PARIS—Michelin suffered drops in earnings and sales last year as higher demand in North America and China was not enough to overcome sluggish demand in Europe and other key markets.
Looking forward, Michelin said it expects demand in 2015 for passenger car, light truck and truck tires would continue to grow in North America and China and would pick up again in Europe, although at a modest rate.
For the year that ended Dec. 31, Michelin's operating income fell 2.9 percent to $2.88 billion, while sales dropped 3.4 percent to $26 billion, yielding an operating ratio of 11.1 percent. Net income slid 8.5 percent to $1.37 billion.
Michelin's 2014 results also were affected by declines in the agricultural and mining sectors, softened by a recovery in the original equipment and infrastructure market in the earthmover tire segment, the French tire maker added in its report for the financial year.
Mining tire customers, it noted, were likely to make further inventory drawdowns and OE sales in the agricultural tire segment are expected to be lower. The earthmover segment, OE and infrastructure business should continue to grow at a modest rate.
“This year, we will focus on stepping up our growth drivers, including the launch of new Michelin brand ranges and a revamped line-up of our other brands, a significant improvement in the quality of our customer service, and more assertive distribution,” Michelin CEO Jean-Dominique Senard said in a statement.
Michelin plans to accelerate its “competitiveness plan,” which should yield cumulative savings of $1.6 billion through 2016, up about 20 percent from previously disclosed.
From a segment point of view, sales revenue fell in all three of Michelin's businesses—consumer tires, truck tires and specialty businesses—although the firm said unit sales were up in both the consumer and truck tire segments, by 2 and 1 percent, respectively. The market for mining tires in particular contracted sharply, Michelin said, as mining companies reduced their tire inventories, and operations at certain mines were scaled back in response to sharply lower commodity prices.
Regionally speaking, revenue in North America slipped 2.1 percent to $9.14 billion, reflecting “targeted price adjustments,” Michelin said.
The company described the North American consumer OE market as “buoyant,” with demand rising 5 percent over 2013, while the replacement market grew 6, although shipments were influenced by inventory building ahead of the introduction of customs duties on Chinese tires.