PARIS (Oct. 27, 2009)—Michelin's sales revenue fell 10.9 percent to $5.62 billion in the third quarter on 14-percent lower unit sales, but the French tire maker said it is seeing signs the year-old market implosion may have bottomed out.
In both Europe and the U.S., Michelin said orders are starting to pick up again as dealers have depleted their stocks and the winter tire season is starting. At the same time, the company said it expects to benefit throughout the second half from lower raw materials costs and lower inventories.
Michelin did not disclose earnings at this time but said it expects to achieve its stated objective of generating positive free cash flow.
For the nine months ended Sept. 30, Michelin's revenue was down 12.5 percent to $16.3 billion on 20.1-percent lower unit sales and a 7.6-percent improvement in the price-mix component, buoyed especially by the Michelin brand's “solid performance.”
In North America, passenger tire demand rose 3.8 percent in the quarter, Michelin said, after dropping 11.8 and 9.7 percent, respectively, in the first and second quarters. Replacement demand for truck tires fell nearly 12 percent, but Michelin said dealers and fleets have exhausted their inventory reserves, as demonstrated by a slight upturn in retread demand.
However, Michelin said, “the markets will truly recover only when there is renewed demand for freight and international truck services.”