Analysts Expect “Very Bad” 4Q Figures from Michelin
Financial analysts have cut their 2008 operating income estimate for Michelin from 1.15 billion to 1.05 billion (-37 per cent compared with 2007). Deutsche Bank’s reduced estimate comes off the back of sharp falls in tyre demand in mature markets.
According to the analysts, mature markets (such as Europe and North America) represent 70 per cent of Michelin’s volumes. “We estimate tyre demand fell sharply in the fourth quarter (-15 per cent) both in OE and in replacement – in passenger as well as truck markets. We believe this weak demand, coupled with a destocking effect, led to a high 25 per cent production cut in the fourth quarter,” the analysts commented, explaining that the magnitude of this volume drop is not sustainable: