Michelin & Cie., the French tire maker, saw a decline of 71% in its 2009 profits. The company released its fiscal 2009 results on Thursday and lowered its expectations for the next fiscal. The smaller profits were there due to lesser sales to automakers and trucking companies and also the rise in reorganization costs. The company reported a 15% drop in tire sales in the year 2009.
In the FY 2009 Michelin, the second biggest tire company of France reported in its results that the net profit of the company were posted €104 million ($142.3 million) decreasing by 71% as in the fiscal 2008 the profits were reported €357 million. The revenue in 2009 was posted €14.81 billion decreasing by 9.8% from €16.41 billion reported in FY 2008. The profit was reported below the expectations of the market analysts as they were expecting a profit of €125 million for 2009.
“The market visibility prevailing in early 2010 and the rising cost of raw materials (particularly natural rubber) are prompting us to exercise extreme vigilance,” Michel Rollier, CEO of the company said in a statement. The CEO also said the company would give a new timetable this month for achieving a medium-term operating margin goal of 10 percent.
The market for a car’s first tires dropped everywhere in the world except China last year. This decrease in the market was there in 2009 reportedly because the car making companies not only lowered their production but also they tried to reduce their inventory. The market for replacement tires also got contracted in the first half of 2009.