Michelin Q1 revenue up despite lower unit sales

ERJ staff report (TB)

Paris -- Group Michelin's sales revenue grew 5.1 percent in the quarter ended March 31 to euro5,304 Million despite a drop in tyres sold of nearly 10 percent.

The sales increase is attributed entirely to higher selling prices and an improved mix of products. Michelin said, along with a slight gain in the currency effect from gains in the value of the dollar, Chinese yuan and other key currencies against the euro.

Michelin attributed euro 577 million on its improved revenue to price increases and raw-materials indexation clauses and euro 52 million to the improved sales mix. Michelin called the volume sales decline “expected,” considering the high “prior-year comparatives” and ongoing dealer inventory drawdowns.

Michelin did not disclose earnings for the quarter but said it “reaffirms” its 2012 objective of a “clear increase” in operating and positive free cash flow compared with 2011.

Michelin's Specialty Businesses Unit led the way with a 23.8-percent sales jump to euro 940 million, based on higher selling prices and a 6.2-percent increase in tonnage sold. Sales of earthmover tyres rose “significantly” across all segments, Michelin said, reflecting both the sharp increase in volumes and the favorable application of raw materials-based price indexation clauses.

Agricultural tyre sales also climbed steeply, led by strong growth in OE volumes, while higher raw materials costs were passed along in prices. Sales of two-wheeler and aircraft tyres also rose, based on higher prices and volumes.

Sales in the passenger/light truck tyre business unit rose 2.9 percent to euro 2760 million despite an 8.9-percent drop in volumes. Sales in the truck tyres unit were essentially unchanged from the 2011 quarter at euro 1604 million, as volumes fell 16.3 percent, dragged down by the “collapse” in demand in Europe; volumes “demonstrated better resistance” in North America.

Michelin also reported its euro 130 million car tyre plant in Itatiaia, Brazil - which the tyre maker is calling its “Pau-Brasil” factory - was commissioned and started production in early February.

The plant is Michelin's second car tyre factory and third overall in Brazil. The other car tyre plant, also in Itatiaia, opened in 1999 and makes high-performance tyres aimed mainly at the export market. Capacity is listed as 5,000 tyres daily.

The third plant, in Campo-Grande, makes truck and OTR tyres. Opened in 1981, its capacity is listed as 4,500. Together the two plants employ 2,800.

From Tire Business (A Crain publication)

Press release from Michelin