Michelin benefits from global automotive recovery
THE recovery in the global automotive sector has had a beneficial effect for tyre manufacturer Michelin, which saw sales volumes across the group rising 12.6%.
The French group, which has a large manufacturing facility in Stoke-on-Trent, has now revised its 2011 targets upwards and is predicting profitability.
The group’s interim results show net sales were up 21% in the first half to £8.86bn (€10.1bn). Operating income was £851m (€971m) for a 9.6% operating margin. Net income was up 32%.
In a statement, the firm said: “The second-half business environment should see ongoing market growth at a pace closer to long-term trends.
“Against this backdrop, the group is aiming for growth in sales volumes of approximately 8% for the full year.”
It added that given the impact of raw materials costs on working capital requirement – amounting to approximately £350-438m (€400-500m) for the full year – and the faster deployment of capital expenditure, free cash flow is expected to be temporarily negative in 2011.
The group said worldwide demand for tyres rose substantially in all regions, although the impact of the earthquake in China was significant with demand in that market falling 5% as a result of the disaster and its effect on car production.
Elsewhere, demand for new and replacement car tyres was strong in Europe and South America, while there was strong demand for new and replacement for truck tyres in Europe (up 61%), North America (66%) and Africa/India and Middle East (115%).
