Currencies Affect Michelin 1Q Sales

Michelin’s first quarter sales fell 4.9 per cent year on year to 3.655 billion Euros.

Much of this was due to the effect of weaker currencies (notably in the USA, Canada, Mexico and Brazil) versus the Euro. The negative impact of currencies was estimated at -10 per cent.Sales volumes increased, but value fell across all segments.

In terms of value, the passenger car/light truck segment declined by 7.4 per cent, heavy truck tyre sales fell 0.9 per cent and other products were down 5.

4 per cent. These figures were despite price increases, which Michelin believes are sticking and which had a positive 1.3 per cent effect on 1Q sales.

In volume terms, Michelin increased sales of passenger car tyres in the European replacement market (+ 8.3 per cent), while OE sales declined by 16.1 per cent.

The situation in North America was reversed, with car tyre replacement market sales falling 6 per cent and OE sales rising 9.2 per cent. For the rest of the world, volumes of car tyres were up 5.

7 per cent (replacement) and 42.5 per cent (OE).There was more consistency in truck tyre sales volumes, with European replacement sales rising 9.

4 per cent and OE sales up 4.3 per cent. North American truck tyre sales volumes were up too, at 10.

9 per cent (replacement) and 5.7 per cent (OE). Rest of the world figures were + 1.

2 per cent and + 28.2 per cent.Industry analysts are predicting difficult times ahead for the tyre industry, with many major markets flat at best and with rising costs of energy, healthcare and new testing procedures in the USA.

However, they describe Michelin as “well positioned” to make progress in spite of these negatives, due to its pricing policy and strong truck tyre business. It is unlikely though that these will be strong enough to offset the many negative economic and market factors and the analysts are predicting a decline in profits for Michelin in 2003, while stressing that the company’s performance will be better than that of many of its leading competitors..