Tyre maker Michelin today announced that sales volumes were up 6.7% in 2011, increasing from €17.8bn in 2010 to €20.7bn in 2011.
The rise in sales was down to a strong first half of the year, which saw sales rise from 100 tonnages sold in Q1 2010 rise to 117 tonnages in Q1 2011. However, this figure fell throughout the year culminating in a poor Q4, which saw this figure fall to 110 tonnages.
The strong year-on-year sales figures result from Michelin’s strategy to capture the premium tire segment in all of its speciality businesses, increasing its market share as sales grew by 29% between 2009-10. This was due to strong performance in China, where the company’s 17+ inch tyres experienced a 330% rise in sales.
This was facilitated by increased spend on R&D, which rose from €545m in 2010 to €592m in 2011, €21m higher than pre-recession levels of investment in 2007.
The higher cost of raw materials in 2011 was offset by passing the increase onto customers. Michelin believe that this will now stabilise in 2012, making that assumption that the price of natural rubber, which accounts for 40% of the company’s raw materials costs, will significantly fall in 2012.
The company is predicting that the number of tires sold in Europe will fall in 2012, which will be offset by further growth in South America, Africa, the Middle East and Asia.
The company recently announced plans to invest £50m in its manufacturing sites at Ballymena, Dundee and Stoke-on-Trent. Michelin’s chairman Michel Rollier told The Manufacturer that Michelin are committed to manufacturing in Western Europe, but future factory builds will take place outside of the region to capitalise on the emerging markets.
Mr Rollier added that the company are looking to further automate parts of the manufacturing process and cut workforce costs in the UK and Western Europe through natural wastage.
Rollier also announced that Jean-Dominique Senard will succeed him at the company’s next annual shareholder’s meeting. If approved by 66% of the shareholder’s, Rollier will leave his role with immediate effect on May 11, 2012.
Following today’s results, Rollier said that he was confident Michelin would achieve at least 25% growth from 2011 to 2015. The company upped its operating income target from €2bn to €2.5bn by 2015 after a robust operating income of €1.9m was achieved during 2011.
Full interview with Michel Rollier to follow.