PARIS-Groupe Michelin, reporting a 117-percent jump in net profits for fiscal 1995 to $604.3 million, is hoping to build on two straight years of rising profits by expanding its global presence to help offset slowed sales growth in North America and Europe. The company's fiscal revenue of $13.5 billion fell slightly from 1994, primarily because of unfavorable currency translation swings.
When translation differences are factored out, Michelin said sales rose 6.2 percent, reflecting a double-digit swing in the value of the French franc vs. the U.S. dollar.
Michelin's earnings were slightly higher than analysts had anticipated, and the market reacted with a measurable boost in the share price, which is considered undervalued by the financial community. Barclays de Zoete Wedd is forecasting further earnings growth in 1996 and 1997 that would push the earnings/sales ratio to nearly 6 percent from 4.5 percent last year.
Average selling prices were up 5.6 percent throughout the year, partly through price increases instituted to offset higher raw materials prices and partly through increased sales of higher-margin performance tires, Michelin said. The company had some difficulty meeting demand in the first half of the year, particularly for truck tires, but brought supply into line with demand in the second half.
Based on historical reporting trends, Michelin would retain the crown as the global No. 1 tire maker, although the gap to No. 2 Bridgestone Corp. narrowed.
``Business activity in the world tire markets in 1996 should, overall, be at a slightly higher level than last year,'' Michelin forecast. This takes into consideration a slowing of business activity in its two largest markets, Europe and North America.
``In these conditions of modest growth, Michelin should maintain the pattern it has established in the two previous years: continuing to reduce costs and indebtedness, improving profitability and its financial position,'' the company stated.