Michelin margins up in ´05 on better prices, tighter cost controls

Paris -- Despite 15-percent higher raw materials costs last year, Michelin managed to increase its operating profit 5 percent over 2004 on the effects of higher selling prices and tight control over operating costs.

For the year, Michelin reported operating earnings before non-recurring items of $1700 million on 3.6-percent better sales of $19 400 million, for an operating margin of 8.8 percent, a 0.1-percentage-point improvement over 2004.

Operating income after non-recurring items -- principally a gain of $317 million related to changes in the US Medicare program´s prescription drug plan -- surged 27 percent to $1950 million, or 10.1 percent of sales. Net income advanced 35.9 percent to $1140 million for the same reasons.

The increase in sales came almost entirely from higher prices and a better product mix; production volume worldwide was down 1.8 percent, although this factor was tied heavily to the lackluster European truck tyre market.

In North America, Michelin reported improvements in the Michelin brand's performance in the replacement passenger/light truck market as well as good performances in new and retreaded truck tyres. The firm´s passenger/LT volumes at OE were impacted by lower production volumes at certain customers, while positions with truck OE customers strengthened in a "robust" market.