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UPDATE 1-Michelin sees lower currency, price hurdles for 2016
October 19, 2016 / 4:55 PM / a year ago

UPDATE 1-Michelin sees lower currency, price hurdles for 2016

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PARIS, Oct 19 (Reuters) - Michelin posted a decline in quarterly revenue on Wednesday but the tyre maker said negative pricing and currency effects were milder then feared, reiterating its guidance for the full year.

Sales dropped 2.5 percent to 5.18 billion euros ($5.68 billion), the company said.

Car and truck tyre demand was “flat to slightly down” in Europe and North America and more mixed elsewhere, with China growing and South America contracting.

Michelin, based in Clermont-Ferrand in central France, is pushing an overseas expansion while cutting costs and struggling to defend its namesake brand’s higher prices against mid-market and budget rivals.

But the group said conditions were looking better than they had three months ago, when it posted a solid increase in first-half profit despite a 2 percent sales decline.

Despite a “challenging price environment in Europe”, Chief Financial Officer Marc Henry predicted that pricing and product mix would dent full-year earnings by 400 million euros, an improvement on the 450 million impact previously forecast.

The company also sees gentler currency headwinds trimming 160 million euros from 2016 sales - instead of 200 million - while declining raw material costs lift earnings by 550 million euros, 100 million more than predicted in July.

Michelin reiterated its full-year guidance including free cash flow in excess of 800 million euros, higher operating income and sales volume growth outpacing all major markets. ($1 = 0.9120 euros) (Reporting by Laurence Frost; Editing by Susan Fenton and David Evans)

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