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Up and down: Pirelli posts 3Q results

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Pirelli & Cie SpA  posted net income of 86 million euros on net sales of more than 1.5 billion euros for the third quarter ended Sept. 30, 2012. That compares to income of 92.5 million euros on sales of more than 1.4 billion euros for the same period last year.

Based on the exchange rate on Sept. 30, 2012, Pirelli recorded net income of $111.3 million on net sales of $2 billion for 3Q '12. The company's income-to-sales ratio was 5.5%.

Third-quarter operating income was up 19.2%, from 161.1 million euros last year to 192.1 million euros.

For the first nine months of the year, income (22.7%), sales (7.2%) and operating income (31.4%) were up compared to last year. Pirelli's income-to-sales ratio was 6.7%.

Tire revenues, which make up 99% of the company's total revenues, were up 7.5% through three quarters, from 4.2 billion euros to more than 4.5 billion euros.

Pirelli's analysis

"The Pirelli group’s results for the first nine months saw key economic indicators grow, in particular profitability compared with the same period of 2011, notwithstanding the slowdown of the macro-economic scenario which intensified in the third quarter," says the company.

"The negative impact of the crisis on sales’ volumes was, in fact, offset by the group thanks to the positive performance of Pirelli’s premium range, as well as the reinforcement of the productive and commercial presence in rapidly developing economies and with a more favorable demand dynamic, factors which resulted in a significant increase in profitability."

Pirelli says the positive results were particularly significant "considering the overall reduction of sales’ volumes in tire activities, which fell 6.8% during the first nine months of the year because of the persistent difficulties of the global macro-economic scenario, in particular in the countries of southern Europe."

The results, in the company's eyes, confirm the effectiveness of its strategic focus on the premium segment. Volume in this segment was up 12.5% in the third quarter and 13.5% through three quarters of fiscal 2012.

"The effectiveness of Pirelli’s 'premium' strategy in contrasting the overall slowdown in demand can be seen in particular in the growth of profitability in the consumer business, which, in the first nine months, increased by two percentage points to 14.5%."

Barring "unforeseeable events," Pirelli expects a 2012 profitability target of approximately 800 million euros (through nine months, the company posted net income of 308.3 million euros).

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