French tire maker Michelin on Friday reported a 71 percent drop in earnings last year as auto markets slumped, and said it is "vigilant" for the year ahead.
Michelin posted a net profit of 104 million euros ($143 million), less than the 357 million euros earned last year. Revenues declined 9.8 percent to 14.8 billion euros.
Like auto maker Renault SA, Michelin, which is based in Clermont-Ferrand, France, achieved its aim of generating positive free cash flow at the year end to help it ride out the crisis.
Michelin had a positive free cash flow — the funds a company is able to generate after maintaining or expanding assets — of 1.4 billion euros compared to a negative 359 million euros in 2008 after it ran down inventories and reduced capital expenditure.
In 2010, Michelin is again targeting positive free cash flow.
Chief Executive Officer Michel Rollier said Michelin has "improved its major financial metrics, the foundations of its future growth" as it responded to a "historic decline in tire demand, especially in mature economies."
Looking ahead, he said Michelin is exercising "extreme vigilance."
Michelin said markets for car and light truck tires fell sharply in the first half as carmakers slashed production and cut inventories, but lifted in the second half thanks to government scrappage schemes.
The exception was China, were demand surged 65 percent, making the country the largest market ahead of the United States for the first time.
Demand for truck tires remained low, the company said.
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