Michelin Profits Plunge Blames Euro and Flat Market

Michelin Profits Plunge, Blames Euro and Flat Market

Net profit dropped by 28% to $1.55 billion from the 2012 level.

PARIS -- Tire-making giant Michelin blamed a rise of the euro and flat markets for a profits plunge and weak sales in 2013, the company said on Tuesday.

The group supplies a vast range of tires to the car, truck, aviation, mining and agricultural sectors, and is therefore an indicator of global economic activity.

The company, known around the world by its logo of a man made of tires, said that the global market for tires was recovering slightly.

Net profit dropped by 28% to 1.13 billion euros (US$1.55 billion) from the 2012 level, and operating profit before non-recurrent items was down 7.8% to 2.23 billion euros.

The operating outcome was hit mainly by a rise of the euro in the second half of the year which cut the annual performance by 230 million euros.

Restructuring of some activities in the home base France also cost 260 million euros.

Analysts polled by Dow Jones Newswires had expected the net figure to fall by less, by 22%, and operating profit to retreat by 5.8%.

Group sales fell by 5.7% to 20.25 billion euros.

The market for tires had been weak in the first half of the year, picking up in the second half, but prices had come under downward pressure because some contracts were linked to the price of raw materials, Michelin said.

However, the group cut net debt to 142 million euros from more than 1.0 billion euros in 2012.

Michelin said that it expected market conditions to improve this year and that the volume of its sales would rise by 3% in line with growth of the global tyre market.

It said that this year it should be on track for its targets in 2015, of an operating profit before non-recurrent items of about 2.9 billion euros.

Copyright Agence France-Presse, 2014

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