Michelin & Cie.’s first-quarter revenue rose 0.9 percent as improving car sales in the European tiremaker’s home region made up for faltering demand elsewhere.
Sales increased to 5.07 billion euros ($5.74 billion) from 5.02 billion euros a year earlier, the Clermont-Ferrand, France-based company said in a statement Wednesday. Tire volume rose 3.7 percent, with strong demand in mature markets, China and India offsetting a decline in South America.
Industrywide car sales in the quarter rose 8.1 percent in Europe, where demand has increased for 31 consecutive months, and 3.1 percent in the U.S. Last year, Europe and North America each accounted for a little more than one-third of Michelin’s revenue. The company’s sales growth has been held back by a slowdown in vehicle deliveries in China, recessions in Brazil and Russia, and the euro’s gain on foreign-exchange markets that has reduced the value of revenue earned outside Europe’s single-currency zone.
Michelin reiterated targets for full-year operating profit, excluding currency effects, to rise and structural free cash flow to exceed 800 million euros. Tire markets will probably remain mixed, the company said.
The 2016 guidance is an "under-promise and over-deliver case," analysts at HSBC wrote in a report before Michelin published the first-quarter figures.