Michelin net falls by half in 2008: volumes down by 16% in Q4

ERJ staff report (DS)

Paris -- Michelin hs announced a small decline in sales and profits down by about half for the 12 months to December 2008. The company said net sales fell by 2.7 percent to euro 16 408 million, while operating profit fell by 44 percent to euro 920 million. Net income stood at euro 357 million, down by 53 percent on the previous year.

The company said sales volume fell by 16 percent in the fourth quarter due to the steep fall-off in demand. In anticipation of worse to come, the company has slashed its capital investment budget. Michel Rollier, Managing Partner, stated, "We have decided to reduce our capital spending substantially in 2009 while maintaining the key orientations of our midtermstrategy."

Michelin is currently working on the assumption that

• Tire markets will remain well below prior-year levels in the first half, before firming up asreplacement market inventories are replenished and business activity begins to recover.
• In 2009, Michelin's profitability will be supported by the full-year combined effect of theprice increases passed in 2008 and the decline in raw materials prices, in particular fornatural rubber and oil derivatives.
• Plant flexibility will be enhanced, while capital expenditure will be cut to around EUR 700million, with an emphasis on driving further expansion in the new, high growth potentialmarkets.

Michelin said it had idled many pants, and had incurred costs of EUR 224 million as a consequence. Of this, EUR 170 million wasin the last quarter alone. This amount includes the effect of idle capacity on productivity, depreciationand external costs.

This is an external link and should open in a new window. If the window does not appear, please check your pop-up blocking software. ERJ is not responsible for the content of external sites.

Press release from Michelin