Michelin’s Sales Growth Slows

After “exceptional growth” in the first half of 2004, Group Michelin has posted third quarter results that show a slowdown in sales growth. In spite of this Michelin still expects to meet its operating targets for the 2004 financial year.

In the third quarter Michelin’s sales rose 1.1 per cent to 3.843 billion euros (£2.67 billion) compared with 3.801 billion euros the year before. The figures missed BNP and other French analysts’ expectations of between 3.93 and 3.975 billion euros. Michelin says it still expects full-year replacement tyre markets to return to their long-term annual growth trend of 2-3 per cent.

Michelin said its price mix rose 4.4 per cent in the third quarter, which will “continue to offset raw material price increases.” The company also reported that currency fluctuations had an adverse effect on the company’s nine-month sales of 3.5 per cent. According to the company “Michelin’s confidence in its ability to achieve visible improvements in its operational performance in 2004 is unchanged.”

Passenger and light truck tyre sales fell 0.5 per cent to 1.904 billion euros, while truck sales rose 3.9 per cent to 1.065 billion. Michelin said truck original equipment markets remained firmer than expected in the third quarter in all regions.

Michelin officials say the company performed “in line with the (general) market” throughout North America. “However, third quarter sales volumes under-performed the market,” something which was at least partly due to the impact of the three-month strike at its BFGoodrich plant in Kitchener, Ontario. In spite of this, Michelin reports that its brands gained market share in the high performance and SUV segments.

Looking ahead to the full year, the company expects the replacement market to rise 4 per cent after a 2.6 per cent rise in the third quarter. Michelin expects replacement markets in North America to grow at a rate of between one and two per cent in the full year, the company said.