Michelin leads the way in shareholder value

Michelin was the top-performer among suppliers in the fourth quarter of 2006.

The French tyre maker provided shareholders with a 25.43 percent return in the fourth quarter, as the investment community was reassured about the company's management and its business prospects.

Michelin has a new CEO, Michel Rollier, who took over after the unexpected death of Edouard Michelin in a boating accident last May.

Rollier's first six months as CEO have reassured financial markets that Michelin will remain a tightly run company.

Michelin also experienced strong demand for replacement tyres in Europe. In addition, the price of rubber, Michelin's prime raw material, is expected to come down.

These factors "should enable Michelin to reach an operating margin target of 10 percent" in 2010, Societe Generale, a French bank, says in a research report.

Suppliers Grammer and ElringKlinger came in second and third in shareholder value for the quarter. Continental was positioned no 19 for the three months, but topped the list when figures for three yeares were taken into account, showing a total improvement in trturn of almost 205 percent in the period.

Wagon shares decline

At the low end of the quarterly performance list, Wagon shareholders lost 21.64 percent on their investment in the fourth quarter.

That weak performance marks a sharp contrast with the first quarter of 2006. Then, the UK engineering group topped the league after a tie-up with Oxford Automotive, a French-based,

privately held metal parts and modules maker.

In October, Wagon warned that results would suffer as it experienced problems with its business with some French customers. French car manufacturers PSA/Peugeot-Citroen and Renault both have suffered from weak European sales in 2006, hurting their suppliers. One of Wagon's main shareholders is US investor Wilbur Ross.

For the year, German engine-components maker ElringKlinger topped the list with a 64.02 percent increase in shareholder return. Swiss supplier Rieter was a close second, rising 60.95 percent. Michelin finished third, adding 56.64 percent.

From Automotive News Europe (A Crain publication)