Michelin & Cie. rose the most in 19 months in Paris trading after reporting better-than-expected quarterly sales and announcing a EUR 750 million ($801 million) stock-buyback program. Michelin jumped as much as 6 percent in the steepest intraday gain since September 19, 2013, and was up 5.4 percent at EUR 100.95 as of 9:53 a.m. The stock, which is trading at the highest price since mid-2007, has gained 34 percent this year, valuing the tiremaker at EUR 18.8 billion. First-quarter revenue rose 5.6 percent from a year earlier to EUR 5.02 billion, exceeding the EUR 4.94 billion average analyst estimate, as an improving European economy fueled automotive-industry demand and the weaker euro boosted the value of sales overseas. Michelin reiterated full-year targets late Wednesday and said that lower raw-material prices will boost earnings this year by about EUR 600 million.

“They’re gaining market share and there was nothing wrong with their figures,” Philippe Houchois, a London-based analyst at UBS Ltd., said. “This shows that they’re back in the car business. The share buyback might help pushing shares on the short term, but not on the medium term as their price is already high.” Michelin, Europe’s biggest tiremaker, has been shifting strategy to reduce dependence on the region’s car market by developing tires for mining vehicles and expanding in China, India and Brazil. The moves have made the company more exposed to weakness in emerging markets as well as to currency shifts. This year, the euro’s drop against the dollar is due to be a boon. The company predicted that foreign-exchange effects will boost 2015 operating profit by more than EUR 350 million, more than double a previous forecast. In the first quarter, currency moves lifted sales by EUR 443 million. At the same time, Clermont-Ferrand, France-based Michelin is seeking to adjust to softer demand in emerging markets by cutting costs by EUR 1.2 billion through 2016. The buyback will be carried out over 18 to 24 months starting April 27, Michelin also said Wednesday. Repurchased stock will be canceled at the end of the year, the company said.

Source: Bloomberg