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

Article by Christian Andrei, 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

Login or Create new account to add a comment!

Recommended

The Chevrolet Cruze is coming to Australia. But it won’t be known as the Chevrolet Cruze. Instead, it will bear the Holden badge and get the Astra moniker. The 2017...
by - January 17, 2017
As expected, four years after the current generation of the BMW 4 Series was introduced in 2013 with the BMW 4 Series Coupe, the German premium carmaker is implementing a...
by - January 17, 2017
As BMW continues to pursue its plans for the coming years, President-elect Donald Trump gave out a warning to car manufacturers to prevent them from exporting their cars to the...
by - January 17, 2017
Audi recently unveiled its Q8 full-size coupe SUV concept at the 2017 North American International Auto Show. Bearing the traditional functionality of an SUV and the sexy and sporty styling...
by - January 17, 2017
The highlight of this year’s Consumer Electronics Show may be based on some of these keywords---connectivity, integration and partnership. Just like in the previous year, you’ve probably heard and read...
by - January 16, 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