By Denna Bowman
Michelin tyres announced it has swung back into profit following a bounce in the recovery of the automotive market.
The French tyres manufacturer reported a net profit of €504 million in the six-month period ended June 30 compared to a net loss of €122 million a year earlier when restructuring costs hit performance.
Sales climbed 17% to €8.35 billion from €7.13 billion and the company also reported an historically high operating margin of 9.8%.
Looking forward, Michelin says the outlook for the second half of the year is also positive.
The company announced: “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.
“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% 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 this environment, Michelin reaffirms its full-year 2010 target of driving 10%-plus growth in sales volumes, maintains its objective of generating positive free cash flow and, despite the expected impact of raw materials costs, intends to deliver an operating margin before non-recurring items of close to 9%.”