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Michelin optimistic about emerging markets
In 2007, the Michelin Group experienced strong growth in both sales and profits, with notable progress in key markets around the world. The Asian market, particularly China, played a significant role in this success, showing consistent and robust development. Looking ahead to 2008, Michelin anticipated that emerging markets would be the main drivers of tire market growth.
During the year, the group's combined net sales rose by 3.0% compared to the previous year, while sales volume increased by 3.2%. Passenger car and light truck tire sales performed exceptionally well, with the original tire market growing by 5% and replacement tires up by 1.4%. In Asia, the overall market expanded by 8.1%, with China and India standing out as the most dynamic regions, recording growth rates of 20% and 10%, respectively. The demand for radial tires also surged, especially in the region, and specialty tire sales saw strong gains across all segments.
Despite stable product prices, Michelin managed to boost its gross profit margin, which rose by one percentage point to 29.9% in 2007. Structural cost improvements contributed to an increase in operating profit by 1.6 percentage points, reaching 9.8%. Net income for the year jumped by approximately 35% to 772 million euros, and liquidity improved by 430 million euros compared to 2006.
He Liye, Managing Partner of the Michelin Group, highlighted that positive market demand and limited increases in raw material costs helped the company achieve solid results in 2007. After two years of strategic adjustments, Michelin had regained its growth momentum, with nearly all business segments experiencing healthy sales expansion. He emphasized that the company was entering 2008 in a strong and favorable position, while also preparing for potential challenges in an uncertain global environment.
For 2008, Michelin projected continued strong growth in the tire market, driven mainly by emerging economies. In Asia, original passenger and light truck tires were expected to grow by 8%, replacement tires by 5%, original truck tires (radial only) by 15%, and replacement truck tires (radial only) by 8%. These projections reflected the company’s confidence in the long-term potential of the region.