PARIS (July 29, 2014) — Michelin Group reported a 23.1-percent jump in net income in the first half of fiscal 2014 despite a 4.8-percent drop in sales revenue.
The tire maker said operating income before non-recurring items was essentially unchanged at $1.6 billion, or 12 percent of the $13.3 billion in sales. Net income rose to $856 million, or 6.5 percent of sales revenue.
Michelin CEO Jean-Dominique Senard said: “In a competitive environment that persisted through the first half, Michelin met its objective of delivering a further improvement in its performance….”
The company attributed the 0.5-percent increase in operating income to the favorable impact of lower raw materials costs offsetting the negative effects of currency exchange losses and unfavorable price-mix changes.
Operating income after non-recurring items—costs associated with restructuring efforts in Canada and Hungary—jumped 18.7 percent to $1.47 billion.
For the second half of the year, the company is projecting global demand for consumer and commercial tires should “remain supportive in the mature markets and China” while other new markets are beginning to slow down, especially in the OE segment.
“For the full year, the group aims to improve its gross unit margin, while preserving a positive balance between pricing policy, product mix and raw materials costs,” Mr. Senard said.
“The competitiveness plan is being deployed on schedule.”
Michelin added that it was maintaining its view that volumes would increase by around 3 percent, in line with projected 2014 market growth.
Michelin’s specialty tire business unit (agricultural, OTR, motorcycle tires) suffered an 8-percent drop in sales, largely due to the contraction in demand from the mining segment.
Sales in the truck tires and related distribution unit fell 6.2 percent as negative currency effects trumped higher tonnages sold.
The passenger car/light truck tire and related distribution unit reported a 2.9-percent drop in sales despite a 2.4-percent gain in tonnages sold and improvements in the product mix toward larger rim size tires, according to the company.
Globally, unit volumes in the consumer tire OE and replacement markets grew 4 and 5 percent, respectively, with volumes of OE shipments up in all regions in South America and Africa/Middle East.
Truck tire shipments witnessed sustained growth in North America and Asia, stabilization in Europe and contraction in South America and Africa/Middle East.
Titan International and the United Steelworkers union have petitioned the U.S. International Trade Commission and U.S. Department of Commerce seeking relief from OTR tire imports from China, India and Sri Lanka. What’s your opinion?
|I wholeheartedly support their action – something needs to be done.||
|I think it’s a bad idea that could inevitably tie the hands of domestic tire makers.||
|I oppose any duties against tire importers—they only raise costs for distributors and make it harder to obtain inventory.||
|I’m kind of on the fence and not sure what’s right, but need more information before deciding.||
|I don’t really care whether or not relief is granted.||
|Total votes: 78|