AMSTERDAM, Netherlands-Eroding prices and rising production costs led to reduced sales and an operating loss for Pirelli Armstrong Tire Co. last year, according to information gleaned from the Pirelli Tyre Holding NV annual report. Pirelli's operating loss in North America for fiscal 1993 was $19 million vs. an operating profit of about $5 million the year before.
The firm said sales fell 8.7 percent to $510.3 million, partly because of aftermarket selling prices that were off an average of 5 percent from 1992.
Also affecting Pirelli's 1993 results was the phase-out of some older Armstrong product ranges and the introduction of some newer Pirelli products, which led to a drop in production volumes. On the positive side, Pirelli said its product mix improved with better performance tire sales.
Improved tractor and motorcycle tire sales were other positives for the company.
Regarding 1994, Pirelli is pursuing a ``market-oriented brand policy'' in order to better deal with the ``huge complexity'' of the distribution network in North America.
Despite lower production by Pirelli Armstrong last year, North America represented a larger share of Pirelli Tyre's global output than in 1992 because of larger production cuts elsewhere.
Globally, Pirelli Tyre suffered a $135 million net loss on sales of $3.05 billion; operating earnings of $75.5 million were 16.2 percent lower than in 1992.
PTH management is ``mildly optimistic'' about 1994 based both on internal operating improvements and slight market recoveries in Europe and the Americas.
PTH has been forced to scale back part of its reorganization in Europe and schedule the phase-out of truck tire production at Burton-on-Trent, England. Separately, Pirelli Tyre is gearing up to launch silica-modified versions of its aftermarket-targeted P200 Chrono and P5000 Vizzola car tire lines, which promise reductions of 15 to 20 percent in rolling resistance from the standard products.
Dubbed P200 Chrono Energy (T-rated) and P5000 Vizzola Energy (H-rated), the products will be available in various European markets starting in early 1995. Prices were not released at this time.
Groupe Michelin launched a separate ``Energy'' product range earlier this year; it's not clear whether Pirelli's use of the word ``energy'' will lead to objections by Michelin.