in second quarter and 11.7 percent in the first. Organic revenues increased by 11.3 percent to $1.8 billion. Premium tire sales accounted for about 65 percent of total consumer revenues, up from 62 percent a year ago.
Pirelli's operating result (EBIT) before non-recurring and restructuring charges of $29.4 million in the first half of 2016 fell 1.9 percent to $480.5 million. The one-off charges were linked to activities under way for the merger of Pirelli's Industrial segment with the Industrial assets of China National Tire & Rubber.
The EBIT margin before non-recurring and restructuring charges grew to 14.5 percent compared with the prior-year 14.2 percent. Pirelli benefited from efficiencies to the tune of $57.3 million—on top of $51.2 million in first half of 2015)—taking it to 68 percent along the way to a target of $390.9 million set by a 2014-17 corporate plan.
Regionally, profitability improved in Europe and NAFTA thanks to growth of the premium segment.
In the first half, Pirelli's total investments amounted to $174.2 million, mainly earmarked for the increase of premium capacity in Europe, NAFTA and China, as well as mix improvements.
As of June 30, the firm said it had 36,598 employees, compared to 36,753 a year ago.