The net sales of Michelin tyres for the first nine months of 2014 amounted to €14,558 million, which represents a year-on-year decline of 4.7% due to the following reasons:
Sales volume increased by 1% during this period, among which the Michelin brand's market share in the tire business of passenger cars, light trucks and trucks and passenger cars remained stable. The business of original tires for construction machinery and infrastructure tires increased, while the inventory of tires for mining equipment continued to shrink.
During the first nine months, the effect of the price combination effect was negative 1.9%, mainly reflecting the impact of price cuts (the negative impact of 397 million euros), of which about 45% came from adjustments arising from the application of the price index of raw material contract prices. The success of the Michelin brand's high-end strategy brought a favorable price portfolio effect of EUR 113 million in the first nine months.
During this period, the currency effect was negative at 3.2%, with negative 0.6% in the third quarter, reflecting the appreciation of the euro (especially for the US dollar, the Brazilian Real, the Canadian dollar and the Argentine peso). With the fall in the exchange rate of the euro against the US dollar, the effect of this effect turned positive in September.
Net sales by business units
Car and light truck tires and related distribution business
In view of the unfavorable 3% currency effect, net sales of car and light truck tires and related distribution businesses were EUR 7.759 billion, which was 3.3% lower than EUR 8.023 billion in the first nine months of 2013.
o As Michelin brand sales grew by 3%, sales of other brands remained stable in the third quarter, and sales of passenger cars and light truck tires rose by 2% over the same period.
o The price adjustment of the original tire distribution business application contract price index terms and the repositioning of replacement tire business.
o The price mix effect is still favourable, driven by a 12% increase in the sale of Michelin brand high-end car and light truck tires.
Truck tires and related distribution business
Net sales of truck tires and related distribution business for the first nine months were 4,503 million euros, a decrease of 5.8% from 4,778 million euros in the same period of last year. This reflects:
o Sales volume growth of 1%, which comes from the company's priority to focus on improving the profitability of the truck and bus tire business.
o In addition to the impact of the terms of the price index on the original tire business contract, the replacement tire price remains strong.
o The unfavorable currency effect caused the reported net sales to drop by about 4%.
Special tire business
In the first nine months of 2014, net sales of special tires were 2.296 billion euros, compared with 2.478 billion euros in the same period of last year. Excluding the price adjustment based on the same price index terms and the 3% unfavorable currency effect, this decline was caused by the decline in sales, with sales in the first quarter increasing by 1% and the second quarter and the third quarter falling by 5% respectively. During this period, the overall decline was 2%. In the whole year, it is expected to be the same as in 2013.
o Construction machinery tyres: Net sales have declined due to the decline in sales and the adverse effects of the terms of the raw material price index and currency effects. Sales of the original tire and infrastructure business have increased.
o Agricultural tyres: Net sales decreased slightly during the period due to the increase in sales volume in mature and emerging markets which almost offset the impact of the application of raw material price index terms and unfavorable currency effects.
o Two-wheeler tires: Net sales have increased as sales growth in mature and growing regions has been sufficient to offset adverse currency effects.
o Aircraft tires: The growth in sales volume and the trend of the market shifting to radial tires led to an increase in net sales.
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