October 24, 2019 / 4:12 PM / a month ago

Michelin keeps its 2019 guidance but calls for caution

FILE PHOTO: The Michelin logo is seen during the first press day of the Paris auto show, in Paris, France, October 2, 2018. REUTERS/Regis Duvignau

PARIS (Reuters) - French tyre maker Michelin (MICP.PA) on Thursday maintained its full-year profit guidance but cut its forecast again for the global tyre market, pointing to a sharper-than-expected downturn in the truck segment.

The group, which said two weeks ago it would close a French plant in response to deteriorating conditions in the auto industry, posted a 8.9% increase in third-quarter revenue to 6.115 billion euros ($6.78 billion).

Michelin said in a statement that the truck tyre market is now expected to end the year down 4%, versus a previous forecast of a 2% decline.

The group confirmed it expects 2019 operating income exceeding the 2018 figure at constant exchange rates and before the estimated 150 million euros contribution from the Fenner and Camso businesses.

It also expects a structural free cash flow of more than 1.45 billion euros.

Michelin’s chief financial officer Yves Chapot said during a conference call that the deterioration of the truck market, linked to worsening conditions in the industry and construction sectors, called for some caution.

“Our third quarter was very good, helped by forex effects and acquisitions, but our message is this: beware, the organic volumes are down and we see a certain number of clouds gathering above us”, he added.

Finnish tyre maker Nokian Renkaat (TYRES.HE) warned on Tuesday its 2019 sales would be lower than earlier forecast due to weak car and tyre markets, and it expects markets to remain soft.

Germany’s Continental (CONG.DE) said the same day that slower automobile production growth over the next five years had forced the car parts maker to book a 2.5 billion euro ($2.8 billion) impairment.

Reporting by Gilles Guillaume; Writing by Benoit Van Overstraeten; Editing by Lisa Shumaker and Alexandra Hudson

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