2016 First-Half Results

Analyst / Investor conference webcast

Operating income from recurring activities rises in first-half 2016,

to €1,405 million, or 13.7% of net sales

Volumes up 2.5%, outpacing the markets

2016 guidance confirmed

  • Passenger car and Light truck tire markets rose over the period, with replacement sales leveling off in the second quarter; Truck tire markets were less dynamic and Earthmover markets contracted further.
  • Volumes up 2.5%, beating the market in every segment, rising 4% in Passenger car and Light truck tires and 1% in Truck tires, and declining by 2% in the Specialty businesses.
  • Strong growth in operating income from recurring activities of €241 million at constant exchange rates to 13.7% of net sales, representing a 1.7 point improvement led by:
    • The €115 million positive impact of changes in the price mix and raw materials costs, thanks to effective management and a favorable basis of comparison.
    • The €155 million in gains from the competitiveness plan, which offset, as expected, the increase in production costs and overheads.
  • Positive free cash flow of €8 million, representing a €108 million improvement from first-half 2015 before acquisitions.
  • Share buybacks: €150 million tranche completed in the first half; new €150 million tranche scheduled for launch in the second half.

In the first half, Michelin delivered a strong business performance driven by the quality of its tires and services, the effective management of the balance among growth and pricing, as well as by cost competitiveness. In a highly competitive marketplace, our company is focused more than ever on the four areas of improvement designed to fulfill our strategic vision: enhancing the quality of customer service, streamlining our operating procedures, deploying digital solutions and increasing the empowerment of our teams.

Jean-Dominique Senard, Chief Executive Officer


Over the rest of the year, the Passenger car/Light truck and Truck tire markets are expected to lose some momentum in North America and Europe, but to remain buoyant in China's Passenger car/Light truck segment. The Specialty tire market is expected to continue to be impacted as mining companies complete their inventory drawdowns.

In this environment, margin management in the second half should help to deliver a positive price mix/raw materials effect over the full year.

As a result, Michelin is confirming its full-year targets of volume growth exceeding global trends in its markets, an increase in operating income from recurring activities at constant exchange rates, and structural free cash flow of more than €800 million.


Year over year comparison

In € millions First-Half 2016 First-Half 2015
Net Sales 10,292 10,497
EBITDA from recurring activities 2,085 1,913
EBITDA margin on recurring activities 20.3% 18.2%
Operating income from recurring activities 1 1,405 1,262
Operating margin on recurring activities 13.7% 12.0%
Passenger car and light truck tires and related distribution 13.8% 10.8%
Truck tires and related distribution 9.9% 9.6%
Speciality businesses 20.6% 21.5%
Operating income/(loss) from non-recurring activities -51 -17
Operating income 1,354 1,245
Net Income 769 707
Earnings per share 2 (in €) 4.24 3.79
Capital expenditure 623 632
Net debt 1,719 1,798
Gearing 18% 18%
Employee benefit obligations 5,273 4,780
Free cash flow 3 +8 -219
Employees on payroll 4 112,400 112,600

1 To make its operating performance easier to understand and analyze, Michelin now presents "Operating income before non-recurring income and expenses" as "Operating income from recurring activities" and has refined its definition.

2 Attributable to shareholders of the Company

3 Free cash flow: net cash from operating activities less net cash from investing activities less net cash from other current financial assets, before distributions

4 At period-end