(Reuters) -Michelin on Wednesday cut its sales volume forecast for the full year as the French tyre maker reported third-quarter sales that fell short of market expectations due to weaker demand.
Group sales in the third quarter dipped 4.2% to 6.77 billion euros ($7.29 billion) from 7.07 billion euros a year before, below the 6.82 billion forecast in a company-compiled consensus.
The French group also said it now expects its sales volumes to fall 4-6% this year, versus a previous forecast for between a 5% contraction and 2% growth.
CEO Florent Menegaux said in a statement that adverse factors the company had been facing were increasing, and would lead to “substantial drops in our sales volumes and production reductions”.
The company also cut its forecast for segment operating income – total sales minus the cost of sales and operating expenses – at constant exchange rates to about 3.4 billion euros from 3.5 billion euros previously.
In May, Michelin (EPA:) said it was targeting a segment operating margin of 14% by 2026 helped by rising demand for higher value-added tyres like those used in sports cars.
The company may however need more restructuring to avoid another guidance cut, after it already lowered its long-term targets for its non-tyre business, Bernstein analysts flagged in a note.
As European carmakers face weaker sales and rising trade tensions with China, the tyre industry has looked to a strong price mix and cost-cutting measures to help offset growing economic pressure and supply chain disruptions.
Leading tyre manufacturers including Michelin are currently under investigation in the EU after antitrust regulators raided them in January as part of an investigation into a possible price-fixing cartel.
Michelin and five other tyre makers are facing a trio of class action lawsuits in the U.S. with the same allegations.($1 = 0.9283 euros)
