STOKE-ON-TRENT, England—Michelin Tyre U.K. was strongly hit by the COVID-19 pandemic in 2020 but expects it will return to profit this year following two straight years of delivering loss.
"The company has positive net assets at Dec. 31, 2020, and although it has made a loss for the current year and the prior year, latest forecasts show that the company will be profitable for 2021 and future years now that the Dundee factory has closed," Michelin said in its 2020 annual report filed with the U.K. Companies House on July 10.
The tire maker reported a 30.8 percent year-on-year drop in sales to just under $555 million for 2020, as local sales fell 15.7 percent and exports were down 77 percent.
Original equipment volumes dropped 33.7 percent year-on-year while sales to the segment dropped 35 percent. Michelin linked the drop to the COVID-19 pandemic and its impact on car production.
Sales, it said, fell sharply in the second quarter when OE manufacturers closed factories, but recovered in the third and fourth quarters.
In the replacement market, volumes were down 10.6 percent and revenue fell 9.3 percent, again as a result of the pandemic.
Tire exports were particularly low as a result of the March 2020 closure of the Dundee factory, whose products were mainly exported.
Operating results were affected by the low levels of sales as well as the ongoing costs associated with the closure of the Dundee factory. Operating loss before taxation stood at $58 million, 68 percent lower than the $35 million loss reported in 2019.
Michelin's U.K. head office and commercial headquarters is in Stoke-on-Trent, along with a truck tire retreading factory. The company operates a training and information center as well as a service center at the Stoke location.