Jean-Dominique Senard: Michelin Under Raw Material Pressure
French tire maker Michelin's next chief executive told a shareholders' meeting on Friday the company is facing "incredible pressure" from high and volatile raw materials prices.
"We have never experienced such strong pressure," Jean-Dominique Senard said, adding that despite the "incredible pressure" of raw materials the group's 2011 operating result would increase.
Senard also reiterated the long-term targets Michelin set out in October, including for operating profit before non-recurring items clearly above €2 billion ($2.84 billion) by 2015.
Michelin pledged in April to hike prices further to offset raw material costs. It said that over the next nine months it would increase prices to cover €400 million of 2011 cost headwinds, adding to previous increases covering €1.4 billion. Earlier this month, Michelin announced truck tire price rises to help offset the rising costs.
Rubber prices remain high despite recent falls from record levels.
Physical rubber prices have dropped more than 20% since hitting a record $6.40 per kilogram in February, driven by selling on the Tokyo Commodity Exchange and worries about a drop in demand from China as the world's largest consumer of rubber tightens the economy. In May 2010, physical rubber prices were at around $3 per kilo.