In the first quarter of 2011, net sales of card passenger car tires and related distribution businesses reached 1.606 billion euros in the first quarter, an increase of 32.5% over the same period in 2010. Sales in the first quarter increased by 17.8% year-on-year, especially in the original tire market. This increase was driven by the expansion of inventory by dealers before the price increase and the increase in global market share. With the sharp increase in raw material costs and tight tire supply, the Michelin Group is making price adjustments in all markets.
In the first quarter of 2011, the Michelin Group’s net sales reached 5.047 billion euros, an increase of 28.1% over the same period of 2010, which was mainly due to the following factors:
Sales volume increased by 16.5%, showing that Michelin has a considerable market share in the context of a sharp rise in demand for the tire market.
The price combination generated 7.7% of the revenue, which was caused by the following factors: First, the company's consistent pricing policy was continued, and the second was the price linkage clause for binding raw materials in sales contracts, which had a negative impact in the first half of 2010. . The combined effect is not significant enough, because the influence of specific market segments, specific countries, regions, and brand effects is continuously increasing. At the same time, sales of original tire distribution business are also growing rapidly, and the impact of the two offset each other.
The positive effect of the 2.1% exchange rate factor was mainly due to the appreciation of the U.S. dollar, the Brazilian real and the Canadian dollar against the euro.
The direction of development in 2011
Sales volume in the first quarter of 2011 increased significantly compared to the same period in 2010. This is due to the fact that the mature market demand in the same period in 2010 is still in the recovery period. At the same time, the market has also chosen to purchase the product ahead of the next round of price increase.
In 2011, Michelin’s sales growth target for the full year was an increase of at least 6.5%. If end-user sales remain at current levels in the coming months, it does not rule out the possibility of further increasing this goal.
With the rising cost of raw materials, Michelin insists on the company's consistent pricing policy. It is expected that the price increase that has been implemented or determined to be implemented will offset nearly 80% of the annual incremental costs, equivalent to approximately 1.8 billion euros.
Due to the above increase in working capital requirements and the acceleration of capital expenditures, it is expected that free cash flow will be negative in 2011.
Michelin reiterated that its goal is to realize higher operating profit in 2011.
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