PARIS-Despite sluggish tire sales in North America, Group Michelin's earnings continued to grow on an operating basis in the first half of 1996, though provisions for restructuring measures at its Spanish subsidiary resulted in a 12-percent drop in net income. The company anticipates its performance will ``continue the progress made since 1994'' for the rest of 1996, as the impact of cost reductions take hold and ``generally buoyant'' business should translate into ``modest'' sales growth.
Michelin is taking a $138 million provision to cover plans to reduce employment at its Neumaticos Michelin SA subsidiary by more than 10 percent to about 8,000 in the next three years. The firm told financial analysts it expects to recover this cost within two years.
Operating profits grew 31 percent over the comparable 1995 period, to $702.7 million, but net income fell to $245.8 million after the restructuring provision. (All amounts converted from French francs at current rates.) The operating profits/sales ratio exceeded the firm's target of 10 percent.
Sales increased 5.4 percent to $6.78 billion as a result of higher unit volume and improved selling prices, the company said. Tire sales in North America and Europe were depressed due to sluggish original equipment markets.
Michelin said selling prices were up an average of 2 percent over 1995, and that up to 40 percent of the operating profit increase was the direct result of actions taken to reduce the unit production cost.