PARIS -- Europe's biggest tire maker Michelin posted a smaller-than-expected 1.8 percent dip in 2003 revenue on Thursday as a strong euro and high raw material costs wiped out stronger volume sales and a boost from its purchase of European tire retailer Viborg.
Michelin said in a statement its sales totalled 15.37 billion euros ($19.7 billion) compared to 15.645 billion euros previously. Thirteen analysts polled by Reuters on average forecast 2003 sales of 15.262 billion euros.
Stripping out the effect of a strong euro versus the U.S. dollar and other currencies, and its Viborg acquisition, sales rose five percent.
"These are very good results -- better than expected in all segments and a good sign for 2004," said one Paris-based analyst who declined to be named.
Michelin said fourth-quarter sales rose 6.6 percent to 4.221 billion euros, thanks to a 313 million-euro boost from the consolidation of Viborg in its accounts and a 5.8 percent rise in sales by volume.
The company said its business environment, in terms of tire markets, exchange rates and raw material costs, was roughly the same as in October, when it forecast a full-year operating profit margin below that of 2002.
Michelin has warned its full-year bottom line will be hit by a 300 million-euro goodwill charge for the loss-making Viborg, adding that the business would also knock 20 million to 40 million euros off its 2003 operating profit.
RECOVERY IN 2004?
Michelin, which vies with Japan's Bridgestone Corp. and U.S.-based Goodyear Tire and Rubber Co. for world tire market supremacy, said currency effects took an 8.3 percent bite out of 2003 revenue.
Analysts expect Michelin's net profit to fall sharply this year due to the Viborg charge, and predict an 8.6 percent dip in operating profit.
However many reckon the company, also famed for its upscale restaurant guides, is set for an easier ride in 2004 amid recovery in the key U.S. truck market, although continued high raw material costs and a strong euro could still hamper growth.
Nordic tire maker Nokian Renkaat, which is less exposed to the U.S. market, posted a 10 percent rise in 2003 sales fuelled by strong demand for winter tires.
Higher volumes lifted sales by 3.3 percent while price rises gave a 1.6 percent boost. The company said that tire markets had fared slightly better than it had expected -- particularly the more profitable replacement market, although this varied according to region.
