CLERMONT-FERRAND, France—While Michelin did not disclose its earnings with the release of its first-quarter financial results, the company did release details of efforts it's taking to "mitigate the financial impact of the impending deep recession."
Among the measures Michelin implemented in mid-March are:
- Reduced scheduled capital expenditures for 2020 by $550 million, or approximately 28 percent less than spending in fiscal 2019;
- Reduced the dividend submitted to shareholder approval by $365 million, or roughly 48 percent from that proposed earlier;
- Suspended the share buyback program, except for the firm commitments outstanding for 2020;
- Took efforts to reduce overhead costs; and
- Initiated tracking of supply and demand on a weekly basis to keep inventory under control.
In addition, Michelin Managing Partners Florent Menegaux and Yves Chapot took 25 percent salary/benefits cuts for April and May and members of the company's executive committee reduced their remuneration by around 10 percent during the same period.
These reductions will be continued as long as Michelin employees are in partial activity due to the COVID-19 health crisis, the company added.
Menegaux and Chapot also have offered to give up part of their 2019 variable compensation paid in 2020. Shareholders will vote on that issue at the firm's general meeting on June 23.
Michelin's supervisory board, led by Chairman Michel Rollier, agreed to donate more 25 percent of its attendance fees received so far in 2020 to foundations in their respective countries, which are part of the fight against COVID-19.
Michelin also stated in the earnings report it has sources of financing in place to deal with the uncertainty surrounding the crisis.
Stress tests, Michelin said, based on volumes declining by between 20 percent and 35 percent over the full year show that the company has sufficient cash and cash equivalents, without drawing down its confirmed back-up lines of credit.
In a statement, Menegaux thanked the firm's employees for "their dedication, commitment and agility, which I am sure will enable Michelin to weather this unprecedented global crisis of still unknown proportions.
"This exceptional situation has deepened our belief that the group's future is anchored in the balance between the engagement of its employees, without whom nothing is possible, the sustainable growth of its business operations and the robust strength of its finances."