Michelin Business Report FY2009
|(in million euros)|
|FY2009||FY2008||Rate of change(%)||Factor|
|Business unit of Passenger Car-Light Truck & Related Distribution|
|Business unit of Truck & Related Distribution|
-Net sales amounted to 14,807 million euros in 2009, down a limited 9.8% at current exchange rates compared with 2008.
-The decline primarily reflected the 14.8% fall-off in volumes caused by the record collapse in tire markets around the world.
-Operating margin before non-recurring items stood at 5.8%, up slightly from the 5.6% reported in 2008.
At 862 million euros, operating income before nonrecurring items was down 6.3% for the year. It was hard hit by the decline in unit sales.
-Net sales in the Passenger car and Light truck tires and related distribution segment stood at 8,280 million Euros for the year, down 4.5% on 2008.
-Operating income before non-recurring items amounted to 661 million euros, versus 370 million euros in 2008. -Operating margin widened to 8.0% from 4.3% in 2008, led by the year-end upturn in volumes, particularly in winter tires, the still positive price mix, the decline in raw materials costs and the improvements in production flexibility.
-Net sales in the Truck tires and related distribution segment stood at 4,496 million euro for the year, down 17.2% on 2008. The impact of the steep decline in sales volumes, which reflected the collapse in demand and its subsequent stabilization, was only partly offset by the sustained focus on extremely firm pricing policies.
-Operating income before non-recurring items, which represented a loss of 163 million euro in the first half due to the sharp contraction in sales volumes in deeply depressed markets, low capacity utilization and the still negative impact of raw materials costs, swung to a profit of 94 million euros in the second half, thanks to firm prices, the positive impact of raw materials costs and higher capacity utilization rates. For the full year, the operating loss before non-recurring items came to 69 million euros, corresponding to a negative 1.5% operating margin.
Contracts-In Sept 2009, the Company announced that the Primacy HP, its luxury car tire, was selected for the Mercedes-Benz S-Class Hybrid as its factory-installed genuine tire. (From an article in the Nikkan Jidosha Shimbun on Sep. 11, 2009)
-In May 2009, the Company announced that it has started delivering its OEM tires for the new Toyota Prius hybrid vehicle. (From an article in the Nikkan Jidosha Shimbun on May 23, 2009)
-In April 2009, the Company announced that two types of its passenger vehicle tires have been chosen by Volkswagen of Germany as OEM tires for the new Golf to be sold in Japan. (From an article in the Nikkan Jidosha Shimbun on Apr. 14, 2009)
-In March 2009, the Company announced that an environmentally friendly "Energy Saver" tire would be installed as standard on a 1-liter engine version of the Toyota Yaris for the European market. (From an article in the Nikkan Jidosha Shimbun on Mar. 11, 2009)
-In February 2009, the Company announced that the new Toyota Yaris 1.0-liter, which would be scheduled for launch in early 2009, would be exclusively equipped with Michelin Energy Saver tires. (From a press release on Feb 5, 2009)
Acquisition-In Feb 2010, the Company announced that it took full control of Shanghai Michelin Warrior Tire Co. Ltd. (SMWT) by acquiring the remaining 30% stake in SMWT from Double Coin Group of China for around 18 million euros. (From a press release on February 2, 2010)
-In July 2009, the Company expressed its intention to purchase the remaining shares of Shanghai Michelin Warrior Tire Co. Ltd (SMWT) from two other shareholders. Michelin currently owns 70% of this joint venture in China - Double Coin Holdings Ltd. with 28.5% shares while Shanghai Minhang United Development Co., Ltd with 1.5%. In its plant in Shanghai, China, SMWT produces radial tires for cars, for both MICHELIN and Warrior brands. (From a press release on Jul 17, 2009)
Restructuring-The Company announced that it will end tire production at its Ota Plant in Gunma Prefecture, Japan in July 2010. The production discontinuation will mark the international tire supplier's withdrawal from the tire manufacturing business in Japan, as part of its initiatives to reorganize its production operations on a global basis. (From an article in the Nikkan Jidosha Shimbun on Jan. 18, 2010)
-The Company announced plans to reorganize its French tire plants. Under the plans, the passenger tire activities at the Montceau plant will be consolidated with those of other Group plants in Western Europe. The production of light truck tires will be integrated into the Cholet location by transferring these activities from other European factories. In addition, the premium tire production at the Seclin location will be moved to Les Gravanches plant. As a result, a total of 1093 employees are likely to be impacted by the actions. (From a press release on Jun 17, 2009)
-Michelin North America announced the closure of its plant in Opelika, Alabama, USA, by Oct. 31, 2009. The facility produces BF Goodrich brand passenger car tires. The action is in response to the unprecedented drop in market demand. The production at the location will be shifted to other BF Goodrich facilities in Tuscaloosa, Alabama and Ft. Wayne, Indiana. (From a press release on Apr 14, 2009)
|(in million euros)|
|% of sales||3.4%||3.0%||3.3%|
R&D Structure-4,000 research engineers and developers are engaged in the R&D operations in France, Spain, the United States and Japan.
-The Company announced that it will upgrade its R&D center in Clermont-Ferrand, France. The upgrade program is designed to shorten time-to-market cycles for tires and to enable the development of more innovative manufacturing processes. The Company will invest more than 100 million euros in the facility. (From a press release on Jun 17, 2009)
Product Development-The Company improved the environmentally friendly "Energy Saver" tire to meet required features for Toyota Yaris; low rolling resistance, high grip performance, long tread life and greater riding comfort, by using new kind of selica for the compound and rearranged design and manufacturing processes. (From an article in the Nikkan Jidosha Shimbun on Mar. 11, 2009)
-The Company announced plans to coordinate the development of electric and rechargeable hybrid vehicle systems with Valeo. Their collaboration involves the development of systems such as the drive train, engine and battery cooling management, climate control, lighting, energy management and tires. (From a press release on Feb 13, 2009)
Capital Expenditure by Business Segments
|(in million euros)|
|Passenger Car Light Truck||322||635|
Capital Expenditure by Geographical Segments
|(in million euros)|
-Gross purchases of intangible assets and property, plant and equipment amounted to 672 million euros at December 31, 2009, or 4.5% of net sales, versus 1,271 million euros, or 7.7% of sales, a year earlier. The decline was in line with the objective of preserving cash flow, as announced early in the year. It primarily reflected the postponement of projects to add marginal capacity in mature markets, with capital projects maintained in the growth countries of China, India and Brazil.
The main capital projects were as follows:
Passenger car and Light truck tires:
projects to improve productivity and refresh product lines;
projects to increase production capacity:
- in Shanghai, China,
- in Brazil, by starting up engineering and groundwork projects on a new plant,
- in Spain, by developing the new MICHELIN EnergyTM Saver fuel-efficient tire ranges at the Vitoria plant.
- in China, to increase capacity at the Shenyang plant;
- in India, to acquire land for the new Truck tire facility;
- projects to improve productivity;
- projects to develop new molds to refresh the product lines.
- in the United States, to increase mining tire capacity at the Lexington, SC plant.