Fall­ing sales data sealed plant’s fate

The Courier & Advertiser (Dundee Edition) - - NEWS - GRA­HAM HUBAND BUSI­NESS EDI­TOR

Miche­lin’s board was di­gest­ing fall­ing sales data as they de­bated the fu­ture of the Dundee tyre plant.

The lat­est fi­nan­cial in­for­ma­tion pro­duced by the com­pany shows a 5% de­cline in de­mand for pas­sen­ger car and light truck tyres in Europe in the third quar­ter of the year.

The cat­e­gory re­lates to the 16-inch and be­low tyres pro­duced at the clo­sure-ear­marked Bal­dovie plant, but also in­cludes larger 18-inch and above sized prod­ucts pro­duced at other global Miche­lin man­u­fac­tur­ing sites.

The group has cited struc­tural market de­cline for smaller tyres and a flood of cheap Asian im­ports as rea­sons be­hind the de­ci­sion to shut the Dundee site in 2020.

How­ever, Miche­lin still ex­pects to pro­duce struc­tural cash flow of €1.1bn this year and to grow that fig­ure out to €1.6bn by 2020.

The group’s struc­tural cash flow in 2017 was €1.5bn.

“Given the sig­nif­i­cant de­cline in the pas­sen­ger car and light truck and truck tyre mar­kets late in the third quar­ter and the fur­ther weak­ness ex­pected in the fourth quar­ter, the group has re­vised its 2018 mar­kets sce­nario, no­tably in China,” Miche­lin said in its trad­ing up­date for the nine months to Septem­ber 30.

As a re­sult, it now ex­pects a slight in­crease in over­all vol­umes for the full year, with im­prov­ing de­mand for larger car tyres of 18-inches and above off­set­ing smaller tyre vol­umes.

It added: “Fourth-quar­ter per­for­mance will be driven by sus­tained market share gains in the 18-inch and larger seg­ment of the pas­sen­ger car and light truck busi­ness and in the spe­cial­ity mar­kets. Full-year vol­umes will be af­fected by the ma­jor price in­creases al­ready in­tro­duced to off­set the sharp cur­rency de­pre­ci­a­tion in emerg­ing mar­kets.”

The fi­nan­cial in­for­ma­tion was re­leased pub­licly on Oc­to­ber 18, nine days af­ter Miche­lin’s board had pri­vately made its de­ci­sion to close the Dundee fac­tory.

Miche­lin also reaf­firmed its com­mit­ment to de­liv­er­ing €1.2bn in sav­ings through its “com­pet­i­tive­ness” plan in the three-year pe­riod from 2017-20.

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