* Michelin says European slump weighing on 2013 outlook
* Net income 1.57 billion euros on sales of 21.47 billion
* Forecast was 1.64 billion on sales of 21.65 billion
* Shares tumble
(Adds analyst comment, shares tumble)
By Laurence Frost
PARIS, Feb 12 Michelin, the world's
second-largest tyremaker, forecast a challenging year ahead in
Europe after narrowly missing 2012 profit forecasts, as sales of
specialty tyres failed to offset the region's prolonged slump in
The French company, whose tyres equip vehicles ranging from
bicycles to airliners, said sales volumes and operating profit
would be flat in 2013.
Michelin chief executive Jean-Dominique Senard told
reporters in Paris the group's financial goals faced new
hurdles. "Raw material costs may increase in the second half
ahead of a structural upturn in the tyre market," he said.
Michelin said truck and specialty tyres for farming and
mining equipment helped it boost 2012 profit, enabling it to
raise its dividend, but analysts said the numbers were
Overall net income rose 7.5 percent to 1.57 billion euros
($2.1 billion) on sales of 21.47 billion last year, short of the
1.64 billion profit expected by analysts on sales of 21.65
billion, according to Thomson Reuters I/B/E/S data.
Profitability increased in specialty tyres, where revenue
advanced 13 percent, but European replacement car tyre sales
dropped 10 percent, dragging Michelin's global sales volume down
6.4 percent. Vehicle registrations hit a 17-year low in Europe
Goldman Sachs analyst Stephan Puetter noted "weaker than
expected revenues in specialty tyres" and reiterated his "sell"
rating on the stock.
Shares in Michelin fell in morning trade, down 3.5 percent
at 70.14 euros by 0929 GMT.
For the most part, tyremakers and other auto parts makers
have fared better than vehicle manufacturers in Europe's
protracted market slump after restructuring more decisively in
the 2008-9 crisis.
Michelin, based in Clermont-Ferrand, central France, is
seeking to cut 1 billion euros in operating costs by 2015 while
adding the equivalent of a new overseas plant each year to
harness emerging-market growth.
A bright spot was pricing: hikes introduced in 2011 held
firm last year, Michelin said, boosting sales by more than 1
It forecast free cash flow would stay positive in 2013 and
raised its proposed dividend to 2.40 euros from 2.10 euros last
Truck tyre margins recovered to 6.6 percent from 3.5 percent
in 2011 as growing demand from U.S. vehicle manufacturers helped
limit the global market decline to 5 percent, Michelin said.
Replacement truck tyres, which are more critical to profit,
saw European sales tumble 14 percent.
Operating income rose 25 percent to 2.42 billion euros,
excluding one-time gains or losses, raising the operating margin
to 11.3 percent from 9.4 percent, Michelin said.
Michelin forecast "stable" operating income and broadly flat
sales volumes. The company had warned in September that earnings
growth would resume only after a "year of transition" in 2013.
Michelin, which ranks behind Bridgestone of Japan,
also reiterated its medium-term operating profit goal of 2.9
billion euros for 2015.
($1 = 0.7474 euros)
(Additional reporting by Gilles Guilaume; Editing by Sophie