For the first half of the year, Michelin posted a 37% increase in profit as price hikes have aided in offsetting the decline in Europe’s economy and auto industry. Michelin also announced that it anticipates a full-year increase in operating income. In Friday’s statement, Michelin said that net income climbed to 915 million euros ($1.13 billion) from 667 million euros during for the same period in the previous year.
Revenue increased by 5.9% to 10.71 billion euros even with a drop in volumes, driven by price increases imposed last year. Michelin, which has its headquarters in Clermont-Ferrand, central France, will be adding about one new plant every year for its expansion plans in markets like China.
Michelin, which is closely followed by Bridgestone at No. 2, is targeting a 2.5 billion-euro operating income target for 2015. Michelin released a statement to announce that sales volumes decreased by 8.3% and are predicted to fall by 3% to 5% for the full year. However, this decline will be offset by better raw materials costs and by a positive currency effect.
The operating income of Michelin for the first half of the year increased by 36% to 1.32 billion euros (before one-time gains and losses), making up about 12.3% of sales, from 971 million, or a 9.6% margin. For the first half, Michelin recorded 7 million euros in free cash flow. The company also reiterated its goal to achieve a positive figure for the full year. Michelin said that the operating income will indicate a “clear increase" for full-year 2012, restating a previous forecast. The net debt surged to 2.18 billion euros from having posted only 1.81 billion at the end of December.