Michelin Says Strength of Euro Takes Toll on 1Q Revenue

By David Pearson

PARIS--French tire maker Cie Generale des Etablissements Michelin SCA said Wednesday the strong euro was largely responsible for a 2.4% decline in its revenue for the first quarter of the year despite increased tire sales.

Like other automotive companies with significant European manufacturing operations, Michelin is suffering from the strength of the single currency, which is eroding sales and earnings from foreign operations when translated back into euros.

Michelin said its net sales fell 2.4% in the three months through March 31 to 4.76 billion euros ($656.9 billion) despite a 3.4% rise in tire sales from recovering sales and production of cars and trucks worldwide.

But Michelin, one of the world's leading tire and rubber companies, said its first-quarter revenue would have been 4.6% above the reported level had it not been for the euro, which strengthened significantly against other currencies over the three-month period.

The first-quarter figure was well below an average estimate of EUR4.83 billion among a panel of 11 analysts polled by the company.

The company reaffirmed its 2014 full-year guidance of a 3% rise in its sales volumes, in line with the global market, as well as a return on capital employed of more than 11% and cash flow of more than EUR500 million.

It said it aims to improve its gross unit margin, while preserving a positive balance between pricing policy and raw-material costs.

Write to David Pearson at [e-mail]

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