Michelin Lowers Guidance After Sales Weaken

PARIS--French tire maker Compagnie Generale des Etablissements Michelin (ML.FR) Wednesday lowered its sales expectations for the full year after its sales revenue fell 4.6% during the third quarter on weaker demand in Europe and the negative effect of currency fluctuations.

The company said it expects its sales volume growth this year to be between 1% and 2%, down from a previous forecast of 3% three months ago.

Sales revenues were down to 4.89 billion euros ($6.21 billion) during the third quarter from EUR5.12 billion during the same period a year ago, Michelin said. Analysts polled by Michelin expected sales of EUR5.05 billion.

Volume sales rose 1% during the quarter.

Although the new tire market in North America and China is buoyant, the company said reduced demand hit its performance as geopolitical uncertainties discouraged global consumption.

"In the new markets other than China, the slowdown observed, particularly in the original equipment segment, is expected to continue," Michelin said in a statement. Demand in Europe has continued to weaken, the company said.

Nevertheless, Michelin's management maintained its target of delivering more than 11% return on capital employed and generating a structural free cash flow of more than EUR500 million.

Michelin expects to maintain its capital expenditure program at around EUR2 billion in 2014 and said it will lower spending on that in the coming two years.

Write to Inti Landauro at [e-mail]

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