Half Year Results For Michelin Confirm Disappointment

Earlier this year, Michelin warned that its financial results for the first half of 2000 would not meet expectations. Now the French company has officially released these figures, which confirm the disappointing forecast. Michelin says that the results do not accurately reflect the progress made in its strategy to become more competitive and says that the results are influenced by a number of factors, including an increase in inventories, the impact of currency fluctuations and higher raw material costs (up 15 per cent in the first half).

In the various product sectors, sales of passenger and light truck tyres grew 5.7 per cent. Particularly encouraging was the growth in more profitable segments, such as 4×4 tyres and ultra high performance tyres, sales of which rose worldwide by 23 per cent.

In Europe, sales of uhp tyres rose 39 per cent, compared with a figure of 11 per cent for the market as a whole. Sales of BFGoodrich tyres rose 20 per cent. In North America, Michelin said it recorded “significant gains” in market share, particularly in the 4×4 sector.

In South America, the company says it achieved a 10% share of the Brazilian replacement market. Truck tyre sales grew by 8.9 per cent, helped by a volume increase in original equipment of 11.

5 per cent. Edouard Michelin said that the group will “continue its strategy of a focused, profitable and worldwide growth, targeted at the most dynamic and profit making markets.” Sales of winter tyres and productivity improvements will provide tangible benefits.

Mr. Michelin continued: “..

.the economic environment looks much less favourable than we had anticipated at the beginning of the year; markets will be more contrasted in the second half, notable truck tyres in North America, raw materials will be above our initial assumption and we will be further impacted by the mechanical effect on our operating margin of a weak Euro vs the Dollar.” He concluded on an upbeat note, saying: “The group will benefit from the first half gains in productivity and market shares, as well as from the continuation of its growth strategy.