Michelin has posted a smaller-than-expected 1.8% drop in 2003 revenues as a strong euro and high raw material costs wiped out stronger volume sales and a boost from its purchase of tyre retailer Viborg.

Europe's biggest tyre maker reportedly said in a statement that sales totaled $US19.682 billion compared with $20.035 billion. Thirteen analysts polled by Reuters forecast on average 2003 sales of $19.555 billion.

Stripping out the effect of a strong euro compared with the US dollar and other currencies, and of its Viborg acquisition, sales rose 5%, the report said.

Michelin reportedly said fourth-quarter sales rose 6.6% to $5.405 billion, thanks to a $401 million boost from the consolidation of Viborg in its accounts and a 5.8% rise in volumes.

According to Reuters, the company said its business environment, in terms of tyre markets, exchange rates and raw material costs, was roughly the same as in October, when it forecast a full-year operating margin below 2002's level.