Michelin suffers sales drops across the board
Groupe Michelin posted net sales of 3.7 billion euros for the third quarter ended Sept. 30, 2009. That compares to sales of 4.2 billion euros for the same period a year ago. Based on the exchange rate on Sept. 30, 2009, Michelin posted net sales of nearly $5.5 billion.
The company attributed the 10.9% drop in 3Q sales (and 12.5% comparative drop through three quarters) to the decline in tire shipments globally. Price-mix benefits positively impacted 3Q sales by 4%, and year-to-date sales by 7.6%.
Despite the decline, Michelin "maintains its objective of generating positive free cash flow in the second half of 2009." It gives two main reasons for being optimistic:
1. improved profitability versus the first half, thanks to the decrease in raw material costs; and
2. a further reduction in inventory and capital expenditure (an estimated 700 million euros for the year).
Global consumer, truck and specialty tire/business sales in 3Q09 compared to 3Q08 were down 4.6%, 17.6% and 17.8%, respectively. Passenger and light truck tire sales account for 55.7% of total sales.
Michelin adds that it expects automobile industry stimulus programs and dealer demand -- especially for winter tires -- to positively impact the consumer tire segment in the second half.