Michelin, the largest tire maker in Europe, on Tuesday announced that its earnings for fiscal 2015 increased 19% driven mainly by the availability of cheap raw materials as well as cost cutting strategy. The tire maker posted net earnings of €1.2 billion for the year 2015, up from €1.03 billion in the previous year.

On a per share basis, Michelin's annual income increased to €6.28 from €5.52 in the earlier year. Operating income including non-recurring items amounted to €2.21 billion in 2015, up from €1.99 billion last year.

Operating profit, excluding non-recurring items, jumped to €2.6 billion from €2.2 billion in the prior year. Annual net sales rose 8.4% to €21.2 billion from €19.55 billion in 2014.

The company's capital spending totaled €1.80 billion in fiscal 2015, down from €1.88 billion in the previous year. Net debt dropped to €1.01 billion from €707 million in fiscal 2014. Tonnages increased 3.2% in 2015, overtaking the industry. Tonnages from the company's light truck and passenger car tires segment rose 6.7%.

Michelin posted a robust free cash flow at €965 million in 2015, excluding the €312 million in acquisitions. The operating margin for light truck and passenger car tires segment was 12.2% during the second half of 2015, an increase of 2.6 points from the same period in 2014. Operating margin from truck tires segment stood at 11.1%, a rise of 2.6 points from the second six-month period of 2014.

The wavering price in raw materials had a positive impact of €105 million in the final half of 2015. The group's tonnages grew 4.2% in the fourth quarter of 2015 while the light truck and passenger car tires segment contributed an increase of 8.7%.

The company expects the demand for truck tires, light truck tires and passenger car tires to further increase in the grownup markets and to remain same with the previous year trend in the fresh markets in 2016. Michelin anticipates operating income, excluding non-recurring items, to increase in 2016 and free cash flow to be over €800 million.

Bloomberg quoted Hans-Peter Wodniok, an expert at AlphaValue, who said in a note that the company earned more than what the analysts had predicted. He also referred to passenger tire segment as "star performer." The restructuring costs including the plants closure in Europe coupled with the suspension of an Indian project trimmed the earnings by €370 million in 2014.

Michelin also said that it has increased its dividend to €2.85 a share. The company expects operating margin, excluding onetime items, to be in the range of 11% -15% in the light truck and passenger car segment for 2016 - 2020.

According to SPORTS RAGEOUS, the priority SUV tires of Michelin are designed to suit the weather conditions and roads in Asia Pacific. The Michelin SUV tires have safety features like 2.2 meters braking space on roads that are wet, 6% increased control in wet cornering and 1.9 meters braking space on dry roads.

The company's financial result was boosted by low raw material prices and its light truck and passenger car tires segment played a vital role in contributing to the group's progress. Michelin aims to maintain its strong growth in the coming years.