MILAN (Reuters), -Italy’s Pirelli reported Tuesday that its operating profit grew by 35% in Q1 despite a bleak economic outlook this year, which is being hampered by inflation, geopolitical tensions and a Chinese lockdown.

According to the manufacturer of Formula One tires and premium carmakers like BMW and Audi, its adjusted earnings after interest and tax (EBIT), was 228.5 million euros ($240.8m) during January-March. It exceeded an analyst consensus estimate of 217 millions euros.

According to the statement, “Geopolitical tensions are limiting global economic growth. China’s declining demand and lockdown measures have led to geopolitical tensions,” said the company.

After previously forecasting between 16%-16.5%, the company saw the need to cut its EBIT margin to about 15%.

Pirelli raised slightly its outlook for full-year revenue, so the company can confirm an EBIT target of 890 millions euros. It was first stated three months ago.

Pirelli stated that rising inflation and increased raw material costs are more than compensated by price-mix, efficiencies and other factors.

Other actions were taken to mitigate the negative effects of the conflict in Ukraine and the decline in Chinese demand. This was partially offset partly by the better performance in North America. ($1 = 0.9489 euros)