MILAN — Pirelli & C. S.p.A. reported solid gains in pre-tax operating earnings (adjusted EBITDA) for the quarter and nine months ended Sept. 30, as improvements in the price/mix offset rising raw materials costs.
Earnings rose 6.7% to $393.3 million in the quarter and 7.6% for the nine months to $1.13 billion. Sales grew 6.7% in the quarter to $1.55 billion and 2.8% for the nine months to $4.53 billion.
Pirelli cited a 5.4% improvement in the price/mix component, which contributed $135 million to earnings in the January-September period, for helping offset a $76 million rise in materials costs and nearly $61 million in volume-related revenue decline.
The price/mix improvement was mainly due to growing sales of higher value-added products and an improved product and channel mix, the Italian tire maker said.
In its earnings statement, Pirelli noted the nine-month period was marked by weakness in the car market, which also continued into the third quarter "beyond expectations."
The slowdown of the car market impacted tire demand, with a decline of 6.3% in OE during the first nine months of the year, the firm added. The market developments also had a negative effect on prices as many operators diverted production originally planned for OE to the replacement channel.
In this context, Pirelli said its continued strategic focus on high value products, which are less exposed to competitive pressure, paid off.
Total volumes overall fell 3.1% due primarily to a 12.2% drop in standard volumes; sales of higher value-added tires, by contrast, rose 6%.
In terms of regions, Europe, Middle East and Africa (EMEA) was the only area where Pirelli suffered a sales decline, with revenue down 2.4% to $1.98 billion.
Business in North America was up 11.9% to $981 million on 8.7 percent growth in higher value-added products. The region also saw a 8.3% drop in sales of standard products.
Revenue in Asia/Pacific grew 6.8% to $819 million, while South America was up 1.7% to $571 million.