MILAN, Italy-Pirelli Armstrong Tire Corp. improved its financial picture in the first half of 1996, but parent Pirelli Tyre Holding N.V. is standing fast by its decision to close PATC's Nashville, Tenn., plant by early next year. ``The positive signals coming from the U.S. subsidiary during the last part of 1995 have been confirmed by the improvement in operating result during the first half of 1996,'' PTH said in commenting on its results for the six months ended June 30.
``However, management is convinced that the turnaround in North America can only be achieved by concentrating on the high-margin Pirelli brand, premium car tires and light truck tires, produced at the Hanford, Calif., plant.''
PTH allocated $50 million in extraordinary charges in the first half, mainly to cover the restructuring of commercial and industrial activities in North America.
Despite this charge, which was nearly triple that of the comparable 1995 period, PTH's net profit for the period ended June 30 increased more than fivefold to $33.2 million. (All amounts converted from Dutch guilders at prevailing rates.)
Both Pirelli Tyre and its parent, Pirelli S.p.A., reported double-digit growth in operating earnings in their respective first-half periods, reflecting the positive effects of ongoing efficiency improvements, and a ``renewal'' of the product portfolio.
PTH management maintains ``positive'' expectations for the second half, ``the dimension of which will be in line with market developments,'' which will vary according to geographic region, the company said in its earnings statement.
PTH did not release results for Pirelli Armstrong, but the statements made indicate a measurable improvement over fiscal 1995, when PATC suffered a $58.6 million loss and reported a sales decline of 33 percent to $305 million.
Earlier, PTH management had forecast a ``modest recovery'' for Pirelli Armstrong for 1996 based on the ``first signs of recovery'' during the second half of 1995.
Pirelli Tyre's 47.6-percent jump in operating results, to $118.2 million, increased the earnings/sales ratio to 6.8 percent for the period, moving the firm closer to management's goal of increasing profitability to a level ``sufficiently high to provide a satisfactory return on investment.''
Net sales increased 8.9 percent to $1.74 billion, based on: improved sales of performance tires to car makers; a ``consolidation of market share'' in the premium tire replacement markets; a ``significant'' increase in motorcycle tires; and satisfactory performances in truck and agricultural tires, the company said.