Michelin & Cie., Europe’s largest tiremaker, reported a 5.6 percent increase in first-quarter revenue as an improving economy in the region fueled demand and the weaker euro boosted the value of sales overseas.
Sales rose to 5.02 billion euros ($5.38 billion) from 4.76 billion euros a year earlier, the Clermont-Ferrand, France-based company said in a statement Wednesday. This beat the 4.94 billion-euro average of seven analyst estimates compiled by Bloomberg. Michelin confirmed its full-year targets, including improving operating profit and generating a structural free cash flow of about 700 million euros.
The French manufacturer also said that lower raw material prices will boost results this year by about 600 million euros. It will spend 750 million euros on a share buyback program to be carried out over the next 18 to 24 months.
Michelin has been pushing to reduce its dependence on the European car market by developing tires for mining vehicles and expanding in China, India and Brazil. Those moves have made the company more exposed to weakness in emerging markets as well as currency swings.
This year, the euro’s drop against the dollar is due to be a boon. The company predicted today that foreign-exchange swings will boost 2015 operating profit by more than 350 million euros, more than double a previous forecast. In the first quarter, currency lifted sales by 443 million euros.
The company is seeking to adjust to softer demand in emerging markets by cutting costs by 1.2 billion euros through 2016.