Michelin announces 35-percent profit rise, workers hold two managers
Workers at a company factory in eastern France scheduled to be shut down next year were holding two managers at the site.
PARIS, February 18, 2008 - French tyre-maker Michelin reported on Friday a
35.3 percent surge in 2007 net profit as workers at a company factory in
eastern France scheduled to be shut down next year were holding two managers
at the site.
Net earnings came to 774 million euros (1.13 billion dollars) last year
from sales that rose 3.0 percent to 16.9 billion euros.
Chief executive Michel Rollier said Michelin had achieved "a very good
level of operating performance" in an environment of "generally firm demand,"
adding that the effect of a rise in raw material costs had been limited.
But the company on Friday was confronted with a stand-off in the eastern
French town of Toul, where disgruntled workers were holding two managers at a
plant that Michelin plans to close next year with the loss of 826 jobs.
The two managers, the social relations director and the head of personnel,
have been prevented from leaving the plant since Thursday morning following a
meeting with union representatives on personnel measures that would accompany
the plant closure, sources at the scene said.
A Michelin spokesman said early on Friday that the men had "passed the
night in the room and are still there."
Production has been sharply reduced since Wednesday night when a pile of
tyres was set alight in front of the facility.
Rollier said that, overall, 2007 had been marked by a "return to growth
after two rather sluggish years" and that the company would recruit 800 to
1,000 people per year in France for the next few years.
"We are going to invest significantly in new markets but we are maintaining
a strong industrial base in western Europe, particularly in France and in
North America," he said.
He said a plan called Horizon 2010 "is beginning to bear fruit" and that
the company faced 2008 "in a healthy and strong situation," ready to confront
"the many challenges of an uncertain economic environment."
Operating profit before non-recurrent items surged by 22.9 percent in 2007
to 1.645 billion euros, leaving a margin of 9.8 percent, an increase of 1.6
Overall operating profit rose by 17.9 percent to 1.319 billion euros.
Looking ahead Michelin said it was banking on "dynamism in emerging market
countries" to spur the tyre market.
But at the same time an increase in raw materials prices could lead to an
extra 200 million euros in costs, reflecting higher prices for natural rubber
and oil-based products in the second half of 2007.
Cost over-runs attributed to raw materials came to 72 million euros in 2007.
Michelin shares were showing a loss of 3.35 percent at 59.15 euros in early
trading on a Paris market that was 0.21 percent stronger.
Oddo Securities analysts said investors were disappointed with Michelin's
9.8 percent operating margin, which fell short of the 10.2 percent that had
The company said its margin had been affected by a one-time charge of 74
million euros linked to new legislation governing social security payments
that was approved in December last year.