MILAN, Italy (Sept. 13, 2006) — Pirelli & C. S.p.A. reported improved first half sales and earnings, but profits were muted to a degree because of costs associated with the failed stock market launch of Pirelli Tyre S.p.A. in June.
Pre-tax operating earnings were up 12.9 percent to $286.8 million before accouinting for costs associated with withdrawing the initial public offering for Pirelli Tyre. Those costs reduced this figure by $15.1 million to $271.1 million. Net income rose 8.7 percent to $242.3 million, and sales for the six months were up by 7.2 percent to $3.07 billion.
The company said the results were especially strong when increases in raw materials in the first half were taken into account.
Pirelli Tyre, the new name for Pirelli's tire business, reported pretax earnings of $252.3 million, up 7.5 percent, and sales of $2.53 billion, up 12.4 percent.
Pirelli said margins declined in its industrial tire business but rose in the consumer side of its activities. The company said operating income fell because of higher-than-expected increases in cost factors, in particular natural rubber and energy.
In the consumer tire business, sales and earnings grew due to greater volumes and a better price/mix, Pirelli said. Demand was down in North and South America, the company added, but this was offset by higher car tire sales in Europe and better motorcycle tire sales worldwide.