PARIS—For 1999, Group Michelin suffered a 68.2-percent drop in net earnings, to $194.5 million, due almost entirely to provisions the company recorded to cover the costs of restructuring its European activities. Otherwise, the company's pretax earnings jumped 14.9 percent, to $1.31 billion; combined with a 9.3-percent increase in sales, the earnings/sales ratio increased to 9 percent. The company is counting on rebounding sales in Asia and continued growth in Europe and North America, is forecasting 4-percent growth in sales and a double-digit improvement in pre-tax earnings for fiscal 2000.
Long term, Michelin expects to outgrow the global market by two percentage points annually while increasing its earnings/sales ratio to 10 percent, Chairman Edouard Michelin said.
For 1999, sales in North America grew 11.6 percent, aided by the first-time inclusion of the results of Tire Centers L.L.C., the nationwide tire distribution chain Michelin bought in April 1999. Business in Asia—excluding Japan—was up 16 percent, whereas sales in Europe, where Michelin generates half its business, were up only 1 percent.
Overall net earnings were reduced by nearly $395 million because of provisions to cover European restructuring, which eventually will result in 7,500 job cuts.
Investments during the year rose 4.1 percent to $1.21 billion. Among the key projects were completion of a C3M-based factory in Brazil, expansion of truck tire and retreading-related capacities in North America, and initiation of a program to convert passenger and light truck tire capacities in Europe to higher value high-performance tires.