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@Michelin sales rise on buoyant car demand, mining rebound(21/04/2560)

21 Apr 2017
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Michelin’s revenue rose 9.9 percent in the first quarter, buoyed by European auto-market growth and a rebound in demand for outsize mining , the company said on Thursday.

Revenue rose to 5.57 billion euros (4.66 billion pounds) from 5.07 billion euros a year earlier, the French  maker said in a statement. Sales by volume rose 7.3 percent.

The company reiterated its 2017 goals, which include volume growth in line with global markets, an increase in full-year operating income at constant exchange rates and structural free cash flow in excess of 900 million euros.

Under competitive pressure from no-frills rivals, Michelin is cutting production costs to defend profitability while raising prices to absorb higher costs of , including natural and  rubber.

First-quarter sales were “boosted by pre-buy ahead of pricing increases” as dealers stocked up, Chief Financial Officer Marc Henry said on a conference call.

Sales of speciality tyres for  including agricultural and mining equipment rose 14.9 percent to 848 million euros, Michelin said. Car  gained 10.5 percent to 3.2 billion euros, while truck tyres rose 6.1 percent to 1.52 billion.

Further price increases are needed to offset higher raw-material costs despite their slight decline from recent peaks, Henry said, playing down analysts’ doubts about the strategy amid cut-throat competition from Chinese brands.

“Chinese competitors have increased prices so far,” Henry said, outlining Michelin price hikes of up to 8 percent planned by the end of this month. “I’m quite confident these price increases will stick.”

Weaker pricing nonetheless reduced first-quarter revenue by 1 percent, largely offset by stronger sales of 18-inch and other premium tyres, the company said.

Michelin said it expects raw material costs to reduce full-year earnings by 900 million euros, reiterating a forecast given in February.

(Reporting by Laurence Frost; Editing by GV De Clercq and Adrian Croft)

Source: globalrubbermarket (21/04/2017)

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