CLERMONT-FERRAND, France (June 12, 2009)—Michelin is slicing its capital expenditure budget in half and working to control inventories to maintain positive free cash flow as its No. 1 financial goal this year, Michelin CEO Michel Rollier said.
Stating that Michelin sees “no clear signs of recovery” in most of its major markets, Rollier told shareholders at the firm's May 15 annual meeting the company has cut its capital spending budget this year to about $945 million.
The tire maker also has reduced operations at many of its plants to balance inventories balanced with lower demand.
The firm's first quarter sales fell 14 percent from the previous year, but Rollier assured shareholders Michelin has its “financial stability under control” and expects to see the benefits of lower raw material costs in the second quarter results.
By adjusting production to balance demand, Michelin was able to avoid more than $800 million in inventory storage costs in the first quarter.