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Michelin planning further price increase.

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Posted: February 21, 2017 at 9:49 am   /   by   /   comments (0)

Europe’s biggest tyremaker Michelin, is looking at further price increases this year to protect earnings as rubber costs rise after bottoming out in 2016.

The company, which announced this month that it will charge some customers more this year, estimates that raw-material costs in 2017 could pose a 900 million-euro (US$956mil) burden on profit, with the effect largely offset by raising tyre prices, the French manufacturer said in a statement. Falling raw-material costs last year helped 2016 profit by 545 million euros.

“The raw-material effect, which was very positive, will be reversed completely in the coming year,” chief financial officer Marc Henry told reporters in Paris. “I think we have announced all the hikes for the first half of the year, but we’re keeping open the possibility, depending on how costs increase, to make other moves.”

The manufacturer, based in the central French city of Clermont-Ferrand, is cutting spending to compete with low-cost rivals amid mixed demand for tyres, with an expected decline in US car sales from a peak last year. Michelin said that it expects tyre markets this year to follow trends of late 2016, particularly with an increase in products for mine-industry vehicles that reverses a decline of the past three years.

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