PARIS—Michelin reported a 5.6 percent jump in sales in the quarter that ended March 31 on 1.5 percent higher unit sales and a nearly 10 percent favorable currency effect.
Sales rose to $5.66 billion for the period, with nearly all of the gain coming in the passenger/light truck tire business unit, Michelin reported, where revenue was up 10.2 percent to $3.13 billion.
By contrast, revenue in the truck tire unit was up 0.8 percent to $1.66 billion and sales in the specialty business unit fell 0.8 percent to $869.2 million, the tire maker reported.
Michelin did not report earnings at this time but said it expects lower raw materials costs and currency effects to generate positive impacts of about $625 million and $365 million, respectively, throughout the year.
At the same time, Michelin confirmed its earlier earnings guidance of delivering increased operating profits on a yearly basis over fiscal 2014 and achieving a return on capital employed of at least 11 percent.
The company is projecting capital spending this year of nearly $2 billion, which it said it will devote to its policy of “value-creating investment,” focusing on the growing passenger/light truck tire businesses, innovation, truck fleet operator services, digital strategy and raw materials/semi-finished products.
The sales improvement in the passenger/light truck tire segment was underpinned by a sales volume gain of 6 percent, including a 5 percent increase in Michelin-branded sales and especially in Michelin-brand sales in the 17-inch and higher segment, where sales jumped 12 percent.
The company also singled out the success of the BFGoodrich brand in North America.
Prices, on the other hand, declined due to the application of raw materials-based indexation clauses in contracts with original equipment manufacturers, Michelin said, and price repositioning in the replacement market in 2014 and 2015, taking into account lower oil prices.
Sales volume in the truck tire business unit fell 4 percent from 2014 despite good performances recorded in the OE segment in mature markets and higher exports from Europe to meet North American demand.
Sales volume in the specialty businesses unit—earthmover, agricultural, two-wheeler and aviation tires—was off 4 percent despite some gains in the OE and infrastructure OTR segments and sales improvements in the two-wheel sector.
Globally, Michelin noted that OE demand in North America was up both in the consumer (2 percent) and commercial (21 percent) segments, whereas replacement consumer market shipments fell 6 percent in the quarter due in large part to excess inventories tied to above-average imports in the fourth quarter of 2014. Truck tire shipments, on the other hand, “remained strong,” rising 3 percent on sustained demand from the freight services industry.