Michelin global sales up 5.5 percent
Gas prices, economy cut into sales in North America
Published: Wednesday, April 25, 2007 - 2:00 am
By Jenny Munro
Michelin Group's consolidated sales for the first quarter were up 5.5 percent to euro 4.2 billion, but the company's North American markets had difficulties because of economic weakness and increased gas prices.
The capacity to build more earthmover tires, which are in strong demand globally, is increasing, Michelin said, but production capacities still fall short of meeting original equipment demand. The demand is particularly strong in the mining and cement industries.
Michelin North America, based in Greenville, has expanded its Lexington earthmover plant with an investment of $85 million over five years. The expansion, announced in December 2005, is expected to create about 70 new jobs by 2010 and increase capacity by about half.
The company's North America sales for passenger car and light truck sales declined 8.8 percent from a year ago while replacement tires for that sector remained stable, according to Michelin.
Passenger car and light truck replacement tires experienced a weak performance in January and March but had a strong February. The Mexican market improved by 8.4 percent while Canada's market slipped by more than 4 percent.
"Despite an overall flat replacement market, our first-quarter tire sales were very strong, both in terms of volume and revenue thanks largely to good Michelin brand performance and a favorable pricing environment," said Jean-Michel Guillon, chief operating officer of Michelin Americas Small Tires.
"In North America, we remain cautiously optimistic in light of a challenging economic environment characterized by rising gas prices and weak demand for domestic vehicles," he said.
Also, the North America region lagged on original equipment truck tires and replacement truck tires -- behind Europe, Asia, South America and Africa/Middle East.
Natural rubber costs remain high and inventory is low, the company said. Also, materials used to make synthetic rubber are more expensive, due the shortage of some refined petroleum blends.
