PARIS (Feb. 11, 2014) — Group Michelin reported 1.9-percent higher operating income for fiscal 2013, thanks in part to lower raw materials costs and enhanced efficiencies.
Michelin's operating income of $2.96 billion represents an 11-percent margin, based on 5.7-percent lower sales of $26.9 billion. Earnings were up despite a negative currency exchange effect and increased manufacturing costs, Michelin said.
Net income was $1.5 billion, or 5.6 percent of sales.
Michelin CEO Jean-Dominique Senard said achieving improved earnings in an "uneven market enviroment confirms our objective of delivering a business performance in line with our 2015 ambition."
By business unit, the passenger car/light truck tire business reported 5.1-percent better operating income on 3.6-percent lower sales of $14.2 billion, resulting in a 10.2-percent operating ratio. Unit sales volumes were up 1 percent.
The truck tire unit reported 13.3-percent higher earnings but 4.6 lower sales of $8.53 billion, yielding a 7.8-percent operating ratio. Unit sales volumes grew about 1 percent.
The specialty business unit—OTR, farm and motorycle tires—suffered a 31.8-percent drop in earnings and 14-percent lower sales of $4.16 billion, cutting the earnings ratio nearly six full points to 20.6 percent. Unit sales volumes fell 7 percent.
In North America, Michelin saw a 9.2-percent drop in revenues to $9.34 billion, with a 3.5-percent shift in the euro/dollar exchange rate playing a role in the decline.
Michelin's consumer tire sales volumes in North America "generally tracked the market," with gains by the Michelin brand offsetting losses in the mid-range brands, the company said. In truck tires, Michelin reported "good growth" in North America, based on the support of a "robust dealer network and a carefully managed pricing policy."
The tire maker did not comment specifically on the results of its specialty tire businesses in North America.
Michelin ended the year with 105,700 employees, down 1.5 percent from 2012. Research and development expenditures rose 3.3 percent to $854 million, or 3.2 percent of sales.
For the current fiscal year, Michelin is expecting demand to continue expanding quickly in the new markets, while moving back in line with economic activity in the mature regions.
As a result, Michelin is projecting 3-percent growth in sales volumes, driven in part by the launch of products like the Premier All Season or X Multi tire ranges, the continuing deployment of the premium strategy, the structural robustness of the specialty businesses and the ramp-up of new plants.
Michelin's objective for 2014 is to achieve a return on capital employed of more than 11 percent and to generate structural free cash flow of more than $667 million.
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