French tyre firm Michelin has pledged to deliver further gains in its operating profits this year – just weeks after confirming the closure of its Dundee operation.
Michelin shares surged as the firm posted better than expected results for 2018 despite challenging conditions in its main tyre markets.
Strong sales of speciality tyres for mining and agriculture drove a 0.3% increase in group revenue to €22.03 billion despite sharp declines in truck and car tyre sales.
The firm said the Dundee site, which opened in 1971 and exclusively manufactures 16-inch and smaller car tyres, had faced serious difficulties in recent years due to a shift towards larger tyres and a decline in demand for premium tyres.
A Michelin Action Group was subsequently formed to explore new uses for the Michelin factory site.
Michelin confirms plans to close Dundee tyre factory, with loss of 850 jobs
This led to the French firm signing a memorandum of understanding with the group to work with agencies to create a viable future for the site.
Michelin said its operating profit for 2018 edged 1.2% higher to €2.78bn. This was higher than analysts’ expectations of around €2.68bn.
The firm’s shares gained more than 10% on France’s benchmark CAC-40 index on Tuesday in its best single day of trading for almost 10 years.
Michelin waited four weeks to tell Dundee workers about factory closure
“Michelin is able to sustain premium price points, while concurrently gaining market share – this is the perfect recipe for earnings growth,” analysts at Citigroup wrote in a note, keeping a “buy” rating on Michelin shares.