- Generally expanding market environment:
- Sustained original equipment demand
- Replacement tire demand buoyed by early buying ahead of price increases
- Rebound in mining tire demand
- Q1 volumes up +7.3%, lifted by early dealer buying and the recovery in mining tire sales
- The price-mix effect reduced net sales by just +0.1%, a sharp improvement led by:
- The success of the new tire and services solutions aligned with customer needs
- The favorable mix effect, primarily reflecting +31% growth in volumes in the premium 18-inch and larger segment
2017 guidance confirmed
Over the full year, tire markets are expected to track the trends observed in late 2016, in particular with the upturn in mining tire sales. For Michelin, most of the growth will be concentrated in the first six months, due to the early buying already occurring ahead of the price increases, and these will drive an improvement in margins in the second half of the year.
Michelin will continue to agilely manage prices so as to hold unit margins firm in businesses not subject to indexation clauses, given that higher raw materials costs will have a currently estimated impact of approximately €(900) million over the full year. As part of this process, new price increases have been announced in certain markets.
For the full year, Michelin confirms its targets of volume growth in line with global market trends, operating income from recurring activities equal to or exceeding the 2016 figure at constant exchange rates, and structural free cash flow of more than €900 million.