PARIS—Michelin reported a 23.1 percent increase in net income in the first half of fiscal 2014 despite a 4.8 percent drop in sales revenue.
The tire maker said operating income before non-recurring items was essentially unchanged at $1.6 billion, or 12 percent of the $13.3 billion in sales. Net income rose to $856 million, or 6.5 percent of sales revenue.
“In a competitive environment that persisted through the first half, Michelin met its objective of delivering a further improvement in its performance,” Michelin CEO Jean-Dominique Senard said.
The company attributed the less than 1 percent increase in operating income to the favorable impact of lower raw materials costs offsetting the negative effects of currency exchange losses and unfavorable price-mix changes.
Operating income after non-recurring items—costs associated with restructuring efforts in Canada and Hungary—jumped 18.7 percent to $1.47 billion.
For the second half of the year, the company is projecting global demand for consumer and commercial tires should remain supportive in the mature markets and China while other new markets are beginning to slow down, especially in the OE segment.
“For the full year, the group aims to improve its gross unit margin, while preserving a positive balance between pricing policy, product mix and raw materials costs,” Senard said.
Michelin added that it was maintaining its view that volumes would increase by around 3 percent, in line with projected 2014 market growth.
Michelin's specialty tire business unit (agricultural, OTR, motorcycle tires) suffered an 8 percent drop in sales, largely due to the contraction in demand from the mining segment.
Sales in the truck tires and related distribution unit fell 6.2 percent as negative currency effects trumped higher tonnages sold.
The passenger car/light truck tire and related distribution unit reported a 2.9-percent drop in sales despite a 2.4-percent gain in tonnages sold and improvements in the product mix toward larger rim size tires, according to the company.
Globally, unit volumes in the consumer tire original equipment and replacement markets grew 4 and 5 percent, respectively, with volumes of OE shipments up in all regions in South America and Africa/Middle East.
Truck tire shipments witnessed sustained growth in North America and Asia, stabilization in Europe and contraction in South America and Africa/Middle East.