Michelin turnover heads south in Q3

The Michelin share price dipped by more than four per cent following the announcement of the company’s results for the quarter ending 30 September. By 3:30pm Paris time, Michelin shares were trading for €76.47, down 4.11 per cent on the opening price.

Driving this drop in share value was the disclosure of a 5.8 per cent year-on-year decrease in net sales during the third quarter of 2013, to €5,123 million. Net sales for the first nine months of the year amounted to €15,282 million, or 5.3 per cent less than during the same period of 2012. While sales of the company’s passenger car and light truck tyres only declined 3.3 per cent to €2,702 million in the third quarter, specialty business sales plummeted 11.9 per cent to €761 million and truck tyre sales dropped 6.5 per cent to €1,660 million.

A statement from Michelin shares that “faced with a currency environment that has deteriorated since the summer, Michelin should experience a more deeply negative currency effect than was expected at the beginning of the year” and during a conference call on 28 October, Michelin chief financial officer Marc Henry said Euro strength means that foreign-exchange will impact profit by €250 million euros this year – €100 million more than previously forecast. The company now anticipates operating income for full-year 2013 will increase around €150 million year-on-year before non-recurring items, excluding the currency effect.

To offset the impact of unfavourable exchange rates, Michelin reports it will further tighten its management of key levers, most notably through even more careful control of gross margin and costs.