MILAN—Pirelli & C. S.p.A.'s pre-tax operating income grew 4.2 percent for the year ended Dec. 31, thanks to improved volume growth, price/mix and efficiencies.
Offsetting the positive factors were foreign exchange volatility, increased raw material costs and inflation in emerging markets.
Pre-tax operating income (EBITDA) grew to $953.8 million, or 14.8 percent of sales, which grew 1.6 percent to $6.38 billion.
The operating result fell 7 percent to $770 million, reflecting $71 million in non-recurring and restructuring charges related particularly to the reorganization of the commercial tire segment and $112.6 million in costs related to amortizations of intangible assets following the acquisition of Pirelli assets by Marco Polo Holdings—the investment vehicle set up by ChemChina to buy Pirelli shares.
On a net basis, Pirelli returned to the black with earnings of $157 million, which contrasts with a net loss of more than $400 million a year ago. That loss was affected heavily by charges taken to account for the deconsolidation of the company's Venezuelan operations.
The company also reported nearly $97 million in efficiency gains last year, bringing the total of efficiencies achieved since 2014 to $295 million, or nearly four-fifths of firm's four-year target by year-end 2017.
In the consumer business — car, light truck and two-wheeler tire—sales revenue grew 5.3 percent to $5.39 billion with growth in Asia/Pacific, North America, Europe and Middle East/Africa offsetting declines in South America and Russia.
Pirelli said revenue was driven by "solid organic growth," especially in the premium car tire segment, which now accounts for 64 percent of consumer tire sales.
Revenue in North America grew 12 percent last year over 2015 to $1.15 billion. This was the largest increase by a business region, Pirelli figures show, and raises NAFTA's share of global revenue to 16 percent (18 percent of consumer tire sales).
The targeted-for-divestment industrial business unit—medium/heavy-duty truck and agricultural tires—reported 2.6 percent growth in revenue to $1.05 billion, despite a 3.8 percent drop in sales volume, dragged down primarily due to a weak South American market and a slowdown in China.