More work to do in 2006, says Michelin.

Feb. 14, 2006

"Our operating income is showing progress," says Groupe Michelin Chairman and CEO Edouard Michelin, "yet it does not reflect (Michelin's) potential."

Earlier today, Michelin announced financial results for 2005. The tiremaker achieved operating income of 1.57 billion euros, up 27% over 2004 levels. (Its consolidated net sales for 2005 totaled nearly 15.6 billion euros, a 3.6% gain, while its net income rose 35.9% over 2004 levels to 889 million euros.)

"In 2006, we will strengthen our focused growth strategy and strengthen our cost-reduction efforts. We expect markets to grow, with a rebound in the European truck tire market.

"In this environment, we are aiming for dynamic sales growth that will translate into additional operating income and an operating margin equivalent to 2005, despite the additional negative impact from higher raw material costs."

Michelin officials believe that raw material prices "should stabilize" in 2006 at a level close to levels at the end of 2005.

"However, the massive increase recorded throughout last year will have a negative impact of around 11% on the average raw material cost compared to the 2005 average.

"Michelin will try to limit the impact with, in particular, the price increases implemented at the end of last year and with those announced for the beginning of 2006. However, this raw material increase will mechanically impact the operating margin."