Michelin posted its best profit margin in five years in 2004 despite rising commodity prices.
CEO Edouard Michelin said at a press conference that the tire maker’s aim for 2005 is a result that is “at least as good as that achieved in 2004, in what we believe will be a tough environment.”
Stronger sales of high-margin tires for SUVs and specialty tires for public works vehicles helped the French tire maker in 2004.
Tire manufacturers have been hit by higher raw materials costs, especially for rubber.
Since 2000 prices for natural rubber have increased 80 percent in euro terms. Prices for synthetic rubber have increased up to 70 percent.
Michelin expects the rise in commodity and energy prices to accelerate this year, before stabilizing at a high level by “2006 or perhaps 2007,” Michelin said.
Last year Michelin increased its operating profit to 8.3 percent on sales of E15.7 billion from 7.4 percent in 2003, its best result since 1999. Michelin’s net profit rose 60 percent to E527 million from E329 million in 2003.
Michelin expects that commodity prices will increase by 13 percent this year, after an 11 percent rise in 2004. The increase will cost it E400 million in 2005 after E360 million in 2004, it said.