PARIS (Feb. 14) — Despite 15-percent higher raw materials costs last year, Michelin managed to increase its operating profit 5 percent over 2004 on the effects of higher selling prices and tight control over operating costs.
For the year, Michelin reported operating earnings before non-recurring items of $1.7 billion on 3.6-percent better sales of $19.4 billion, for an operating margin of 8.8 percent, a 0.1-percentage-point improvement over 2004.
Operating income after non-recurring items — principally a gain of $317 million related to changes in the U.S. Medicare program´s prescription drug plan — surged 27 percent to $1.95 billion, or 10.1 percent of sales. Net income advanced 35.9 percent to $1.14 billion for the same reasons.
The increase in sales came almost entirely from higher prices and a better product mix; production volume worldwide was down 1.8 percent, although this factor was tied heavily to the lackluster European truck tire market.
In North America, Michelin reported improvements in the Michelin brand's performance in the replacement passenger/light truck market as well as good performances in new and retreaded truck tires. The firm´s passenger/LT volumes at OE were impacted by lower production volumes at certain customers, while positions with truck OE customers strengthened in a "robust" market.