PARIS (July 28)— Michelin's operating income fell 6.2 percent on a 7.1-percent hike in sales in the first half of 2006, as the continued high cost of raw materials continued to hurt profits.
The French company said raw materials costs for the first six months of 2006 rose 21 percent over 2005. For that period costs were up $450 million, and should exceed $1 billion for the year.
Michelin said the truck tire business suffered particularly from higher raw material prices. Despite raising prices for truck tires during the period, the firm said it had been unable to pass on all the increases.
A bright spot was the firm's specialty businessesÃ¹earthmover, motorcycle, industrial tires, etc.Ã¹where earnings jumped 63.8 percent over 2005.
As a result, Michelin's operating profits before non-recurring items fell to $818.8 million as sales grew to $10.2 billion.
Provisions taken to cover the closing of the BFGoodrich plant in Kitchener, Ontario, reduced the operating income by $202.6 million, dropping the operating margin 3.2 points to 6 percent. Net income declined 28.2 percent to $451.7 million