Michelin Records Mild Q1 Losses, but China Is Still OK

You'd think that tire manufacturers were severely hit by the declining sales posted by automakers around the world, except China of course. They are not doing great, but truth be told, they don't seem to be suffering that much either.

Take Michelin for example. They've just announced that their first-quarter net sales were down 14.2% to €3.5 Billion. So yes, they are experiencing losses, but compared to what Honda recorded in the first months of 2009, they seem like a tip toe through the tulips.

Unit sales figures are a bit more disturbing as Michelin reports a 24.4% decline in the first quarter. The cause is the fall-off in tire demand in all of the Group's markets. Well, not all of them. Try and guess the market which is not in decline. We'll give you some hints: communist and big. Yes, that's right. China is the only market not following the downward trend.

Since truck sales are considerably more affected by the crisis than car sales, truck tire sales were also more prone to decline.

On a more positive note, the press release issued by the French manufacturer also mentions that “inventory volumes were stable over the first three months of the year, thanks to the production flexibility programs that will be stepped up in the second quarter to help optimize working capital. Inventory value will also benefit from the decline in raw materials prices.”

Michelin also made some comments regarding the plans for 2009. “The Group’s priority focus will be on managing cash, by optimizing the management of manufacturing operations and sharply reducing capital expenditure, at a time when markets are expected to recover only gradually,” the press release read.