Michelin Posts Strong Profit Increase

PARIS March 15, 2005; The AP reported that Michelin SA overcame high rubber prices to post a 62 percent increase in profit for 2004, but the tire maker's shares dipped Tuesday after its results and forecasts fell short of expectations.

The French company, whose full name is Compagnie Generale des Etablissements Michelin, said profit rose to 515 million euros ($689 million) in 2004 from 318 million euros in 2003.

That was despite an 11 percent increase in raw material costs, Michelin said, and a one-time 206 million euros ($275 million) charge including a provision against expected losses from the planned sale of its wheel division.

Michelin said it had absorbed the higher rubber costs by raising prices, while also delivering a 2.1 percent increase in sales to 15.7 billion euros ($21.0 billion) from 15.4 billion euros. The sales figure had been announced previously.

Chairman Edouard Michelin said the company had "substantially improved its performance despite the continuation of a very strong rise in external costs," announcing a 34 percent dividend increase to 1.25 euros ($1.67) per share.

But the chairman's 2005 forecast stopped short of promising earnings growth, instead predicting that operating profit would be "at least as good" as the 1.30 billion euros ($1.74 billion) posted for 2004 -- citing further expected increases in raw material prices.