Michelin shares rise, sticks to '08 profit guidance

By Matthias Blamont

CLERMONT-FERRAND, France (Reuters) - Michelin (MICP.PA: Quote, Profile, Research) reiterated on Friday its guidance that 2008 profits would be flat due to a weak dollar and high commodity prices, boosting the French tiremaker's shares.

The world's tire and automobile sectors have suffered from soaring commodity prices and this caused Michelin to slash its profit forecast in April, prompting concern it may lower its sights again.

However, Finance Director Jean-Dominique Senard told the annual shareholder meeting: "Our 2008 operating income should be near its 2007 level.

"The excess costs caused by the rise in raw material prices are likely to reach 600 million euros ($930 million) this year."

He said Michelin was aiming for "moderate" sales growth in 2008.

On April 28, Michelin said it expected its 2008 operating income before non-recurring items to be about the same as 2007 -- down from its guidance in February when it anticipated a rise.

The decision to cut its outlook wiped a tenth off Michelin's stock market value the following day, but maintaining its latest forecast helped its shares continue their steady recovery since late April.

Michelin shares were up 2.4 percent at 62.59 euros in late afternoon trade. The DJ Stoxx European automobile sector was up 1.2 percent.