PARIS, July 29 French tyre maker Michelin's
first-half net profit rose 13 percent to 624 million
euros ($838 million) despite a fall in revenue as lower raw
material costs outweighed adverse currency effects, price cuts
and slowing demand for big tyres.
Operating income before non-recurring items was 1.159
billion euros, up from 1.153 billion a year ago and slightly
below the 1.19 billion middle of an 11-strong range of analysts'
Revenue fell to 9.673 billion euros from 10.159 billion a
year earlier, even though sales volumes rose by 1.9 percent, as
price cuts bit.
The company confirmed its 2014 financial targets, including
a planned improvement in sales volumes of 3 percent.
Demand for vehicles is rebounding from a six-year slump in
Europe, improving the outlook for suppliers and tyre makers like
Michelin and Bridgestone of Japan. But a weakening of the U.S.
dollar, Russian rouble and South American currencies is hurting
the value of Michelin's overseas sales.
In the second half, the company said it expects global
demand for car, light truck and truck tyres should remain
supportive in the mature markets and China.
Other new markets are seeing a slowdown, though, especially
in the original equipment segment, it said, even though original
equipment demand for earthmover tires should improve.
Mining companies, whose demand for specialist tyres is
crucial to the industry,"are expecting to continue drawing down
inventory through the end of the year," the company said in its
2014 FORECASTS MAINTAINED
CEO Jean-Dominique Senard warned in February that currency
effects could thwart his pledge to reach 2.9 billion euros in
operating profit next year - from 2.36 billion expected for
But on Tuesday, Michelin said it was maintaining its view
for 2014 - that volumes will increase by around 3 percent this
year, in line with projected market growth.
It also aims to deliver higher operating income before
non-recurring items at constant exchange rates, a more than 11
percent return on capital employed, and structural free cash
flow of more than 500 million euros along with a capital
expenditure program maintained at around 2 billion euros.
"In a competitive environment that persisted through the
first half, Michelin met its objective of delivering a further
improvement in its performance,"... said Senard in a statement.
"A continuous flow of innovations... and a responsible,
ambitious industrial strategy enabled the Michelin brand to
maintain its global positions in the forefront of mobility."
(1 US dollar = 0.7446 euro)
(Reporting by Andrew Callus; Editing by James Regan)