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April 24, 2014

Michelin Q1 sales fall 2.4%

Group Michelin posted net sales of 4.76 billion euros for the first quarter ended March 31, 2014. That compares to sales of 4.88 billion euros for the same period the previous year.

Based on the exchange rate on March 31, 2014, Michelin recorded net sales of $6.5 billion.

Here’s the sales breakdown, in billions of euro, by tire segment:

Tire sales

1Q 2014

1Q 2013

% change

Consumer

2.52

2.58

- 2.4%

Truck/retread

1.46

1.48

- 1%

Specialty

  .78

  .82

- 5.2%

The company said revenue fell due to the strong euro and weak demand in the passenger, light truck and truck tire markets in Eastern Europe.

In OE consumer tire sales, Michelin said the North American market gained 5% over the period as “buyers continued to replace their aging cars.”  For consumer replacement tires, Michelin said 7% growth in the North American market reflected “higher imports, sustained demand, particularly in Canada, and the competitive environment, especially in the mid-market.”

In OE truck tires, the North American market climbed 6%, with an improved mix thanks to the faster growth in the Class 8 segment. For replacement truck tires, the North American market rose 8% over the period, with a noticeable contribution from the imported tire segment.

Michelin said the global mining industry grew as a whole in the first quarter, but the mining tire market remained on the downward trend observed in the final quarter of 2013, dampened by inventory drawdowns by mining companies.  In the agricultural market, global demand for OE tires softened in mature markets due to the decline in farm machinery sales. The replacement market is recovering in Europe, but remains down in North America.

Outlook for 2014, per Michelin

“With tire demand rising as fast as expected in the first quarter of 2014, except in Eastern Europe, Michelin maintains its objective of around a 3% increase in volumes over the full year.

“The Group aims to improve its gross unit margin, while preserving a positive balance between pricing policy and raw materials costs. The competitiveness plan is being deployed on schedule.

“Against this backdrop, Michelin is confirming its 2014 objectives of 1) an increase in operating income before non-recurring items (at constant exchange rates); 2) a more than 11% return on capital employed; and 3) structural free cash flow of more than 500 million euros along with a capital expenditure program maintained at around 2 billion euros."

Related Topics: Michelin financials

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