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Financial information at June 30, 2014

Robust operating income before non-recurring items of €1,159 million,
at constant scope of consolidation and exchange rates up 16%

12% operating margin before non-recurring items

Net income of €624 million, up 23%

  • Improved operating performance in line with objectives
    • At mid-point, the competitiveness plan delivered 60% of the target.
  • Carefully managed price positioning
    • Better-than-expected impact from the price-mix/raw materials, at €182 million.
    • Volumes up 1.9% while demand started to slow in the second quarter, particularly in Truck tires and, as announced, Earthmover tires.
  • Free cash flow in line with the usual seasonal trends
    • €703 million in capital expenditure..

In a competitive environment that persisted through the first half, Michelin met its objective of delivering a further improvement in its performance, with a nearly €200-million increase in operating income at constant scope of consolidation and exchange rates. A continuous flow of innovations praised by vehicle manufacturers and a responsible, ambitious industrial strategy enabled the MICHELIN brand to maintain its global positions in the forefront of mobility.

Jean-Dominique Senard

2014 guidance confirmed

In the second half, global demand for Car and Light truck and Truck tires should remain supportive in the mature markets and China. On the other hand, the other new markets are seeing a slowdown, especially in the original equipment segment. At the same time, original equipment demand for Earthmover tires should continue to significantly improve, while mining companies are expecting to continue drawing down inventory through the end of the year, although fourth-quarter growth will benefit from favorable prior-year comparatives.

For the full year, the Group aims to improve its gross unit margin, while preserving a positive balance between pricing policy, product mix and raw materials costs. The competitiveness plan is being deployed on schedule.

In this environment, Michelin is maintaining its view that volumes will increase by around 3%, in line with projected 2014 market growth. The Group is confirming its objectives of i) higher operating income before non-recurring items (at constant exchange rates); ii) a more than 11% return on capital employed; and iii) structural free cash flow of more than €500 million along with a capital expenditure program maintained at around €2 billion.


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