Michelin returns to profit on market recovery

ERJ staff report (DS)

Paris -- Michelin reported stronger sales on a continued global recovery in the tyre market. For the six months ended 30 June 2010, the company said sales grew by 15.3 percent to euro 8,349 million from euro 7134 million a year previously.

Operating margins recovered, growing to 9.8 percent from 4.0, based on an operatingprofit of euro 822 million (up from 282 million),

The net result moved back to profit of euro 504 million compared to a loss of 122 million a year ago.

Michelin said, "The clear rebound in the tyre markets is expected to continue in the second half

of the year, even though the pace of economic recovery will vary from one

region to another.

The company warned on raw material prices, saying, "While rising raw materials costs will have a negative impact on second-half

consolidated results (and reduce full-year income by €600-650 million),

Michelin will benefit from the price increases introduced in the first half. In

addition, the Group is announcing around a 3 percent increase in its passenger car

and light truck replacement tyre prices in Europe starting in September, thereby

confirming its commitment to a responsive pricing policy.

In Earthmover tyres, Michelin said, "Global original equipment demand rebounded sharply during

the period, fueled by equipment dealer restocking and the impact of government

stimulus plans. Infrastructure markets recovered in North America but remained

weak in Europe, while Asian markets demonstrated comparatively more resilience.

The mining segment continued to expand, led by strong demand for ore and

renewed work on major projects."

In agricultural tyres, the company said, "Global OE demand was down overall year-on-year, but

began to pick up in the second quarter. Replacement demand declined during the

period, notably in North America and, to a lesser extent, in Europe. The compact

line market turned sharply upwards, against low prior-year comparatives."

For aircraft tyres, Michelin said, "All of the Commercial Aviation markets rose during the period,

with a sharp improvement in aircraft load factors. The General Aviation segment

rebounded after collapsing in 2009, while demand for Military aircraft tyres

remained stable."

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Press release from Michelin