PARIS (Feb. 12, 2010) — Despite the global market turmoil last year and a drop in unit production of nearly 15 percent last year, Group Michelin managed to improve its operating margin and keep its sales revenue decline to “just” 9.8 percent.
Michelin cited declines in raw material costs and fierce efforts to cut costs as reasons for helping it restrict its operating earnings decline to just 6.3 percent. Coupled with the sales decline to $20.6 billion, Michelin's operating income of $1.2 billion resulted in an operating margin of 5.8 percent vs. 5.6 percent in fiscal 2008.
Net income fell nearly 71 percent on the effects of $572 million in non-recurring expenses related to the project to specialize certain plants in France, the manufacturing reorganization plan in North America, the voluntary separation plan in France and the closure of the Ota, Japan, plant, Michelin said.
“In an environment shaped by a historic decline in tire demand, especially in mature economies, Michelin was able to respond quickly and more agilely than ever,” said Michel Rollier, managing general partner. “Thanks to the dedicated commitment of our teams and tight management, Michelin has delivered robust performance and improved its major financial metrics, the foundations of its future growth.”
Michelin credited its firm pricing policy, the viability of the Michelin brand and a favorable replacement/OE market mix for improving the overall price/mix, which offset to a great degree the drop in unit sales.
By business unit, sales of passenger car and light truck tires and related distribution activities fell 4.5 percent to $11.7 billion, Michelin said, with business improving steadily throughout the year from a low start in the first quarter.
The truck tires and related distribution segment suffered a 17.2-percent sales decline to $6.25 billion, reflecting a worldwide collapse in demand for commerical vehicle products.
Sales from the specialty businesses segment — earthmover, infrastructure and agricultural tires principally — declined 12 percent to $2.82 billion, reflecting he fall-off in volumes in the original equipment segments.