Michelin reports first half drop in sales, income
Groupe Michelin's net sales for the first half of 2008 totaled 8.2 billion euros, down 1.9% from the first half of 2007. The company's net income also was down, coming in at 430 million euros, a 1.4% drop versus the same period last year.
Michelin officials say exchange rates negatively impacted results. Other factors that contributed to sales and income decreases were "the significant drop in passenger and light truck and truck replacement markets in Europe and North America" and raw material price increases "that were sharper than anyone could have anticipated."
The increases "led to a time lag between (Michelin's) cost of sales increases and the mitigating impact (of Michelin-implemented) price increases."
In addition, Michelin's operating income for the first half was 708 million euros, an 11.3% drop from first half 2007 results.
In North America, "original equipment tire demand reflected the weakness of vehicle production, down 10% on a 12-month rolling average after adjustment for seasonal variances. The pickup and light truck segments accounted for the bulk of the decline, while passenger car sales levels were relatively stable year-on-year."
On the replacement side, "the trends in North America's replacement demand were largely due to the 3% decline reported in the U.S., whereas Canada experienced a very strong winter tire segment growth."
Commenting on Michelin's first half results, Michelin Managing Partner Michel Rollier says that despite the challenging business environment, the tiremaker "continues to grow and gain market share. Michelin... is holding the course of its strategic plan, improving competitiveness, leveraging product differentiation, and increasing (our) foothold in high-growth markets. All of this makes me confident in our future prospects."