Michelin posts 1Q sales of 3.8 billion euros
Groupe Michelin reported net sales of 3.8 billion euros for the first quarter ended March 31, 2004. That compares favorably to sales of 3.65 billion euros for the same period a year ago.
Overall, net income was up 3.9%; without exchange rate fluctuations the increase was 9.5%.
Also, tire sales volume in tons was up 7.6% compared to first-quarter 2003 results.
Michelin said its strong sales growth was inflated because of several non-recurring factors. They include:
* advance purchases in anticipation of price increases. In France, in particular,
outstanding market conditions are related to the implementation of the End-of-Life
Tires (ELT) Disposal Legislation, effective since March 1, 2004.
"Consequently, the gap between the 'sell-in' and the 'sell-out' markets should narrow in the second half of the year."
* Recovery of the North American market from the low base of a difficult first quarter
"Although, on a full-year basis, tire markets could post somewhat better growth than
initially anticipated, first-quarter tire markets should not be extrapolated, because of the above mentioned exceptional market conditions," said the company.
Some anticipated sales in both North America and Europe were triggered by price increases, according to Michelin.
North America. First-quarter 2004 results in North America were up compared to first-quarter 2003 results -- after the negative impact of the Iraq conflict in March 2003 and the consequences of the Firestone recalls that had generated a difficult first quarter 2003 are taken into account.
The replacement consumer tire market was up 5.8%, with the performance (up 15%) and the SUV (up 22%) segments particularly noteworthy.
The original equipment light vehicle tire segment was down 1%, and Michelin doesn't anticipate any OE growth in 2004.
In the commercial end, the replacement truck tire market was strong in the U.S., moderate in Canada and negative in Mexico. However, the OE truck tire segment was up 33% compared to the first quarter of 2003. Michelin said demand is strong at OE for three reasons:
1. The inclusion of loading and unloading time in the driving hours of truck drivers. This is a consequence of a change in U.S. working hour rules (in order to optimize the drivers' working time, freight companies tend to increase the number of their trailers).
2. The need by trucking fleets to renew vehicles, particularly in the power units segment. The renewal of truck fleets had been very limited in 2001 and 2002 following record renewals in 1999 and 2000.
Europe. The replacement consumer tire market was up 5.3% in the first three months of the year. A significant share of the "sell-in" market growth came from the 10% increase in the French market, which was caused by specific price increases passed by most tire manufacturers to cover the aforementioned ELT disposal costs.
Original equipment passenger and light truck tire sales remained flat compared with
the first quarter of 2003.
In the replacement truck tire market, Michelin experienced 6.9% growth in Western Europe year-on-year. At OE, Michelin was up 7.1% in the power unit segment and some 8% in the trailer segment compared to first-quarter 2003.
Michelin said it is confident in its ability to "achieve visible improvements in its operational performances in 2004" despite rising raw material costs.
Michelin will post its first-half 2004 earnings on Friday July 30.