Michelin is weathering the economic storm

ERJ staff report (RD)

Clermont-Ferrand, France - Michelin, the global tyre manufacturer, has recorded solid results for 2008 in the face of the global recession, the company said at its joint annual meeting of shareholders in Clermont-Farrand, France.

Net sales for Michelin's passenger car and light truck segment were down from Euro 9041 million in 2007 to Euro 8668 million with operating income dropping from Euro 830 million to Euro 370 million.

Truck tyre sales fell from Euro 5639 million in 2007 to Euro 5433 million and operating income in the same segment was also down to Euro 130 million from Euro 427 million in 2007, the report said.

“Our sales volumes decreased by 16 percent in Q4 of 2008 and by 25 percent during the first quarter of 09,” said Michel Rollier, general managing partner. “Michelin is bearing up, it is weathering the storm,” he added.

The company's Specialty Businesses segment, including agricultural and industrial tyres, recorded sales of Euro 2307 million, up from Euro 2187 million in 2007 and recorded a Euro 24 million increase in operating income to Euro 412 million.

The worldwide market for truck tyres was down by 3.9 percent for original equipment tyres and 0.2 percent for replacement tyres in 2008, Michelin said. The biggest decline was in North America with original equipment and replacement tyres down 16.5 percent and 8.2 percent respectively.

Passenger car and light truck demand was down globally by 4 percent and 2.2 percent for original equipment and replacement tyres respectively.

“We have to admit that we see very few real signs of an improvement in the global economy,” Rollier commented, adding that despite this, Michelin will benefit from the decrease in raw materials prices for the second quarter of this year. “The company's long-term vision is to contribute to better mobility. The global market is still a promising market in the long term on the condition that we are able to adapt our supply to meet new requirements,” he added.

Overall, the company recorded net sales of Euro 16 408 million, down from Euro 16 867 million in 2007, an operating income of Euro 920 million, down from Euro 1645 million in 2007 with net income down to Euro 357 million from Euro 772 million in 2007.

Rollier said Michelin is acting on three levels to preserve cash flow; firstly, monitoring inventory levels closely to match demand; secondly, cutting investment to Euro 700 million for 2009, around 50 percent of the usual annual investment; and thirdly, to keep expenditure under tight control.

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Michelin 2009 General Meeting from Michelin