Market slowdown dents Michelin's expectations

Paris – The market slowdown observed since the second quarter continued into the third, noted  Group Michelin, announcing €14.6 billion in net sales and a 1 percent Increase in volumes for the first nine months of 2014.

Weakening demand in Europe, especially in truck tires and a contraction in OE demand in new markets, except China, put the dampers on growth. These factors, said Michelin, countered sustained solid growth in North America.

Slightly higher sales volumes reflected “resilience of the Michelin brand” in the passenger car and light truck and truck segments. Meanwhile, growth in the OE earthmover and infrastructure markets helped cushion the impact of sustained inventory drawdowns in mining tires.

Other elements noted by Michelin included a 2-percent decline in the price-mix, a continuing decline in raw materials costs. Currency effects were negative over the nine months, but turned positive in September.

Assessing the full-year outlook, Michelin predicted buoyant demand for passenger car and light truck and truck tires in North America and China and stable demand in Europe.

Outside of China, the company expects continued slowdown, particularly in the OE segment. Replacement tire demand, though, should remain robust in the passenger car and light truck segment but soften in the truck segment.

Based on this assessment, Michelin has lowered its outlook for volume growth, in line with the market, to a range of 1 percent to 2 percent for the entire year.

In the final quarter, Michelin said it expects to adjust its cost-management process in response to changing market conditions.  The company reported that its ‘competitiveness plan’ had delivered €169 million in savings over nine months.