Michelin in H1 profit, sees rebound continue
July 31, 2010
Michelin announced a net profit in the first half, when it was lost a year earlier and said he expected a continued rebound in demand for tires in the second half of the year.
The group, world leader with Japan's Bridgestone, has reached the first six months of 2010 net income group share of 503 million euros, while it was running a year earlier, at the height of the crisis Auto, a loss of 122 million.
Its net sales have rebounded 17% to 8.35 billion euros, an increase of 15.3% by volume.
"The environment in the second half will be marked by continued strong rebound of the tire market, although the intensity of the economic recovery varies from one region to another," Michelin said in a statement.
The group has confirmed its target of growth in sales volumes in excess of 10% in 2010 and said the operating margin target can approach 9% before non-recurring items, after a historically high rate of 9.8% in the first half against 4 , 0% a year earlier.
Michelin has also maintained its goal of positive free cash flow over the year, although that cash flow was negative 30 million euros in the first half – against 575 million a year earlier – a trend "due in particular to increased working capital needs resulting from the resumption of activity of the group ", the company said.
The stock, up 669 million euros over the six months, have also experienced rising raw material prices, including rubber and oil. The effect of this increase, estimated at between 600 and 650 million euros for 2010, will materialize in the second half accounts.
Against this background, Michelin announced it would raise its rates by 3% for replacement tires for cars and trucks beginning in September.
The shares closed Thursday at 59.35 euros, giving a market capitalization of nearly nine billion euros. Since the beginning of the year, the title took approximately 10%, after rising more than 40% throughout 2009.
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