French tire maker Michelin (MGDDF.PK,MGDDY.PK), Monday reported a five percent rise in first-quarter sales led mainly by strong growth in its specialty tire business as well as a favorable price mix. Nonetheless, volumes slackened at its passenger and light truck tire divisions during the quarter.
Looking ahead to the full year 2012, Michelin confirmed its goal of stable sales volumes over the full year, partly dampened by continued uncertainty in Europe. Michelin said it continues to expect a rise in operating income for 2012, excluding the impact of the Paris building sale.
Michelin said that during the quarter, its revenue from Specialty tire business, comprising earthmover, agricultural, and aircraft tires, rose 24 percent from last year, led by a 6.2 percent rise in tonnages sold and the favorable application of contract clauses indexing prices to raw materials costs.
Passenger car and light truck tires segment sales edged up 3 percent. Nevertheless, volumes at the segment slid 8.9 percent, given the high prior-year comparatives due to the price increases introduced in April 2011. Volumes were also hurt by buyer hesitation in certain large markets and by ongoing dealer de-stocking.
Truck tires segment revenue meanwhile slid a modest 0.1 percent compared to last year, with sales volumes down 16.3 percent, mainly on weak European demand.
"Overall tire markets were down overall, with a contrast between passenger car, light truck and truck tires, where demand weakened as expected and specialty businesses, which remain buoyant," the company said.
The company benefited from a 13.8 percent improvement in price mix for the quarter, reflecting the 577 million euros impact of the 2011 price increase and the indexation clause designed to offset higher raw material costs.
Michelin posted first-quarter sales of 5.304 billion euros, compared to 5.047 billion euros last year.
The company has set a capital expenditure for 2012 of 1.9 billion euros.
In Paris stock exchange, Michelin closed at 50.65 euros, down 1.34 or 2.58%, on a volume of 1.2 million shares.
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