Group Michelin is forecasting a slight drop in earnings for fiscal 2020 after reporting strong fiscal 2019 sales and profitability, despite what the firm described as “a deteriorated environment and shrinking markets.”

Michelin’s forecast takes into account negative outlooks for original equipment demand in both the consumer and commercial sectors worldwide, Michelin CFO Yves Chapot told analysts during the firm’s fiscal earnings conference call earlier this month.

For the year ended Dec. 31, Michelin reported 8.4% and 4.2% improvement in operating and net income to $3.37 billion and $1.94 billion, respectively, on 9.6% higher sales of $26.9 billion. Michelin cited gains associated with recent acquisition for helping improve the operating income.

The company said its performance was enhanced by “tight production management,” which included $125 million in reduced inventories at constant scope of consolidation.

While volumes were down 1.2%, Michelin said the price/mix effect and lower raw materials costs added over $360 million to the bottom line.

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