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Michelin sees tangible rise in 2007 profit

From Reuters| February 17,2007

Michelin expects a tangible increase in operating profit this year after reporting a fall in 2006 when price increases failed to fully compensate for a spike in the cost of raw materials, it said today.

Among Michelin's brands are BFGoodrich, Uniroyal and Kleber.

Michelin said its operating profit before non-recurring items fell 2.2 percent last year to $1.75 billion (1.34 billion euros).

Operating profit after non-recurring items was $1.47 billion (1.12 billion euros).

The margin was 6.8 percent after non-recurring costs, but 8.2 percent before these costs. The company said it was in line with its target of a margin of close to 8 percent.

"The bull case on Michelin is predicated on anticipated restructuring in high cost locations such as Europe and North America," said analyst Stephen Cheetham of Sanford C. Bernstein.

"There is no new news in the announcement on this point, and we would continue to highlight that margins, and the stock's valuation, remain high by historical standards," he added.

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