France's Michelin says it has no need for state help during coronavirus crisis

PARIS, April 29 (Reuters) - French tyre maker Michelin said on Wednesday it had sufficient sources of financing to deal with the fallout from the coronavirus pandemic.

In an interview with Reuters, Michelin chief financial officer Yves Chapot said the COVID-19 crisis was probably one of the worst the group has had to deal with since the end of World War Two, but that the group would hold strong.

“We have the means to get through this crisis,” he said.

Michelin said in a statement that stress tests have shown the firm has sufficient cash and cash equivalents, without drawing down its confirmed back-up lines of credit.

It said the tested scenarios assume a decline in full-year volumes ranging from 20 to 35% (minus 32%-42% in the first half and minus 10%-27% in the second half), and reflected the measures now in place to conserve cash.

On April 28, Michelin had 2.3 billion euros ($2.50 billion) in cash and cash equivalents and 1.5 billion euros in undrawn confirmed lines of credit.

It also said that it has no bonds falling due before the first half of 2022.

“We have not called on any state-guaranteed loans, we ruled that out from the start... We think that aid should first go to companies who need it most,” Chapot said.

French carmaker Renault has received a 5 billion euro ($5.4 billion) loan guarantee to mitigate the impact of the coronavirus crisis.

Michelin said first-quarter sales fell 8.3% to 5.33 billion euros, with tyre demand dropping as lockdown policies gradually spread around the world, impacting every business segment.

It said the passenger car and light truck tyre markets dropped 15% after carmakers suspended production and consumers went into isolation, while truck tyre markets fell 17% year-on-year.

To mitigate the financial impact of the impending deep recession, the group in mid-March reduced capital expenditure by 500 million euros, reduced its proposed dividend payout by 330 million euros and suspended a share buyback programme, except for the firm commitments outstanding for 2020.

Source: https://www.reuters.com/article/michelin-results-idUSL8N2CH6JJ