PARIS (Aug. 5, 2005) — Group Michelin's earnings rose 5.5 percent in the first half, prompting management to forecast the firm's operating margins will exceed those generated last year despite rising raw materials costs.
For the six months ended June 30, Michelin reported net income of $465 million on 0.1-percent better sales of $9.02 billion, raising the earnings/sales ratio to 5.2 percent. Operating income was up 0.7 percent to $828 million.
Michelin said its peformance contrasts with global markets that were "generally down compared to the exceptionally strong first half 2004." The group said the strength of Michelin´s price mix (up 5.1 percent), coupled with its tight control over costs, enabled it to maintain operating income before non-recurring items at last year's high level.
In fact, Michelin stressed, the group "not only managed to compensate for a 3.6-percent decline in sales volumes, but also for the escalation in raw material costs that turned out to be more severe than in the first half 2004."
Michelin said it expects raw material costs to escalate by about 14 or 15 percent through year-end, slightly higher than its original estimate of 13 percent.
In North America, Michelin said aftermarket sales of Michelin- and BFGoodrich-branded passenger and light truck tires grew at a faster pace, while private brands slowed, reflecting the firm's “focused growth strategy.”
The brand mix improvement generated an increase in cash generation per tire, Michelin said. The overall North American market was up 3.3 percent, with the high-performance and SUV segments strengthening significantly.
Michelin said its truck tire sales outperformed the market in both replacement and original equipment, with increasing sales of its X-One wide-base singles enriching the product mix.