Michelin profits plunge, blames euro and flat market

Tyre-making giant Michelin blamed a rise of the euro and flat markets for a profits plunge and weak sales in 2013, in a results statement on Tuesday. The group supplies a vast range of tyres to the car, truck, aviation, mining and agricultural sectors, and is therefore an indicator of global economic activity. The company, known around the world by its logo of a man made of tyres, said that the global market for tyres was recovering slightly. Net profit dropped by 28.0 percent to 1.13 billion euros ($1.55 billion) from the 2012 level, and operating profit before non-recurrent items was down 7.8 percent to 2.23 billion euros. The operating outcome was hit mainly by a rise of the euro in the second half of the year which cut the annual performance by 230 million euros, it said. Restructuring of some activities in the home base France also cost 260 million euros. Analysts polled by Dow Jones Newswires had expected the net figure to fall by less, by 22.0 percent, and operating profit to retreat by 5.8 percent. Group sales fell by 5.7 percent to 20.25 billion euros. The market for tyres had been weak in the first half of the year, picking up in the second half, but prices had come under downward pressure because some contracts were linked to the price of raw materials, Michelin said. However, the group cut net debt to 142 million euros from more than 1.0 billion euros in 2012. Michelin said that it expected market conditions to improve this year and that the volume of its sales would rise by 3.0 percent in line with growth of the global tyre market. It said that this year it should be on track for its targets in 2015, of an operating profit before non-recurrent items of about 2.9 billion euros.