Michelin reported 39% growth in 2011, sets new targets

Article by Christian A., on February 11, 2012

Michelin’s profit for 2011 increased due to the rising demand from European and U.S. truckmakers. The net income of the world's second-largest tiremaker increased by 39% to 1.46 billion euros ($1.94 billion), exceeding analysts' expectations, on a 16% boost in revenue to 20.72 billion. The improvement in profit came about even if the sales volume increased by just 6.7% last year, lower than the 8% gain that the company had predicted.

Before one-time gains and losses are considered, its operating income increased by 15% in 2011 to 1.95 billion euros, or about 9.4% of sales, compared with a 9.5% operating margin in 2010.

According to Thomson Reuters data, analysts had anticipated sales of 20.65 billion euros, 1.89 billion in operating profit (after one-time items) and 1.32 billion in net income.

Michelin is aiming for a 9% return on capital in 2015 while promising to provide a 30% payout of its profit as dividends. Its sales volumes are estimated to increase by 25% by the year 2015 to 2.5 billion euros ($3.3 billion), compared with a previous goal of 2 billion euros or by 50% by the year 2020.

France-based Michelin is ranked behind Bridgestone of Japan in worldwide production. It raised 1.2 billion euros in a 2010 share issue to finance a growing market expansion comparable to adding a new plant annually. Last November, the tiremaker sold its 9.98% stake in Hankook Tire Co., increasing by up to $610 million to add to its expansion fund. Last April, the company inked a joint venture deal to make car and light-truck tires with China's Double Coin Holdings, adding to its four plants in China.

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