PARIS (July 30, 2002) – Group Michelin, buoyed by better-than-expected first-half results, is forecasting a slight rise in its operating margin for the full year. The company cautioned, however, the improvement still depends on continued stability in raw material prices and exchange rate parity.
For the first six months of fiscal 2002, Michelin reported a 16-percent rise in operating income, to $511 million, on 1.4-percent better sales of $7 billion. Michelin credited a “sharp” drop in raw materials prices along with internal cost containment initiatives for the gain.
Net earnings, excluding a one-time capital gain in the 2001 period, nearly quadrupled to $228 million.
Michelin's unit sales volume was up 2.2 percent for the period, but the sales revenue gain was held back by negative currency fluctuations.
In North America, Michelin said it raised its market share and improved its product mix in the relatiely unchanged passenger and light truck aftermarket, and growth of its original equipment sales outpaced the industry increase, 10.5 percent to 6.3 percent.
In the truck tire aftermarket, Michelin said it has regained most of the market share it lost in the first quarter of 2001 and the price increases instituted in March for the Michelin and BF Goodrich brands have been holding up. On the downside, replacement market demand for truck tires, while up over the depressed levels of 2001, is still running about 7 percent below the 2000 pace.
Michelin said it is increasing its truck tire original equipment market share thanks to its “strong presence with the market's most dynamic manufacturers.” Overall, OE demand for truck tires is up as heavy vehicle makers are gearing up to produce vehicles ahead of an October 2002 deadline for more restrictive emissions regulations and inventories of second-hand trucks are running out.