FRANCE: Strong euro, materials costs, hit Michelin operating profit - report
High raw materials costs and a strong euro hit sales at Europe's biggest tyre maker Michelin in the third quarter and will push down its operating margin slightly for the full year, Reuters reported.
Michelin, based in Clermont-Ferrand, France, reportedly said on Wednesday sales fell 1.7% to €3.801 billion in the year-ago period, meaning nine-month sales fell 4.6% to €11.149 billion ($US13 billion).
According to Reuters, the company said its 2003 operating margin would be slightly below last year's level of 7.8%, excluding the impact of acquisitions, partly because of a $350 million increase in operating expenses caused by higher material costs.
Michelin reportedly said its recent acquisition of Danish tyre distributor Viborg meant 2003 sales would be around €300 million higher than last year - however the purchase would knock €20-40 million euros off its operating profit and it reiterated that its full-year income would be hit by a €300 million charge linked to the buy.
Analysts told Reuters the sales figures were at the top end of expectations and noted that, although the outlook was not that upbeat, it had been largely forecast.
Sales in terms of volume rose 2.6% in the third quarter but this was erased by a strong euro, with exchange rate fluctuations hitting revenues to the tune of 6.2%, or 8.7% impact in the nine-month period, Reuters said.
According to the news agency, for the full year, Michelin expects sales of tyres for passenger cars and light vehicles to manufacturers to dip 3% in Europe and 4-5% in North America, even though some car makers were starting to raise production in the fourth quarter.