Michelin reports sales increase, hints at further price increases

Paris - Michelin reported 10.2-percent higher sales in the first quarter of fiscal 2006 but warned that it have to raise prices again this year after raw material costs rose more drastically than forecast earlier this year.

Michelin reported sales of $462.5 million on the positive effects of higher volume, higher selling prices, better product mix and currency exchange rate changes.

In truck tires, Michelin said it gained market share in a shrinking replacement market for new tires and that its business in retreading recorded double-digit sales growth.

Michelin did not disclose earnings at this time but said the costs of raw materials continue to rise, prompting it to increase its estimate of their impact on the bottom line by nearly 50 percent to $675 million.

"In these circumstances," the company said, "Michelin reiterates its determination to offset this impact as much as possible, through its policy of passing external cost increases on to the market."

Michelin earlier stated it is targeting an increase in its operating income and an operating margin over the 2005 level. Last year Michelin reported $1.61 billion in operating income, equal to 8 percent of sales.

From Rubber & Plastics News (A Crain publication)

Lex comment from FT FT via Euro2day (UK / Greece)