Moody's upgrades Michelin

Moody's Investors Service said it raised Compagnie Generale des Etablissements Michelin's long-term ratings and those of its rated subsidiaries to Baa1 from Baa2.

The Prime-2 short-term ratings remain unchanged and the outlook is stable.

Moody's said the upgrade reflects Michelin's continuous improvement in its financial metrics over the last several quarters, including a capital increase in 2010, to levels that solidly position the company in the Baa1 rating category as well as Moody's confidence that Michelin will be able to sustain these metrics over the next years despite economic weakness in major European countries and rising raw materials.

Michelin's ability to pass on higher raw material costs to customers in the replacement market will be a critical driver for preserving healthy profit margins in future, the agency said.

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