Michelin hikes dividend as pricing boosts profit
PARIS (Reuters) - Michelin (MICP.PA), the world's second-largest tyremaker, raised its dividend after price increases boosted 2012 profit, pledging to hold onto gains this year even as sales volumes remain flat.
Net income rose 7.5 percent to 1.57 billion euros last year as revenue increased 3.6 percent to 21.47 billion, the company said on Tuesday.
The French company, whose tyres equip vehicles ranging from bicycles to airliners, said truck and specialty tyres - for farming and mining equipment - largely drove the earnings gain.
"The markets weren't very strong at all last year," Chief Executive Jean-Dominique Senard told BFM radio. Against that backdrop, "Michelin's performance was particularly good".
Tyremakers and other auto parts makers have fared better than vehicle manufacturers in Europe's protracted market slump after restructuring more decisively in the 2008-9 crisis.
Michelin, based in Clermont-Ferrand, central France, is seeking to cut 1 billion euros in operating costs by 2015 while adding the equivalent of a new overseas plant each year to harness emerging-market growth.
"We've seen another strong improvement coming through from pricing," London-based Credit Suisse analyst David Arnold said in a note.
"It appears that the worst in terms of volume-related (earnings) impact is now behind us."
Michelin (MICP.F) shares in Frankfurt were up 1.5 percent in early trading.
Price hikes introduced in 2011 held firm last year, Michelin said, boosting sales by more than 1 billion euros.
Free cash flow will stay positive in 2013, the company predicted, raising its proposed dividend to 2.40 euros from the 2.10 euros paid out last year.
Truck-tyre margins recovered to 6.6 percent from 3.5 percent in 2011 as growing demand from U.S. vehicle manufacturers helped limit the global market decline to 5 percent, Michelin said.
Replacement truck tyres, which are more critical to profit, saw European sales tumble 14 percent.
Profitability also increased in specialty tyres, where revenue advanced 13 percent, but car tyres were weighed down by a European "collapse in new car registrations", Michelin said.
Vehicle registrations hit a 17-year low in the region last year, dragging Michelin's global sales volume down 6.4 percent.
Operating income rose 25 percent to 2.42 billion euros, excluding one-time gains or losses, raising the operating margin to 11.3 percent from 9.4 percent, Michelin said.
The company forecast "stable" operating income for 2013 and broadly flat sales volumes.
Pricing remained strong, it said, also forecasting a first-half gain of 350-400 million euros from ongoing price declines for its rubber, steel and oil-derived manufacturing inputs.
Michelin, which ranks behind Bridgestone (5108.T) of Japan, reiterated its medium-term operating profit goal of 2.9 billion euros for 2015.
Analysts had expected 2012 net income of 1.64 billion euros for 2012 on revenue of 21.65 billion, according to Thomson Reuters I/B/E/S.
($1 = 0.7474 euros)
(Editing by James Regan)
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