Michelin Full-Year Sales & Income up in 2007

In its 2007 financial results, published February 15, French tyre major Michelin has reported increased sales and a markedly higher net income than that of the previous year. The company recorded sales of 16.867 billion euros in the year to December 31, 2007, a 3 per cent rise over that of a year earlier. Sales volume increased by 3.2 per cent over the same period.

Prior to taking non-recurring income and expenses into account, operating income for the year was 1.645 billion euros, up 22.9 per cent on the year before. After deducting these factors operating income stood at 1.319 billion euros, an increase of 17.9 per cent. Net income shot up 34.7 per cent during the 2007 year, to 772 million euros. The company’s net debt also decreased by 464 million euros, 11.1 per cent of the total, and now stands at 3.714 billion euros.

Managing partner Michel Rollier stated: “In an environment where overall demand was supportive and where the impact of raw material cost increases was limited, Michelin achieved a fine operating performance in 2007; and this translated into a return to growth after two rather lean years: almost all operations, although at times curbed by saturated Group production capacity, posted healthy sales volume growth. Michelin further improved its results and financial structure.”

Original equipment passenger car and light truck tyre sales for the year increased in the Middle East/Africa, Europe, Asia and South America regions by 3.4, 4.5, 8.1 and 20.0 per cent respectively. The only market to buck this trend was North America, where OE sales declined 1.8 per cent. Replacement market sales for this segment were up everywhere expect in Europe, where the vigorous Eastern Europe market (up 5.8 per cent) growth could not fully offset the 3.6 per cent decline recorded in Western Europe, owing, in particular, to a drop in winter tyre sales. Overall the European market reduced by 1.6 per cent, while global sales rose 1.4 per cent. Total sales for this segment were 9.041 billion euros, 54 per cent of the Group total.

In the truck and bus segment original equipment markets were up sharply, accelerating in the 3rd and 4th quarters of 2007: demand was particularly strong in Eastern Europe (50 per cent) and in Germany and Spain, leading to a total Europe-wide increase of 18.6 per cent for the year. However growth in most regions was dragged down by dismal OE performance in North America, where a 32 per cent reduction in OE sales largely caused global OE sales in this segment to decline by 1.4 per cent. Replacement market sales were steady, showing single-digit increases in all markets apart from North America, where sales were down 6 per cent. Worldwide, truck and bus tyre sales increased by 5.8 per cent. Global truck and buss tyre sales came to 5.639 billion euros, 33 per cent of Michelin Group total sales.

Michelin’s outlook for 2008 is a tyre market driven by the dynamics of emerging countries. Passenger car and light truck sales for OE and replacement market are anticipated to increase by 1.5 per cent and 3 per cent respectively, with OE and replacement market truck and bus tyre sales rising by 8.5 per cent and 3.5 per cent. The most significant growth across all segments is expected to take place in Michelin’s Asia, South America and the Africa and Middle East market regions.

“The 2010 Horizon plan is yielding its first fruit and further significant progress has yet to be achieved,” commented Mr. Rollier. “Michelin is starting 2008 with a healthy and robust situation and is well armed to deal with a challenging environment marked by multiple uncertainties. With the remarkable turnaround of free cash flow, we will be in a position to forge ahead with our development, while simultaneously strengthening our financial independence: this is yet another good sign for the future of Michelin.”