Michelin reported last week that it saw a decline of 71% in its 2009 profits due to decreased sales to automakers and trucking companies, in addition to a rise in reorganization costs. Sales fell 9.8% to 14.8 billion euros.
Net income fell to 106 million euros ($145 million) from 360 million euros in 2008, short of the 121 million euros expected by analysts. The French company gave no outlook for this year, beyond pledging to maintain a positive cash flow.
“The market visibility prevailing in early 2010 and the rising cost of raw materials (particularly natural rubber) are prompting us to exercise extreme vigilance,” Michel Rollier, Michelin CEO, said in a statement. He also said the company would give a new timetable this month for achieving a medium-term operating margin goal of 10%.
In North America, sales to OEMs decreased by 32%, leading to a 15% overall volume decline, while rising demand from Chinese car makers surged 65%.
The truck tire division was unprofitable in 2009 with a negative 1.5% operating margin compared with a positive margin of 2.5% a year earlier. The decline in North America’s market eased in the second half, Michelin said.
Car and light truck tire revenue fell 4.5% to 8.28 billion euros globally, while heavy truck tire sales dropped 17% to 4.5 billion euros. Specialty tires for airplanes and construction equipment, Michelin’s most profitable division, recorded a 12% sales drop.
