MILAN—Pirelli & C. S.p.A. reported solid gains in pre-tax operating earnings (adjusted EBITDA) for the quarter and nine months ended Sept. 30, as improvements in the price/mix offset rising raw materials costs.
Earnings rose 6.7 percent to $393.3 million in the quarter and 7.6 percent for the nine months to $1.13 billion. Sales grew 6.7 percent in the quarter to $1.55 billion and 2.8 percent for the nine months to $4.53 billion.
Pirelli cited a 5.4 percent improvement in the price/mix component, which contributed $135 million to earnings in the January-September period, for helping offset a $76 million rise in materials costs and nearly $61 million in volume-related revenue decline.
The price/mix improvement mainly was due to growing sales of higher value-added products and an improved product and channel mix, the Italian tire maker said.
In its earnings statement, Pirelli noted the nine-month period was marked by weakness in the car market, which also continued into the third quarter "beyond expectations."
The slowdown of the car market impacted tire demand, resulting in a decline of 6.3 percent in original equipment during the first nine months of the year, the firm added. The market developments also had a negative effect on prices as many operators diverted production originally planned for OE to the replacement channel.
In this context, Pirelli said its continued strategic focus on high value products, which are less exposed to competitive pressure, paid off.
During the period, the tire maker also implemented a cost-reduction plan, which resulted in $44.5 million in savings, helping to offset pressure on prices and costs of transition to high-value tires.
Pirelli's high-value tires segment registered 7.5 percent revenue growth to $3 billion, representing 64.5 percent of the company's total sales.
Revenue derived from the sale of standard tires fell 5.7 percent to $1.4 billion for the same period.
Total volumes overall fell 3.1 percent due primarily to a 12.2 percent drop in standard volumes; sales of higher value-added tires, by contrast, rose 6 percent.
In terms of regions, Europe, Middle East and Africa (EMEA) was the only area where Pirelli suffered a sales decline, with revenue down 2.4 percent to $1.98 billion.
Business in North America was up 11.9 percent to $981 million on 8.7 percent growth in higher value-added products. The region also saw a 8.3 percent drop in sales of standard products.
Revenue in Asia/Pacific grew 6.8 percent to $819 million, while South America was up 1.7 percent to $571 million.