Michelin finishes first half with $1.1 billion profit
Groupe Michelin posted net income of 915 million euros on net sales of 10.7 billion euros for the first half ended June 30, 2012. That compares to income of 667 million euros on sales of 10.1 billion euros for the same period last year.
Based on the exchange rate on June 30, 2012, Michelin recorded net income of more than $1.1 billion on net sales of more than $13.4 billion for the first half of its 2012 fiscal year. Its income-to-sales ratio was 8.5%.
Michelin increased its monetary sales by 5.9% despite an 8.3% decrease in volume. The decrease "reflected the weak market environment, particularly in the mature markets of Europe and North America."
Here is the segment breakdown in net sales (in millions of euros):
Segment 1H 2012 1H 2011
Passenger/light truck tires 5,501 5,252
Truck tires 3,269 3,266
Specialty businesses 1,936 1,587
First-half operating income before non-recurring items was was 1.3 billion euros, up 36% compared to 1Q 2011.
Outlook for the full year
"In a still uncertain market environment, mainly in Europe, Michelin’s global presence across every market segment represents a competitive advantage," says the company. "To strengthen it, the group is pursuing an ambitious capital expenditure plan that is expected to total around 2 billion euros over the full year. The outlays are focused on building new capacity in growing markets, improving industrial productivity in mature markets and driving sustained technological innovation.
"Confident in its strengths, Michelin confirms its full-year objective of reporting a clear increase in operating income before non-recurring items. (Michelin finished 2011 with operating income of slightly more than 1.9 billion euros.)
"Following the decline in demand in the first half, sales volumes are now expected to end the year down by 3% to 5%. However, this should be offset mainly by more favorable raw materials costs and a positive currency effect. Michelin also confirms its objective of generating positive free cash flow, before the impact of the sale of a property complex in Paris."