Michelin stuck to its annual targets while joining a chorus of car-parts makers in cautioning the rest of year would be tougher than expected.
The French tiremaker, formally known as Cie Generale des Etablissements Michelin, sees volumes growth in line with global market trends and rising profits this year, according to a statement Thursday. Operating profit rose 8% to 1.44 billion euros ($1.61 billion), beating estimates compiled by the company.
The carmaking industry is under pressure from falling demand in key markets. Vehicle demand in China, the world’s biggest car market, contracted 12% through June, amid declines in the U.S. and Europe and forecasts for a tough second half of the year.
Both Volkswagen AG and Nissan Motor Co. on Thursday said they’ll cut output. VW has shed 450,000 cars from its production planーroughly the size of one of its car plantsーand is open to reduce more should market deteriorate.
French manufacturer Faurecia SA warned Tuesday that auto production could drop 4% this year, more than it initially expected. Michelin said it expects tire demand to contract 1%. The company is pursuing cost initiatives to counter the uncertain environment, CEO Florent Menegaux said.
“We are faring well in a bad weather,” CFO Marc Henry told reporters on a conference call, citing Michelin’s firm pricing policy and firm grip on costs. The company’s profit margin still dropped to 10.3% from 11.3% a year earlier.
By Ania Nussbaum