Michelin sees sales volume down by 24% in Q1

ERJ staff report (DS)

Paris -- Michelin said it sold almost 25 percent fewer tyres in the first quarter of 2009, compared with a year earlier. Nevertheless, revenues were down by "only" 14.2 percent, at euro 3512 million for the group, compared with euro 4091 million a year ago.

The company said sales volume fell largely as a result of the significantly lower OE sales in car and OE and replacement sales in truck markets throughout the world, with the exception of China. It also noted that the Michelin brand gained market share in the replacement sector.

Overall, Michelin said it is seeing initial signs that the worst may be over. The company said, "In March, however, the European market showed glimmers of recovery in countries that had introduced automobile stimulus packages, with a more favourable impact on small-car tyres."

The company continued, "In North America, demand seems to have stabilised, but at very weak levels." and added, "The retail sell-out market is reviving, indicating that distributor inventories could be close to bottoming out, especially in Europe and North America."

Michelin said its inventories did not grow in the first three months, despite the downturn, and this was due to its rapid response to the falling markets in terms of production flexibility. The inventory situation is likely to improve in the second quarter, as Michelin intensifies its measures to reduce output, and as the value of the raw materials in store declines.

As part of its efforts to cope with the crisis, the company will continue to restrict its capital expenditure to a rate of around Euro 700 million/year, split equally between the first and second half of the year.

The company said these measures should bring it back to a positive cash flow during 2009.

Sales of consumer tyres amounted to Euro 1946 million in the first quarter, down by 9.8 percent from the euro 2157 million recorded a year earlier.

In the commercial tyre division, sales fell 24.2 percent, to euro 1006 million (euro 1327 million).

Sales of special tyres fell by 7.6 percent, to Euro 561 million (euro 607 million)

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Press release from Michelin