Michelin remains strong after earlier death of CEO

By Sylviane de Saint-Seine | | Automotive News Europe

Michelin generated a 22.98 percent gain in value during the third quarter, proving that investors remained confident about the company's future following the accidental death of CEO Edouard Michelin May 26.

Edouard Michelin's successor as chief executive, Michel Rollier, has reaffirmed the French tyre maker's objectives. By 2010, the supplier wants to achieve an operating margin of 10 percent or more and a reduction in inventory levels to 16 percent of sales from 20 percent in 2005.

The company's operating margin was 8.8 percent last year. Rollier expects a 2006 operating profit of “only” 8 percent, due to soaring prices of rubber and other materials and the weak dollar against the euro. To combat the rising costs, Michelin announced in August it would charge automakers 6 percent to 8 percent more for passenger-car and light-truck tyres starting October 1.

Record in sight for Continental

Continental gave shareholders a 14.48 percent return in the quarter, making it the second-best performer in the index of 24 suppliers.

Sales rose 6.2 percent to €7200 million in the first half and earnings before interest and taxes (EBIT) increased 5.3 percent to €722 million. The company said it is “highly confident” it will achieve new records for sales and EBIT in 2006 for the fifth consecutive year.

Meanwhile, the company continues to diversify. It concluded its purchase of Motorola's automotive electronics division on July 2.

It also expressed interest in acquiring Goodyear's Engineered Products division, which specialises in non-tyre rubber products.

From Automotive News Europe (A Crain publication)