Michelin Business Report FY2008
|(in million Euro)||FY2008||FY2007||Rate of change(%)||Factor|
|Business unit of Passenger Car-Light Truck & related distribution|
|See remarks (1) below|
|Business unit of Truck & related distribution|
|See remarks (2) below|
(1) Net sales declined 4.1%. The strong drop in sales volume reflected market trends, whose deterioration was amplified by inventory reductions on the part of distributors. Operating Income amounted to EUR 370 million versus EUR 830 million in 2007. The price increases implemented throughout the year across markets and further sales mix improvements could not make up for the full impact of the strong increases of raw material costs, combined with the drop in volumes sold, idle manufacturing capacity, amplified in the last quarter as a result of falling demand, and the negative impact of currency.
(2) Net sales were down 3.7%. The Company gained market share in Asia (reflecting its good performance in China) and in North America, underpinned by the success of the Michelin Durable Technologies tire offering, which also did well in Europe. Operating margin slipped 5.1 points to 2.5%. This change was the outcome of a multiple unfavorable factors, including raw material cost inflation, especially strong in the second half and only partly offset by the price increases passed throughout the year. The major market slump at year-end dragged unit sales down and pushed up industrial overheads as a result of the production adjustment measures implemented in the second half. Furthermore, the currency effects were negative.
-In April 2008, the Company announced that the Pilot Sport PS2 was adopted for the new Audi A4 and A5 models. At the same time, the Primacy HP was also introduced for the new Audi A4. (From an article in the Nikkan Jidosha Shimbun on Apr. 11, 2008)
-In August 2008, the Company announced that the Primacy HP was selected as the standard equipment for the new Citroen C5. Two sizes of 225/55uR17 and 245/45uR18 will be supplied. (From an article in the Nikkan Jidosha Shimbun on Aug.30, 2008)
-In September 2008, Kia Motors selected the Company as a sole supplier of original equipment tires for the new cee'd. The new supply contract was given new impetus to the Michelin-Kia partnership, which began in 2006. (From a press release on Sep. 18, 2008)
-In December 2008, the Company announced that Honda selected the Primacy HP for the new Accord and Accord Tourer. As the 18-inch all-season tires have already been used for the Accord for the North American market, the Company's tires are now used for all the Accord's 18-inch tires sold worldwide with recent selection for the Japanese models. (From an article in the Nikkan Jidosha Shimbun on Dec. 6, 2008)
-In June 2008, the Company raised its stake in Hankook Tyres to 8.9%. In March 2006, Michelin already raised its stake in Hankook to 6.3%. This acquisition is in line with the agreements signed by the two companies in 2003, pursuant to which it could increase its stake in Hankook Tyres to up to 10%. (From a press release on Jun 18, 2008)
|(in million Euro)||2008||2007||2006|
|% of sales||3.0%||3.3%||3.6%|
-4,000 research engineers and developers are engaged in the R&D operations in Europe, North America and Asia.
-Launched in Europe, the Middle East, South Africa and South America beginning in 2008, the Michelin Energy Saver is the all-new, fourth generation of "green" car tires. By generating fuel savings of nearly 0.2 liters per 100 km in combined city and highway driving, it reduces CO2 emissions by 4 g per km. Safety performance and low environmental impact have led many carmakers to certify the Michelin Energy Saver for use on their new models. One is Peugeot, which is equipping its new 308 1.6 HDi models exclusively with the new tire. Others are Mercedes-Benz for its B Class and C Class models, Volvo for its C30 Efficiency, S80 and V70, Fiat for its 500 series and the Fiorino, Renault for the Clio and Twingo, and Toyota for the Yaris. (From a press release on Mar. 4, 2008)
-The Company renewed its Agilis range for utility vehicles. Launched in Europe in March 2008, it is also available in Asia, Africa Middle East and South America. The Agilis is intended for utility vehicles such as the Ford Transit, Mercedes Sprinter, Volkswagen LT46 or Renault Master. The new light truck range does indeed offer 30% additional mileage based on internal tests. Furthermore, the Agilis braking distance on wet road is 3 meters shorter. (From a press release on Apr. 7, 2008)
|(in million Euros)||FY2008||FY2007|
|Passenger Car Light Truck||635||579|
Capital expenditure by geographical segments
|(in million Euros)||FY2008||FY2007|
-The Company accelerates its development in Central and Eastern Europe, South America, and Asia in order to serve tire demand with local production and to increase its share of sales in those dynamic economies, in line with the geographic breakdown and trends of world tire markets. Its investments in these regions represented EUR 450 million in 2008.
-In Central and Eastern Europe, the Company strengthens the High Performance Passenger Car tire production capacity of its Hungarian facilities.
-In South America, the Campo Grande (Brazil) Earthmover tire plant, commissioned in November 2007, ramped up according to plan. The Company announced construction of a new plant in Brazil to cater to the Mercosur's demand for passenger car and light truck tires. On the other hand, its project to build a new plant in Mexico, whose production was to serve the North American market, was cancelled.
-In Asia, the Company increased its Passenger car and Light truck and Truck tire production capacities in China. It decided to build a truck and earthmover tire plant in India, Asia's 2nd largest truck tire market with a large potential for radial tires. Under a cooperation agreement concluded in 2003, the Company also raised its stake in the Korean tiremaker Hankook Tire (No.8 in the world) to close to 10%.