MILAN—Pirelli & C. S.p.A.'s strategy to focus on high value-added premium tires is paying off. The firm reported a 9.7 percent increase in pre-tax operating income for the nine-month period ended Sept. 30.
Pirelli attributed the increase, to $801.4 million, to improvements in price/mix, volumes and efficiencies, which "more than offset" higher raw materials costs.
The Italian company, which now concentrates solely on consumer (passenger car, light truck and motorcycle) tires, said its revenues increased 9 percent to $4.75 billion for the period. Net earnings improved five-fold to $234 million.
The high-value segment grew 13 percent in both unit sales and revenue and now accounts for 58 percent of total sales, or $2.75 billion. Unit sales of premium car tires, those with rim diameters greater than 18 inches, grew by 15 percent, Pirelli said, or roughly four percentage points above market trend.
Standard tire sales stood at $2 billion, up 4 percent despite a 5 percent drop in volumes. Volumes were down particularly in Russia, Latin America, the Middle East and Europe.
Sales in the North America Free Trade Area jumped 9.1 percent to $890 million, which represents 18.7 percent of the firm's global sales.
The results through nine months showed a gradual improvement from the half-year results, which showed a slight gain on 10.6 percent higher sales.
For the full fiscal 2017 year, Pirelli said it expects to report an adjusted pre-tax operating income before non-recurring and restructuring charges of about $1.1 billion on 9 percent higher sales of $5.85 billion, for an operating ratio of nearly 19 percent.