Pirelli cuts 2,400 jobs to stem losses

Tyres were Pirelli's only growth area

Italian tyre and cable maker Pirelli will shut six factories and cut 2,400 jobs after reporting a much bigger-than-expected loss in the third quarter.

Pirelli, which controls Telecom Italia through Olivetti, blamed the falling revenues on a poor demand for its telecoms cables.

I don't think we'll see much improvement in demand for telecommunications cables or a recovery in the economy

Marco Tronchetti Provera, chairman and chief executive, Pirelli

"The unprecedented crisis that for over a year has been rocking the telecommunication infrastructure market continues to weigh heavily on all companies in the sector," the company said.

Pirelli reported a 355m euros (£226m; $359m) net loss compared with a 15m euro net profit in the same period last year, and said it expected its full-year results to be lower than forecast.

Operating profit crashed 96% to just 2m euros in the third quarter, well below analysts' forecasts.

Trouble ahead

"We will see improvement in profitability in 2003 as a result of our restructuring plan, but I don't think we'll see much improvement in demand for telecommunications cables or a recovery in the economy," Pirelli chairman and chief executive Marco Tronchetti Provera said.

He said the group would close six of its 80 factories, reduce its workforce by 6.5% and had put aside 260m euros to cover the lay-offs.

The unidentified plants, based outside of Italy, make telecoms cables.

The results showed only Pirelli's tyre business posted growth in the third quarter, with operating profit up 6m euros to 39m euros on a 2% increase in sales.

Pirelli shares fell by more than 5%, adding to a drop of more than 55% since the start of the year.