CLERMONT-FERRAND, France, May 7 (Reuters) - French tyre maker Michelin (MICP.PA) sees high raw material challenges as a challenge in 2010 and will hike its prices to reflect the increased costs, its managing partner said on Friday.
World rubber prices rose throughout 2009, and surged in the early months of 2010 because of a shortage of supply.
"We have to face up to ... a rise in raw materials, even if just recently they are starting to dip a little," said Jean-Dominique Senard, one of the group's three managing partners.
He was speaking at the company's annual shareholders' meeting in Clermont-Ferrand, central France, where it has its headquarters.
"But this violent increase is a challenge for the group; it's a real issue for 2010," he added.
"We are going to ensure that sale prices reflect this rise in costs we are experiencing, and we are going to do this with the dexterity necessary to avoid major disruption around the world," Senard said.
Michelin, which suffered a ten percent drop in sales last year when the auto crisis hit, said in February when it released full-year results that rising rubber prices and an unclear market outlook made it "extremely vigilant" for 2010. [ID:nLDE61B079]
Michelin, like Japanese competitor Bridgestone Corp (5108.T), is highly dependent on the evolution of natural rubber and oil prices.
Bridgestone on Friday hiked its profit forecast for the half-year to June on the back of brisk sales. [ID:nTOE64605Z]
Most tyremakers have suffered from the surge in rubber prices since the start of the year, prompted by tight supplies in major producing countries like Thailand and Malaysia, and a spike in demand.
Pirelli & C SpA (PECI.MI), one of Europe's biggest tyre producers, said in May it was considering raising tyre price further to offset raw material costs, including the cost of natural rubber. [ID:nLDE644220]
Tokyo rubber futures market, May JRUK0 gained more than between 25 and 40 percent in the first four months of 2010.
But futures tumbled 7 percent to a five-month low on Friday as investors continued to unwind long positions, with lower oil prices adding to the downward pressure. [ID:nSGE6460A9].
Michelin's first quarter sales released last month showed rising sales as the recovery gathered pace. The group confirmed its full year targets. [ID:nLDE63S1BC]
By 0859 GMT Michelin shares were up 0.67 percent at 52.55 euros against a CAC-40 index .FCHI down 2.3 percent.
(reuters.com)
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