By Helen Massy-Beresford and Gilles Guillaume
PARIS (Reuters) - French tire maker Michelin
Michelin said on Friday it saw a full-year impact of 1.5 billion euros ($2 billion) on operating income in 2011 from expected increases in raw material costs, but 75 percent of those costs were offset by price increases already announced or implemented.
The tire maker had on Wednesday said it would increase European tire 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.
Rubber futures have spiked to all-time highs in recent sessions.
Michelin said free cash flow 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.
Operating income rose to 1.70 billion euros, leaving an operating margin of 9.5 percent, compared with 862 million last year and above an I/B/E/S forecast of 1.59 billion.
Full-year revenue rose 20.8 percent to 17.9 billion euros.
Michelin also said it was preparing the succession of its CEO Michel Rollier, 67, who intends to leave before the end of his mandate, which runs out when he is 72, but will stay on for at least 18 months.
Jean-Dominique Senard, a managing partner of the group, will eventually take over from Rollier and in the meantime will work in parallel with him.
The company will propose the steps at a shareholders' meeting in May. (Additional Reporting by Lewa Pardomuan; Editing by David Holmes) ($1=.7343 Euro)
