Half Year Michelin Results Show Growing Operating Margin

Michelin has announced generally positive results for the half year ending June 30, 2007, which the tyremaker believes were aided by supportive markets, especially the truck tyre sector in Europe, Asia and particularly South America.

Total sales were recorded as 8.4 billion euros, a 4.7 per cent increase on the first half of 2006. From this operating income was 797.7 million euros, up 64.4 per cent on last year and net income as of June 30 was 436.4 million euros, a very respectable 57.6 per cent increase from 2006. The company’s price/mix effect was maintained at +4.4 per cent, in part the result of a “favourable impact” of price increases implemented during the second half of last year. Combined with reduced selling, general and administrative expenses and good sales performance, this equalled for Michelin a strong operating margin growth (before non-recurring items) to 10.2 per cent and the aforementioned 436.4 million euro net income.

“In a first half 2007 characterised by a supportive environment, Michelin’s results confirm the Group’s ability to achieve significant operating margin improvements before non-recurring items,” said managing partner Michel Rollier. “This clearly is encouraging progress that must be made sustainable over time. Indeed, maintaining structurally high operating profits is key to achieving the Group’s other objectives by 2010, in particular return on capital employed of at least 10 per cent and significantly positive free cash flow. Accordingly, we will press ahead with the major programs undertaken to reduce our overhead costs and optimise our industrial base worldwide.”