Cautious of the economic impact following COVID-19, French tyremaker Michelin has opted to cut their earnings targets – the company now expects its 2020 free cash flow will come in at more than 500 million euros (US$588 million), down from an initial objective of 1.5 billion euros (US$1.76 billion), depending on further health crises due to the pandemic.
According to Michelin, its operating profit in the automobile market fell a shocking 78.4% in the first half of this year. Michelin booked an operating profit of only 310 million euros (US$364 million), from 1.44 billion (US$1.69 billion) in the year-earlier period.
Michelin also expects its 2020 operating profit to come in slightly higher than 1.2 billion euros (US$1.41 billion), well below the 3 billion euros (US$3..53 billion) earned in 2019.
The company’s leading executives, including managing partner Florent Menegaux, had agreed to take voluntary pay cuts to help deal with the latest hit to its business. Menegaux will reduce remuneration by around 25% for Apr-May 2020, while executive committee members will reduce by 10% during the same period.