AMSTERDAM, Netherlands-Despite anticipated negative effects of the labor strike in North America, Pirelli Tyre Holding N.V. expects to close out fiscal 1994 better than 1993, when the firm was in the red and operating earnings were only 2.5 percent of sales. For the half year, Pirelli Tyre's operating earnings were up 33 percent to $52.9 million, and the firm was in the black on a net basis thanks to restructuring efforts over the past few years.
Sales declined slightly to $1.46 billion, resulting from lower sales volume and selling prices and a depreciation of the Dutch guilder.
The sale of Pirelli Armstrong Tire Corp.'s Des Moines, Iowa, farm tire plant should not have a significant impact on the PTH accounts for the full year, although it has reduced the payroll by about 750 employees and will reduce global sales by about 5 percent.
Pirelli Armstrong will continue to receive up to 1 million passenger and light truck tires a year for several years from the Des Moines plant under contract with the new owners, Titan Tire Corp.
In Europe, tire production has ceased at Burton-on-Trent, England, and a portion of the truck tire manufacturing equipment from there is being installed at dedicated facilities in Settimo, Italy, and Izmit, Turkey. Burton is being maintained, however, as a warehouse/distribution center for truck tires being imported from Pirelli units in South America.
Returning to the black confirms the company's recent strategic decisions, management said.
``The magnitude of this (profit), however, could be affected by the outcome of the trade union dispute presently under way at Pirelli Armstrong in the U.S.A.,'' Pirelli said. ``The decision has been made in fact to adopt a firm stance in the renewal of the labor contract, which presently entails an uncompetitive labor cost.''