Michelin posts profit despite 'historic decline'
Groupe Michelin recorded net income of 104 million euros on net sales of 14.8 billion euros for its fiscal year ended Dec. 31, 2009. That compares to revenue of 357 million euros on sales of 16.4 billion euros for fiscal 2008.
Based on the exchange rate for Dec. 31, 2009, Michelin posted net income of $150 million on net sales of $21.3 billion last year.
Michelin’s operating income of 862 million euros (before non-recurring items) was down 6.3% compared to fiscal 2008. Michelin also was down 14.8% in global unit sales.
“In an environment shaped by a historic decline in tire demand, especially in mature economies, Michelin was able to respond quickly and more agilely than ever,” says Michel Rollier, managing general partner. “Thanks to the dedicated commitment of our teams and tight management, Michelin has delivered robust performance and improved its major financial metrics, the foundations of its future growth.”
Here’s a breakdown of the company’s sales results by segment compared to 2008.
Passenger/light truck tires
Net sales of nearly 8.8 billion were down 4.5%. However, the volume effect steadily eased with every quarter. “The price mix improved, reflecting the impact of the 2008 price increases, the firm resistance of the Michelin brand and the enhanced segment/speed rating mix,” according to the company.
Net sales of 4.5 billion euros were down 17.2%. “The impact of the steep decline in sales volumes, which reflected the collapse in demand and its subsequent stabilization, was only partly offset by the sustained focus on extremely firm pricing policies,” says the company.
Net sales of close to 2 billion euros were down 12%, “reflecting the fall-off in volumes in the original equipment earthmover, infrastructure and agricultural tire segments,” says Michelin. “On the other hand, the mining and quarries segment demonstrated firm resistance.”
Michelin has a three-pronged strategy for 2010, according to Rollier:
1. pursue it innovation initiatives,
2. maintain cost discipline and
3. enhance future growth potential by investing in growth countries.
“The market visibility prevailing in early 2010 and the rising cost of raw materials (particularly natural rubber) are prompting us to exercise extreme vigilance,” he adds.
The managing partners have proposed a 2009 dividend of 1 euro, subject to approval at the annual Michelin Shareholders Meeting on Friday, May 7.