EUROPEAN Tyre maker Michelin has assessed that sales volume and earnings might remain flat this year as recession in Europe lingers, already stalling profits of the car and truck sectors last year.
Michelin, which is targeting more sales outside of Europe, has reported an operating income before non-recurring items up 25% to EUR2,423 million with volumes down 6.4% and demand remaining flat in the second half; however, the company expects to hold volumes steady this year in a market environment that is uncertain in mature markets but still expanding in the new ones.
Raw materials prices are expected to remain stable in the first half, adding a further EUR350-400 million to operating income. This will be partly offset, however, by the impact of indexation clauses on the original equipment and earthmover businesses.
The capital expenditure programme estimated at EUR2 billion can also help the company setup new production capacity that will come on stream in the growth regions, likewise bring on technological innovations.
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