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February 25, 2004 01:00 AM

Michelin's net income plummets 46.5 percent in 2003

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    PARIS (Feb. 25)—Groupe Michelin suffered a 6.7-percent drop in operating income last year to $1.29 billion, the result primarily of a 21-percent surge in raw materials costs.

    For 2004, Michelin cautioned that external inflationary factors, such as raw materials prices and the fluctuating euro-dollar exchange rate, will continue to exert negative pressure on earnings.

    Net income plunged 46.5 percent to $371.8 million as the company took a $382 million charge against earnings to cover the amortization of goodwill relating to its acquisition in the first quarter of 2003 of the Danish tire distribution chain Viborg Group.

    In addition to the higher raw materials costs—of about $282 million—Michelin said higher health care and transportation costs and currency factors added another $305 million in extra costs. As reported earlier, sales were down 1.8 percent to $17.4 billion.

    Michelin highlighted gains on a number of fronts during 2003, including further improvements in product mix, a 3.7-percent rise in sales volumes expressed in tons and lower finished goods inventories.

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