Michelin net profits up 36 percent in 2005

14th February 2006, Comments 0 comments

PARIS, Feb 14, 2006 (AFP) - French tyre maker Michelin said on Tuesday that its net profit rose 36 percent in 2005 despite a sharp rise in the cost of raw materials and it gave an upbeat assessment of prospects for the market this year.

PARIS, Feb 14, 2006 (AFP) - French tyre maker Michelin said on Tuesday that its net profit rose 36 percent in 2005 despite a sharp rise in the cost of raw materials and it gave an upbeat assessment of prospects for the market this year.

Giving forecasts for 2006, the joint managing partner of the group, Edouard Michelin, said: "We are aiming for dynamic growth in sales which will mean, despite an additional negative effect from the increase in the cost of raw materials, an improvement in our operating profit and a margin equivalent to that of 2005."

Net profit in 2005 increased by 36 percent to EUR 889 million, boosted by a one-off gain of EUR 206 million, and sales rose to EUR 15.59 billion from EUR 15.04 billion in 2004.

The company said it had an operating margin of 8.8 percent in 2005 and would continue cost-cutting in 2006 to compensate for an anticipated 11 percent increase in raw material costs.

News that the operating margin this year would be no better than in 2005 sent the price of shares 2.83 percent lower on the Paris stock exchange to EUR 53.15.

One Paris-based dealer said: "There is a big disappointment on the operating margins forecast for 2006. The forecast figure is disappointing and we are wondering where this weak figure comes from."

Michelin said it expected relatively good market conditions in 2006, with a rebound expected in the tyre market for heavy goods vehicles in Europe.

The company also said that it would book a restructuring charge of US $200 million dollars (EUR 168 million) in 2006 for the cost of closing a plant in Canada which will result in the loss of 1,100 jobs.

Copyright AFP

Subject: French news

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