Michelin said it saw a full-year 2011 impact of 1.5 billion euros ($2 billion) on operating income from expected increases in raw material costs, but 75 percent of those costs were offset by price increases already announced or implemented.

The tyremaker had on Wednesday said it would increase European tyre prices across all ranges by between 4 and 7.5 percent.

Michelin said it aimed to increase unit sales by at least 6.5 percent in 2011.

"In response to the sharp increase in raw material costs, the group will maintain its dynamic pricing policy and, barring any major change in the economic environment, expects to see an increase in operating income in 2011," it said in a statement.

Michelin said free cashflow would be "temporarily negative" in 2011 because of capital expenditure commitments and raw material costs, but it confirmed its target of positive free cash flow for the 2011-2015 period.

Full-year net profit reached 1.05 billion euros ($1.4 billion), compared with 106 million in 2009, beating a Thomson Reuters I/B/E/S forecast of 938 million based on 19 analysts' estimates.