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October 24, 2016 02:00 AM

Michelin eyes higher profits on lower costs

Tire Business Report
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    CLERMONT-FERRAND, France—Michelin expects to report increased operating income this year, based in part on lower raw materials acquisition costs. Michelin expects to yield benefits of approximately $165 million in its third quarter financial report.

    Michelin reported $2.83 billion in operating income, or 18.8 percent of sales, in fiscal 2016. The company did not disclose its earnings for the quarter or nine month period ended Sept. 30, but it said sales revenue fell 2.5 percent in the quarter on declines in unit volume and price/mix.

    Sales revenue for the nine months ended Sept. 30 slipped 2.1 percent to $17 billion despite 1.4 percent higher unit volumes. Sales revenue was impacted by the price/mix and currency exchange differences, the latter because of the euro's rise against other major currencies.

    Michelin said sales revenue attributable to the passenger/light truck tire segment rose 0.5 percent through nine months to $9.8 billion on 2.5 percent higher volumes, especially in OE business and in 18-inch and larger rim diameter tires.

    By contrast, sales revenue in the truck tire segment fell 5 percent to $4.88 billion despite slightly higher unit volumes, which were aided by the resilience of the Michelin brand in the premium segment and the launch of the BFGoodrich brand in emerging markets.

    The specialty business unit reported a 6.2 percent drop in sales to $2.36 billion on the negative effects of lower earthmover and agricultural tire unit sales. Two-wheel and aircraft tires, on the other hand, showed unit volume gains.

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