Price hike pumps up Michelin share price

14th December 2004, Comments 0 comments

PARIS, Dec 14 (AFP) - Shares in French tyre manufacturer Michelin rose sharply in midday trade here as investors welcomed a decision by the company to raise prices in Europe by an average of five percent from July 1 in the face of more expensive raw materials.

PARIS, Dec 14 (AFP) - Shares in French tyre manufacturer Michelin rose sharply in midday trade here as investors welcomed a decision by the company to raise prices in Europe by an average of five percent from July 1 in the face of more expensive raw materials.

Michelin had gained 3.59 percent to EUR 45.55 on a broader market that was up 2.95 percent at 3,809.14.

"The market received well the news of the price hike, which is not expected to lead to market share loss," said one Paris-based dealer.

Exane BNP Paribas analyst Petra Horn reiterated her "neutral" rating on the stock but said Michelin's price increases would largely offset the expected burden from higher raw material costs of around EUR 350-400 million (USD 465-532 million).

"A further margin improvement therefore looks likely in 2005 as Michelin should continue to see its mix improving," she said.

Exane BNP Paribas forecasts Michelin's underlying profit margin to rise to around 8.9 percent in from her forecast of 8.6 percent in 2004.

© AFP

Subject: French News

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