Michelin sets high growth targets

French tyre maker Michelin set ambitious growth targets for the years ahead after posting Friday a 39-percent increase in next profit in 2011 to 1.46 billion euros ($1.93 billion) Operating profit rose by 14.7 percent to 1.9 billion euros, or 9.4 percent of net sales, and Michelin said it aimed to boost that to 2.5 billion in 2015. Sales rose 15.8 percent to 20.7 billion euros. "In deploying its strategy, Michelin is capitalising on a number of unique competitive advantages, including forefront positions both in the premium tyre segment and in all of its specialty businesses, as well a balanced global footprint that will be further strengthened in 2012 with the start-up of the new plants in Brazil and China," the company said in a statement. "As a result, Michelin confirms its ambition to drive at least 25 percent growth and generate positive free cash flow over the 2011-2015 period, and has raised its 2015 operating income target to 2.5 billion," it added. The net profit was above analyst expectations of 1.27 billion euros on average, and Michelin's share price rose but was dragged down by 0.47 percent to 55.50 euros in midday trading on a French market down 0.70 percent overall. "Michelin managed to nearly maintain its operating margins at a decent level," despite the difficult economic conditions, said Dominique Daridan, an analyst at Aurel BGC stockbrokers. He noted that Michelin's performance suffered at the end of the year as the global economy slowed. Jean-Dominique Senard, one of the company's co-chief executives, noted on BFM TV that 2011 was "a bit complicated" due to the "headwinds of increases in raw materials prices" that resulted in a 1.8-billion-euro hit. However Michelin said in its earnings statement that higher raw materials costs have now been "effectively offset". It said a programme to improve the competitiveness of its manufacturing operations aimed to drive down costs by 1.0 billion euros over five years. Senard said the company would continue to push to keep out in front in the premium tyre segment. "There's no choice, that's where the growth is," he said. With factories in Brazil and China due to come on line this year, the company is also banking on emerging markets for growth, while it expects Europe to be "less buoyant". Senart said the Michelin aims to increase its global manufacturing capacity by 50 percent within 10 years. The company proposed a dividend of 2.10 euros per share.