Clermont-Ferrand, France -- Group Michelin management still expects to post a â€œsubstantial improvementâ€ in earnings this year despite higher raw materials prices and a unexciting North American market.
For the year, Michelin is banking on strong demand for truck tyres in Europe, Asia and South America to drive earnings growth and help offset $80 million (â‚¬58.5 million) in additional costs related to higher raw materials prices this year, the company said in its 27 July first half earnings results.
For the full year, Michelin foresees industry shipments of passenger orginal equipment and truck OE and replacement tyres in North America to fall short of their 2006 shipment levels, while shipments of replacement passenger and light truck tyres should grow two percent.
Throughout the rest of the world, Michelin is forecasting growth in all of the markets in which it competes, including double-digit growth in truck original equipment markets in Europe, South America and Asia.
Morgan Stanley Research Europe is â€œconfidentâ€ Michelin can deliver on its forecast of hitting an operating margin of 10.2 percent for the year, according to Adam Jonas, who covers Michelin for the stock analyst firm. Morgan Stanley points to Michelin's strong cash flow and stronger-than-expected sales volumes and pricing/product mix in the first half for its optimism.
From Tire Business (A Crain publication)