PARIS (Feb. 13, 2009)—Michelin will cut its capital expenditures this year about in half to $900 million to help cope with a “prevailing bearish outlook” for the coming months.
Most of the cuts will be made in traditional markets of North America and Europe, according to Managing Partner Michel Rollier, although he declined to say which projects would be cut.
The company did say it would maintain funding projects in Latin America, India and China as well as maintaining research and development and innovation-related spending at traditional levels. Michelin devoted $1.86 billion to capital spending in 2008.
Rollier said Michelin would be reducing its capital spending substantially in 2009 while maintaining the key orientations of its midterm strategy to enhance competitiveness, strengthen leadership without compromising the value of its products and broaden our footprint in the regions or growth.
In addition, Rollier said Michelin expects its profitability in 2009 to be influenced by the full year combined effect of the price increases passed in 2008 and the decline in raw materials prices, in particular for natural rubber and oil derivatives.
Saleswise, Michelin expects tire markets to remain “well below” 2008 levels in the first half before firming up as replacement market inventories are replenished and business activity begins to recover.
Rollier did not make any specific sales or earnings projections for fiscal 2009.