PARIS—Group Michelin expects 4- to 5-percent sales growth this year over 1998, based on the availability of new capacity the company has invested in over the past two years. Michelin's sales in 1998 rose 2.8 percent to $14.6 billion, as a 3.5-percent increase in the number of tires sold counteracted a slight drop in selling prices and the negative effects of currency exchange rates.
The firm did not release, and declined to comment on, earnings performance. At mid-year, however, Michelin reported declines in both net and operating earnings that resulted from increased operating costs and falling prices.
At that time, Michelin said it expected its results to rebound in the second half because of several factors, including price increases in North America and Europe, increased truck tire manufacturing capacity across Europe, reductions in logistics and other variable costs, and productivity gains.
``We could have increased sales considerably more, had we had more capacity,'' a Michelin spokesman said. ``We're in better shape now, in terms of capacity. 1999 should be a better year.''
Fiscal 1998 was a mixed bag for Michelin. Sales in western Europe were up 7 percent over 1997, but were offset to a great degree by a 2.9-percent drop across Asia. Sales in North America rose 1.5 percent, the company said, but the gain was held down by the capacity shortages.
Although business in Asia was down, Michelin still considers the region strategically important, and continues to evaluate several options to expand its holdings there, the company said recently.
Similarly, the sluggish business climate in South America has not influenced the size or pace of investments Michelin has earmarked for Brazil and Colombia, the spokesman said.