PARIS: Michelin, Europe’s largest tire maker, reported Wednesday a 2.4 percent decline in first-quarter revenue on foreign currency exchange issues and sluggish demand in Eastern Europe.
Sales fell to $6.58 billion from $6.74 billion a year earlier, the Clermont-Ferrand company said in an emailed statement. A 3.4 percent increase in sales volumes was more than offset by a $321 million impact stemming from the strong euro.
Michelin is adding factories in emerging markets such as Brazil, China and India, as well as in the United States, where demand for cars is forecast to rise.
In North America, Michelin owns the Uniroyal and BFGoodrich tire brands. Its U.S. headquarters is in Greenville, S.C.; the company has about 22,000 employees — 17,800 in the United States — and 19 plants in the United States, Canada and Mexico. The company in December 2013 opened a new, $750 million commercial tire factory in South Carolina.
At the same time, it is cutting jobs in France as European auto sales struggle to recover from a six-year contraction. The tire maker, which plans to cut costs by $1.38 billion by 2016, has said it aims to raise operating profit to $4.01 billion next year.
“With tire demand rising as fast as expected in the first quarter of 2014, except in Eastern Europe, Michelin maintains its objective” to increase sales volumes this year, the company said. “The competitiveness plan is being deployed on schedule.”
The French manufacturer stuck to its target to sell about 3 percent more tires this year. The company is also aiming for a return on capital employed of more than 11 percent and the financial measure called structural free cash flow higher than $691 million, aided by lower spending on raw materials in the first half and cost cutting in Europe.
About 59 percent of Michelin’s workers are employed in Europe.
The manufacturer said last June that it would end production of heavy-truck tires at a factory in Joue-les-Tours, about 155 miles southwest of Paris, by the end of 2015. About 730 of the plant’s 930 employees will lose their jobs in the move.
The company’s full-time workforce amounted to 105,700 people at the end of 2013.