Michelin suffers from surging raw materials costs

Paris - Michelin said its raw materials costs for the first six months of 2006 are up by 21 percent compared to the same period in 2005. The company said this represents an extra Euro 352 million cost to the company in the six-month period. Michelin said it expected the increases for the full year to total Euro 800 million.

Michelin said the truck tyre business suffered particularly from higher raw material prices. While the company had increased its prices for truck tyres, it had been unable to pass on all the increases.

As a result, Michelin's sales for the first six months of 2006 were 7.1 percent higher than a year earlier, at Euro 8023 million, however the operating margin fell 3.2 points to 6.0 percent

Michel Rollier, Managing Partner, said: “Over the past two and a half years, the repeated increases in raw material prices have deteriorated Michelin's costs by more than one billion euros. As the Group is finding it difficult to fully compensate for this evolution, it is becoming essential to accelerate the productivity improvement and cost reduction programs that are already in place. Michelin's teams are aware of the challenge and of the measures that need to be taken to rise to it. I am fully confident that they will succeed”.

The company said sales of OE truck tyres in Asia grew by 20 percent in the period compared to the first six months of 2005, while the equivalent figure in Europe and North America was between 4 and 5 percent. Sales of OE passenger car tyres were static in the two established regions, but grew by almost 10 percent in China, said Michelin.

This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.

Download (Michelin press release (380 kb .PDF file)