Michelin, Continental lift sales goals

Tyre makers Michelin and Continental raised their full-year sales targets and said price hikes were compensating for the surging cost of rubber, their main raw material. Cost inflation and the impact of supply chain disruption from Japan's earthquake in March have been in focus as car makers and suppliers have reported quarterly results in recent days.
Michelin and Continental sounded confident on Friday in the face of these obstacles. The French tyre maker said the market should return to pre-crisis levels of growth in the second half of this year as it increased its full-year sales volume target. Its German rival predicted higher revenues and said it may raise prices again to offset raw materials costs. The comments come after US rival Goodyear Tire & Rubber Co said on Thursday that an improvement on price mix overcame higher raw materials costs, as its quarterly profit beat Wall Street expectations by a wide margin.
Asian physical rubber prices were trading around $4.80 per kilo on Friday, 60 percent above the year-ago level of about $3. Michelin stuck with its estimate that high raw material prices would have a 1.8 billion euro impact on its accounts in 2011, which it said would be offset by price rises already announced or implemented.
It had previously said price rises would compensate for about 80 percent of the impact in 2011. The company also said it now sees sales volume rising 8 percent this year, compared with an earlier estimate of 6.5 percent. Michelin unveiled its latest round of price hikes in April to deal with what Chief Executive-designate Jean-Dominique Senard has called "incredible pressure" from raw material prices.
Continental, meanwhile, upped its estimate of the 2011 raw material cost impact on its tyres unit to 850 million euros, versus a previous 700 million euro estimate, on a spike in synthetic rubber prices after the Japan quake. CFO Schaefer said he expects synthetic rubber prices to remain high for the rest of 2011, adding the German tyre and auto parts maker may further raise tyre prices.
Goodyear said on Thursday it expected raw materials costs to rise more than 30 percent for the rest of the year, up from previous projections for increases of 25 percent to 30 percent. Michelin posted a first-half operating profit of 971 million euros, or a 9.6 percent margin, on revenues of 10.1 billion euros, in line with forecasts by Unicredit analysts.
Continental said it was now forecasting 2011 sales would reach 29.5 billion euros ($42.36 billion) compared with a previous outlook for 28.5 billion euros with an adjusted operating margin of about 10 percent. Chief Executive Elmar Degenhart said in a statement: "At present, we do not see any reason why the good development in earnings should be weaker in the second half of 2011 than in the first half." Continental posted a second-quarter adjusted profit before interest and tax (EBIT) of 749.8 million euros, in line with the average forecast given in a Reuters poll of analysts.