Michelin achieves sales gain during third quarter

Oct. 25, 2006

Groupe Michelin's consolidated net sales for the third quarter totaled 4 billion euros, a 4.9% increase over third quarter 2005 levels.

The increase resulted from the following factors, according to Michelin officials:

* 2.2% positive volume impact, "mainly due to passenger car and light truck tire sales in Europe (and) South America, and truck tire sales in Europe and Asia;"

* 4.1% positive price mix effect at constant currency. However, Michelin reported a 1.5% negative exchange rate impact, reflecting U.S. dollar depreciation versus the euro.

For the first nine months of 2006, Michelin's net sales increased 6.4% versus the same period during 2005.

In its recently published third quarter results, Michelin analyzed its North American business for the year so far:

"Passenger car and light truck replacement markets remain weak even though a slight improvement was noted in September as compared with the previous months," said Michelin officials.

"The market nevertheless remains challenging and it is still too early to assess the impact of the substantial decline of fuel prices recorded since August in the U.S. All market segments declined with the notable exception of (the) H and VZ segments: the latter posted 4.1% and 10.6% growth respectively over the first nine months of the year versus the same period of 2005."

In the truck tire replacement market, "new tires edged back 4% in the third quarter versus the same period of 2005. For the first nine months of the year, the decline amounts to 4.1%.

"The consistency of the original equipment market, in spite of stable road freight volumes, is the main reason for this trend.

"Overall, the North American zone, which includes Canada and Mexico, has experienced three bearish quarters in a row and Mexico is the only country to have experienced growth since the beginning of the year."