Michelin announces 35-percent profit rise, workers hold two managers
PARIS, February 18, 2008 - French tyre-maker Michelin reported on Friday a35.3 percent surge in 2007 net profit as workers at a company factory ineastern France scheduled to be shut down next year were holding two managersat the site. Net earnings came to 774 million euros (1.13 billion dollars) last yearfrom sales that rose 3.0 percent to 16.9 billion euros. Chief executive Michel Rollier said Michelin had achieved "a very goodlevel 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 easternFrench town of Toul, where disgruntled workers were holding two managers at aplant 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 ameeting with union representatives on personnel measures that would accompanythe plant closure, sources at the scene said. A Michelin spokesman said early on Friday that the men had "passed thenight in the room and are still there." Production has been sharply reduced since Wednesday night when a pile oftyres was set alight in front of the facility. Rollier said that, overall, 2007 had been marked by a "return to growthafter two rather sluggish years" and that the company would recruit 800 to1,000 people per year in France for the next few years. "We are going to invest significantly in new markets but we are maintaininga strong industrial base in western Europe, particularly in France and inNorth America," he said. He said a plan called Horizon 2010 "is beginning to bear fruit" and thatthe 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 2007to 1.645 billion euros, leaving a margin of 9.8 percent, an increase of 1.6percentage points. Overall operating profit rose by 17.9 percent to 1.319 billion euros. Looking ahead Michelin said it was banking on "dynamism in emerging marketcountries" to spur the tyre market. But at the same time an increase in raw materials prices could lead to anextra 200 million euros in costs, reflecting higher prices for natural rubberand 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 earlytrading on a Paris market that was 0.21 percent stronger. Oddo Securities analysts said investors were disappointed with Michelin's9.8 percent operating margin, which fell short of the 10.2 percent that hadbeen expected. The company said its margin had been affected by a one-time charge of 74million euros linked to new legislation governing social security paymentsthat was approved in December last year.