Michelin facing incredible pressure due to raw materials prices, CEO says

Article by Christian A., on May 12, 2011

Michelin's next CEO, Jean-Dominique Senard, said at last Friday’s shareholders' meeting that because of high and volatile raw materials prices, the company faces “incredible pressure."

Senard said that despite this, the group's 2011 operating result is expected to increase. He reiterated the long-term targets Michelin established last October, including aiming for operating profit before non-recurring items that’s clearly above 2 billion euros ($2.84 billion) by 2015.

During the shareholders' meeting in Clermont-Ferrand, central France, Senard estimates that for 2011, the price increases in raw materials will have a 1.8 billion euro impact on its accounts.

Senard clarified that a supply squeeze isn’t what they’re worried about. Rather, they’re concerned about price volatility. After current CEO Michel Rollier retires, Senard will take over as soon as shareholders give their approval to his nomination as expected.

Last April, Michelin announced it will increase prices to offset raw material costs. It said that prices will increase over the next nine months to cover 400 million euros of 2011 cost headwinds.

There had been previous increases that cover 1.4 billion. In early May, Michelin said that the price of truck tires will go up to help offset the rising costs. Despite the recent drops from record levels, the rubber prices have remained high.

Physical rubber prices have fallen by over 20% since reaching a record $6.40 per kilogram in February, buoyed up by selling on the Tokyo Commodity Exchange and concerns that a plunge in demand from China, which is the world's largest consumer of rubber, limits the economy.

Topics: michelin

If you liked the article, share on:

Comments

Recommended

One of the executives at Volkswagen tagged in the so-called Dieselgate scandal has pleaded not guilty to a list of allegations surrounding the carmaker’s actions to cheat emissions regulations in...
by - February 27, 2017
When the Crown De Luxe saloon was first released in 1972, it was at that time the most lavish Toyota model available to British customers. Both unusual and exclusive, one...
by - February 27, 2017
The ride-sharing fleet of sharing Lyft Inc. will soon include thousands of specially fitted self-driving Chevrolet Bolt electric vehicles, courtesy of General Motors. If plans push through, Lyft’s clients would...
by - February 27, 2017
J.D. Power has officially released the 2017 Vehicle Dependability Study, an annual list of the most dependable brands in the auto industry. Once again coming on top is Lexus, the...
by - February 26, 2017
Citroen revealed that its entry to the Chinese market is moving forward with the planned release of the new generation C5. While still on sale on this part of the...
by - February 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries