PARIS (July 30, 2012)—Michelin reported a 36-percent gain in operating income for the six months ended June 30 on 6-percent higher sales revenue.
Michelin attributed its improved earnings, to $1.62 billion or 12.3 percent of sales, to higher selling prices ($1.2 billion) and a lower-than-expected impact from raw materials costs ($359 million).
Net income was $1.13 billion, which included a $119 million capital gain in non-recurring income from the sale of its former Paris headquarters complex.
The revenue increase, to $13.2 billion, was achieved despite 8.3-percent lower unit sales, Michelin said. The drop in volumes reflected the weak market environment, particularly in the mature markets of Europe and North America, Michelin said.
Michelin's Specialty Business Unit—which comprises aviation, earthmover, farm and motorcycle tires—led the way in the period with a 22-percent revenue gain to $2.38 billion. The unit reported $652 million in operating income and a 3.5-percent gain in tonnage sold.
Sales revenue in the Passenger Car/Light Truck Tire segment grew 4.7 percent over 2011 to $6.77 billion despite a 6.4-percent drop in volume sales. The revenue increase was tied to an “amply favorable” price mix. Segment operating income rose 9 percent to $715 million, or 10.6 percent of sales.
The Truck Tires and Related Distribution segment reported $257 million in operating income, an 81.7-percent gain over 2011, on relatively unchanged sales of $4.02 billion. Unit volumes dropped 15.5 percent.
For the full year, Michelin management continues to expect to report a “clear increase” in operating income despite an expected drop in sales volumes of 3 to 5 percent from 2011. Michelin said it expects a more favorable raw materials cost structure and a positive currency effect to help it achieve its earnings goals.
Michelin also said it expects its ambitious capital expenditure plan—nearly $2.5 billion this year—to help it maintain and enlarge its global presence, which it considers a competitive advantage in an uncertain market environment.