(Refiled to remove repetitious text in fifth paragraph)
* Michelin forecasts 3 pct sales volume gain
* Michelin says profit, outlook hit by forex and pricing
* Shares rise on dividend hike, strong cash flow
By Laurence Frost
PARIS, Feb 11 Tyre maker Michelin has
predicted a 3 percent rise in sales this year as it pushes ahead
with an expansion into emerging markets, despite reporting a
sharp drop in sales and profits in 2013 due to pricing pressures
and unfavourable exchange rates.
The company reported a worse than expected 24 percent fall
in net profits to 1.13 billion euros ($1.5 billion) on revenue
down 5.7 percent at 20.25 billion euros in an "uneven market
environment", the company said on Tuesday, but increased its
dividend by 4 percent.
While pledging to increase full-year sales volumes, Chief
Executive Jean-Dominique Senard acknowledged that drops in
foreign exchange rates may upset plans to get operating profits
up to 2.9 billion euros a year in 2015.
The company remained on track to meet the target only "based
on average 2012 exchange rates", he said after reporting a 9.8
percent fall to 2.23 billion euros last year.
Foreign-exchange risk has been an inevitable consequence of
its 2 billion-euro programme to expand into higher-growth
markets, which last year saw Michelin open a new plant in
Shenyang, China. Only 37 percent of group sales were
euro-denominated in 2013.
Michelin nonetheless raised its proposed dividend to 2.50
euros per share, 10 cents more than it paid out last year on
Its shares were up 1.7 percent at 82.4 euros by 0926 GMT.
The company had already warned that operating income was
likely to fall by about 100 million euros because of weakening
foreign currencies including the Brazilian real and Japanese yen
Last year's underlying operating margin was down 0.5
percentage ponts at 11 percent.
But free cash flow rose 7.3 percent to 1.154 billion euros,
helped by a decline in raw material costs that Michelin expects
to boost first-half earnings by a further 300 million euros. Net
debt was slashed to 142 million euros from 1.053 billion.
"It's a really mixed bag," London-based Barclays analyst
Kristina Church said.
Michelin's relatively upbeat message contrasts with caution
from German rival Continental AG over 2014 pricing and
material costs, Church said.
"But the fact they don't give any (operating profit)
guidance suggests they're not convinced it will be up," she
The 2013 results fell short of the 1.37 billion euros in net
income expected by analysts on sales of 20.42 billion euros,
according to Thomson Reuters SmartEstimates.
Besides the 2.9 billion euro operating income goal, Michelin
is targeting a return on capital of above 10 percent next year
and margins of 10-12 percent in car tyres, 7-9 percent in truck
tyres and 20-24 percent in specialty tyres for planes,
earthmovers and mining equipment.
(Additional reporting by Gilles Guillaume; Editing by Andrew
Heavens and Greg Mahlich)