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PARIS, Oct 22 (Reuters) - French tyremaker Michelin cut its full-year sales goal and said it would rein in investment after third-quarter sales fell 4.6 percent, weighed down by an emerging-market slump and weaker European truck tyre demand.
Net sales fell to 4.89 billion euros ($6.18 billion) in July-September, Michelin said in a statement on Wednesday, cutting its 2014 sales volume growth goal to 1-2 percent from 3 percent.
Capital expenditure will be maintained around 2 billion euros this year and subsequently “revised downwards”, the company said, falling steadily to 1.5-1.7 billion euros in 2017.
Michelin is weathering an emerging-market slowdown and currency slide, compounded by a shaky recovery in Europe. The third quarter saw “weakening demand in Europe, especially in truck tyres”, Michelin’s statement added.
Chief Financial Officer Marc Henry had hinted last month that the earlier sales goal might be missed, saying in a newspaper interview that a 3 percent expansion was “difficult to reach in view of current markets”.
Quarterly heavy-truck tyre sales were particularly weak in Michelin’s home region, with European demand from vehicle manufacturers falling 10 percent and the market for replacement tyres shrinking 3 percent.
The U.S. and Canadian markets for truck and car tyres remained buoyant but there was a sharp decline in demand from carmakers in South America, the company said.
Pricing declines accounted for almost half of the revenue decline, amid tougher competition from lower-cost brands.
Michelin nonetheless stuck by its pledge to deliver an increase in full-year operating income before one-time gains and charges as well as a return on capital above 11 percent and structural cash flow exceeding 500 million euros.
1 US dollar = 0.7901 euro Reporting by Laurence Frost; Editing by Andrew Callus