Pirelli S.p.A., plagued by ``unprecedented'' problems in the telecommunications industry, fell $359 million into the red in the third quarter and announced it will shut six cable plants and lay off up to 2,400 workers in the cable sector.
Pirelli's tire business, on the other hand, posted improved sales and earnings for the three- and nine-month periods ended Sept. 30.
Pirelli said it would take a charge of $263 million to cover costs associated with the closings. Earlier, Pirelli had instituted efficiency measures that yielded savings of nearly $140 million, but even this proved insufficient to counteract the falling markets.
Pirelli blamed the losses on the ``unprecedented crisis'' in the telecommunications equipment and infrastructure sector that has resulted in declines in both volume demand and selling prices, resulting in a decline of about 70 percent in value.
In the tire sector, Pirelli reported a 1.7-percent increase in sales for the quarter, to $673 million, and a 1-percent rise for the nine months, to $2.18 billion. Pre-tax operating earnings rose 18.1 percent in the quarter to $39 million, and 4.2 percent for the three quarters, to $151.5 million.
Car and light truck tire volumes were 2 percent ahead of the same period last year thanks to a general increase in share in the major replacement and original equipment markets. Performance products were particularly strong, Pirelli said.
Truck tire volumes were 6 percent ahead of the same period in 2001, bucking the market trend, Pirelli said. A strong performance in South America and in other non-European markets more than compensated for the weakness in the European region.