PARIS-Efforts by Groupe Michelin to reduce overhead and improve its balance sheet have impressed the financial community sufficiently to push the firm's stock to its highest price in nearly three years, despite a net loss last year of nearly $700 million. The firm's renewed stock market strength should help it raise $1.45 billion in fresh equity by converting equity warrants and bonds in the coming months. No dividend was declared for 1994.
Improved sales in the second half of last year helped Michelin hold its overall sales decline for fiscal 1993 to 5.2 percent, to $11.2 billion. The net consolidated loss was $698.2 million.
Financial analysts predict the company will be profitable this year by as much as $175 million to $265 million and even higher in 1995, based on a recovery in the European marketplace, benefits from Michelin's austerity program, and lower capital investments.
Michelin declined to make its own earnings projection, but Finance Director Eric Bourdais da la Charbonniere acknowledged the estimates are close to the company's.
The firm's cost savings plan, which includes trimming employment by more than 10,000, already has generated more than $175 million in savings and should reduce overhead by as much as $620 million by the middle of 1995, Mr. Charbonniere said.
Michelin returned to the black on a monthly operating basis during the fourth quarter, he said; sales during that same period were up 3.9 percent over the 1992 period, reflecting a turnaround in the European market.