Michelin’s Profits Stall

Operating profits for Michelin & Cie. advanced only €6 million to €1.16 million in the first half of 2014 as net sales dropped 5% to €9.7 billion.

The tiremaker's net income jumped 23% to €624 million in January-June. But free cash flow swung from €147 million to a negative €243 million. Michelin says unfavorable currency effects and a less favorable price mix offset cheaper raw material costs.

Capital spending dropped 8% to €703 million. Michelin has opened tire plants in emerging markets such as Brazil, China and India, but sales growth in those areas has slowed or reversed.

The company did not report unit sales. It says global demand for its car and light truck original equipment and aftermarket tires rose 4% and 5%, respectively, in line with market expansion. Sales of original equipment tires for heavy trucks dropped 4%, and replacement sales were flat.