By Denna Bowman
Michelin tyres has been given an impressive end of year report by a leading auto analyst at Deutsche Bank.
The French tyres manufacturer has weathered the recession better than its rivals and is the only group in Europe’s auto rankings still trading above the levels in enjoyed in 2001, according to Gaetan Toulemonde.
Though its margins have suffered severely in the most recent economic downturn, the report in the Financial Times claims, Michelin delivers consistently better returns than either its neck-and-neck rival Bridgestone or the world’s number three, Goodyear.
Also, Michelin may lag behind its continental competitors on margins, but it has neither the debt burden of Continental nor is it limited to a niche market like Pirelli.
It has also been able to push through hefty price increases that have helped to offset plummeting volumes and sharply higher raw material costs.
Though 2008 was dire – with three profit warnings as the market began to melt away – and 2009 figures will show a further decline, Michelin is expected to be one of the biggest beneficiaries of a rebound this year, the Financial Times report concludes.
The group’s performance has been noted by bond investors, who feel safer in a company perceived to be driven by long-term family values.
“It has a very prudent approach. It is less under pressure from shareholders for short-term returns. This is a clear advantage in the bond market,” says Pierre Bergeron, debt analyst at Société Générale.
But some suggest the performance has less to do with the family values than with the recent growing influence of outsiders.
“Today Michelin is run by financiers rather than engineers,” says Mr Bergeron. “The accounts have been seriously cleaned up, and debt and cash flow improved.”