Paris - Michelin & Cie, Europe’s biggest tyremaker, said first-half operating profit rose 8.9 percent on higher volume in its home region and benefits from the weaker euro.
Operating profit before one-time gains or costs increased to 1.26 billion euros ($1.4 billion) from 1.16 billion euros a year earlier, the Clermont-Ferrand, France-based company said in a statement. The figure compares with the 1.29 billion-euro average of five analyst estimates compiled by Bloomberg.
A steady recovery in Europe’s auto market has lifted local tyre demand, while the euro trading close to a 12-year low against the dollar has boosted efforts to expand outside its home region. Prices for industrial commodities including oil are at about the lowest in 13 years, reducing production costs. The trends have also helped tyremaking rival Continental AG, which raised its 2015 sales forecast twice this year.
Michelin’s first-half sales rose 8.5 percent to 10.5 billion euros. Earnings were helped by a 228 million-euro gain from lower raw-material prices and a 302 million-euro gain from currency effects. Volume increased in Europe for sales to carmakers as well as replacement tyres.
The company stuck to its plans to increase full-year operating profit, excluding currency effects, as sales volume rises in line with global markets. At the same time, second-half earnings will be held back by the cost of raw-material price-hedging contracts and lower tire prices.
The manufacturer also reiterated targets for a return on capital employed exceeding 11 percent, structural free cash flow of 700-million-euro goal, and capital spending of 1.8 billion euros.
Bloomberg