The world’s tire giant Michelin Group delivered a satisfactory test paper in early 2008. Its 2007 annual financial report shows that annual sales increased by 3.2% year-on-year; operating profit increased by 1.6 percentage points year-on-year to 9.8%; net income increased by 35% to 772 million euros; and liquidity increased by 430 million euros compared to 2006. As product prices remained stable and productivity increased, the gross profit margin of the Michelin Group increased by 1 percentage point to 29.9% in 2007. He Liye, a managing partner of the Michelin Group, pointed out: “The overall market demand was favorable in 2007, and the increase in raw material prices was limited. After two years of adjustment and efforts, Michelin returned to the track of growth. With the obvious improvement of cash flow status, We will be able to continue to develop while strengthening our financial independence." Sales of Michelin's car/light truck tires have grown steadily in 2007; in the field of replacement tyres, all markets have achieved significant growth; sales in Africa and the Middle East have been especially outstanding. In the passenger and light truck business in the Asian market, the market in the region has achieved overall growth, with China and India increasing by 20% and 10% respectively. In Japan, due to mild winter weather, market demand has dropped by almost 5%. In the field of card and passenger car business, the rapid expansion of the radial tire market in the region reflects the strong growth momentum of the local economy. The Michelin Group stated that in the whole of 2008, under the existing exchange rate, the further increase in prices of natural rubber and petroleum derivatives used for tire production in the second half of 2007 will increase the financial burden of EUR 200 million. In this context, Michelin will adopt a corresponding pricing strategy to offset the negative impact of rising raw material prices, and continue to increase its competitive advantage through productivity enhancement and streamlining structural costs, and strive to achieve growth in 2008. Emerging markets will become Michelin's big profit in 2008. Not long ago, Michelin and "Li Ning" jointly announced that the two sides will carry out technical cooperation in the field of sports shoes. Michelin will apply its tire-related technology to the soles of Li Ning brand sports shoes. The technical cooperation agreement signed this time is part of the Michelin Group's "brand extension plan", which is implemented through Michelin Lifestyle Limited, a wholly owned subsidiary of the Michelin Group. Michelin Lifestyle Limited Managing Director Alessi Kaban said: "We have been committed to expanding our tire-related expertise and knowledge into new sports fields." This move not only added yet another Michelin profit growth point, but also added a new window to more than 5,000 publicly displayed brand images and tire technologies.
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