Michelin sees sales fall, but sees signs of market turnaround

Tire Business staff report

Paris - Group Michelin's sales revenue fell 10.9 percent to $5.62 billion (Euro 3 776 million) in the third quarter on 14-percent lower unit sales, but the French tyre maker said it is seeing signs the year-old market implosion may have bottomed out.

In both Europe and the US, Michelin said orders are starting to pick up again as dealers have depleted their stocks and the winter tyre season is starting. At the same time, the company said it expects to benefit throughout the second half from lower raw materials costs and lower inventories.

Michelin did not disclose earnings at this time but said it expects to achieve its stated objective of generating positive free cash flow.

For the nine months ended 30 Sept, Michelin's revenue was down 12.5 percent to $16.3 billion on 20.1-percent lower unit sales and a 7.6-percent improvement in the price-mix component, buoyed especially by the Michelin brand's “solid performance.”

In North America, passenger tire demand rose 3.8 percent in the quarter, Michelin said, after dropping 11.8 and 9.7 percent, respectively, in the first and second quarters. Replacement demand for truck tires fell nearly 12 percent, but Michelin pointed out dealers and fleets have exhausted their inventory reserves, as demonstrated by a slight upturn in retread demand.

However, Michelin said, “the markets will truly recover only when there is renewed demand for freight and international truck services.”

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Michelin sees signs of market turnaround from Tire Business (a Crain publication)

Press release from Michelin (.doc file)