PARIS -- Michelin posted a forecast-beating 18 percent rise in 2002 operating profit on Tuesday as price increases and cost cuts helped it resist grim markets and a weak U.S. dollar.
The French firm was cautious on the year ahead, declining to give firm forecasts and betting on stable tire markets with a risk of waning demand. But investors cheered the profit figures, driving the stock up more than 5 percent.
"These are a good set of figures," said Thomas Besson, analyst at Schroder Salomon Smith Barney in Paris. "The cash flow is good, they are cutting their debt, and the lack of guidance is not unexpected given the uncertain environment."
Michelin said net profit almost doubled to $624.5 million from $296 million in 2001, or up 96 percent.
Lower interest and tax charges than in 2001 and an exceptional capital gain from real estate sales in North America helped flatter the bottom line, the firm said in a statement.
A three-year belt-tightening plan began to pay off in 2002, helping Michelin lift operating profit and weather an industry downturn that has hurt some rivals.
And price increases also helped swell margins, as did a strategy of focusing on more lucrative top-end tires and on selling more tires direct to individuals rather than carmakers, although all this was tempered by unfavourable exchange rates.
Michelin, also famed for its upscale restaurant guides, said it would not give firm forecasts for 2003 due to uncertain economic and geopolitical conditions but said it aimed to keep improving performance.
"It's an uncertain road ahead in 2003," Chairman Edouard Michelin told a news conference. "But that does not undermine our confidence in being able to continue to improve performance at all levels," he added, confirming a target of 10 percent operating margin in 2005 if markets return to normal.