Michelin sales rise, operating earnings dip

PARIS (July 31)—Based on the continued weakness of the North American marketplace and emerging signs of weakness in other key global markets, Groupe Michelin has downgraded its operating earnings expectations for 2001 by about 15 percent, to between 6.2 and 6.8 percent of sales. During the first half of the year, Michelin's sales grew 4.5 percent to $6.95 billion, while operating earnings slipped 0.9 percent to $442.3 million. Net income, aided by some non-recurring exceptional provisions, rose 57 percent to $333.3 million. In North America, Michelin reported 0.2 percent growth in passenger/light truck tires, as replacement sales grew 4.6 percent—including 12.8 percent growth of the Michelin brandùbut original equipment sales fell 10.4 percent with a 30.7-percent drop in truck tire sales. Michelin attributed its net sales gain in part to better pricing and product mix. The firm is counting on its next round of price increases—of up to 5 percent starting Aug. 1 in North America and Europe—to help bolster second-half results.