Pirelli & Cie SpA posted net income of 40.4 million euros on net sales of 1.4 billion euros for its first quarter ended March 31, 2016. That compares to income of 84.6 million euros on sales of 1.6 billion euros for the year-ago period.
Based on the average exchange rate on March 31, 2016, Pirelli recorded net income of $45.7 million on net sales of $1.6 billion in 1Q 2016. Its income-to-sales ratio was 2.8%.
Results for the first quarter of 2015, for the purposes of comparison, are adjusted to exclude Pirelli’s Venezuelan operations, which were deconsolidated at the end of 2015.
Pirelli said it experienced a significant improvement in its the price/mix component (+6.1%) as a result of price increases in emerging markets, greater sales in the replacement channels, and a diverse geographic and product mix. The gain in its price/mix component offset a slight reduction in volumes (-0.8%), mainly in emerging markets and industrial business, and a reduction of sales of other activities (-0.2%).
Sales of premium performance tires grew 11.7%. Sales of premium performance tires accounted for 67.1% of the company’s consumer tire revenues, an increase from 61.2% in the same period of 2015 (with the same perimeter).
The company said its industrial business sales fell 10.1%, due to the weakening of demand in South America and the slowdown of original equipment sales in China.
Consumer volumes were supported by the mature markets (+8.3%), whose dynamics more than offset the continual weakness of emerging markets (-1.1%), according to Pirelli.
Pirelli said significant growth in the premium segment was responsible for improved profitability in Europe, Asia/Pacific and NAFTA markets.
In addition to its financial results, Pirelli announced its merger with China National Chemical Corp. will take effect on June 1, 2016. The company said the accounting and fiscal effects will be retroactive to Jan. 1, 2016. In its earnings release, Pirellli stated that “on May 6, 2016, the deed for the merger between Marco Polo Industrial Holding and Pirelli SpA was stipulated.” Marco Polo Industrial Holding is a company created to facilitate the merger transaction.
For recent news on Pirelli, see "Pirelli Truck Tires Are on Their Way to the U.S. and Canada."
