PARIS (Feb. 15, 2008) — Michelin's net earnings rose 34.7 percent, operating profits 23 percent and sales 3 percent to $23.1 billion for fiscal 2007, and the tire maker said it expects more of the same in 2008.
Michelin attributed the improvements to higher sales volumes and improved product mix/pricing in all the firm's operating segments, which helped offset the negative effects of currency exchange changes. The net effect of the changes was as a boost in the earnings ratio of one and a half percentage points to 9.8 percent.
Net income climbed to $1.06 billion on the effects of higher operating income and lower income taxes, and operating profits rose to $2.25 billion.
Sales in North America, where Michelin claims to be the most profitable tire maker, grew 4.5 percent to $8.1 billion.
Michelin is starting 2008 with a "remarkable turnaround of free cash flow," and is a good position to advance, according to Michelin Managing Partner Michel Rollier. He did warn that an expected hike in raw materials costs could add nearly $275 million to the firm's operating costs.
The company intends to combat that increase with its pricing policy, productivity gains and streamlined structure costs.
Michelin reported all its operating segments showed sales and earnings growth last year.
Passenger and light truck tire earnings increased 50 percent to $1.14 billion on relatively flat sales of $12.4 billion, thanks to higher sales volume, "further significant" brand and segment mix enrichment, stable raw materials costs and a "very favorable" pricing effect.
The firm said truck tire profits increased 26 percent to $584.1 million on a 4.1-percent rise in sales to $7.71 billion. Specialty operations, which includes off-the-road, motorcycle and aircraft tires, recorded a 24-percent earnings improvement on 10.7-percent better sales.