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Michelin posts 122 million euro loss

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Groupe Michelin recorded a net loss of 122 million euros on net sales of 7.1 billion euros for the first half ended June 30, 2009. That compares to net income of 430 million euros on sales of 8.2 billion euros for the same period in 2008.

Taking the exchange rate on June 30 into consideration, Michelin posted a net loss of $86.3 million on sales of $5 billion for the first half of its 2009 fiscal year.

Michelin also reported the following:

* operating income before non-recurring items of 282 million euro, down 60.2% from the same period a year ago;

* an operating margin before non-recurring items of 4%;

* a 23% decrease in unit sales "primarily due to the fall-off in tire demand in all of the country markets except China";

* a generation of 575 million euro in free cash flow, driven by "efficient management of working capital, particularly inventory; and

* a comparative reduction in capital expenditure, from 500 million in the first half of 2008 to 319 million.

"Faced with the persistent, steep decline in global tire markets, Michelin has responded swiftly and effectively by tightening its management and deploying production adjustment programs," says Michel Rollier, managing general partner.

"As part of this reponse, the Groupe nevertheless had to introduce short-term working hours in a number of countries and to implement the production reorganization programs needed to make Michelin more competitive.

"Concerning the business environment, inventories have now returned to more normal levels, but not to the extent that we can talk about a real upturn," he says. "We will therefore maintain our efforts in the months ahead, although the decline in raw materials prices should support second-half margins."

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