ERJ staff report (LMH)
Clemont-Ferrand,France - Tyremaker Michelin said despite a fall in volumes, it achieved high profitability in the first half of 2012 including high margins in its speciality businesses. Operating income before non-recurring items was up 36 percent at Euro 1.3 billion, 12.3 percent of net sales.
Net sales were Euro 10.7 billion, up from 10.1 billion in the first half of 2011. Operating margin was 12.3 percent. In speciality businesses, the operating margin was 27.4 percent, while in passenger cars (10.6 percent) and truck tyres (6.4 percent) it was much lower.
In the passenger car and light truck tyre business, both the European original equipment (OE) and replacement markets were down, by -4 percent and -11 percent respectively. However, OE demand rose in North America (21 percent), Asia (17 percent) and Africa, India & the Middle East (9 percent). The South American market was slow with no change in the replacement market but a 7 percent decrease in the OE market.
In the truck tyre business, the European replacement market was down by 26 percent, primarily due to dealer inventory drawdowns in the first half in the face of an uncertain economy and comparison with first half 2011, when dealers stocked up ahead of announced price increases, Michelin said. OE was down 2 percent.
Demand in Asia was down by 8 percent overall in the OE market and -7 percent in replacement. OE demand in Chinese fell by a steep 15 percent, but in Japan, demand rebounded by 49 percent off fairly low prior year levels, impacted by the tsunami.
In agri tyre business, worldwide OE demand is rising, especially in high-powered farm machinery. However, the replacement market fell sharply in Europe due to the economic situation and in North America for weather reasons.
Following the decline in demand in the first half, sales volumes are now expected to end the year down by 3 percent to 5 percent. However, this should be offset mainly by more favourable raw materials costs and a positive currency effect. Michelin also confirms its objective of generating positive free cash flow, before the impact of the sale of a property complex in Paris.
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Press release from Michelin