25-07-2017
Financial information for the six months ended june 30, 2017
Net income of €863 million, up 12%
Volumes up 4.1% (3.6% at constant scope of consolidation)
Operating income from recurring activities of €1.4 billion, stable and in line with the Group’s roadmap
2017 guidance confirmed
Volumes up 4.1% (3.6% at constant scope of consolidation) over the first half, dampened in Q2 by heavy buying in Q1 ahead of price increases
Growth in Passenger car and Light truck tire volumes (up 3%) and stable volumes in Truck tires,
Sustained rebound in mining tire demand and sharp upturn in OE Earthmover and Agricultural tire sales,
Acquisition of Brazilian two-wheel tiremaker Levorin in December 2016.
Price-mix effect positive, at 1.4% in the first half, accelerating to 2.8% in Q2, reflecting the initial impact of price increases and resulting, as announced, in a €186 million net negative price-mix/raw materials effect over the period.
Competitiveness plan gains offset inflation, as expected.
Free cash flow of a negative €305 million, in line with annual objectives
Stable, excluding acquisitions and capitalized interest on the OCEANE bonds,
Working capital management in response to the unfavorable impact of higher raw materials prices.
Outlook
Over the second half of the year, regardless of prevailing winter weather conditions, replacement markets are expected to recover from their decline after the surge in early buying. Demand for original equipment tires should remain on an upward trend in the Truck, Earthmover and Agricultural segments, with growth slowing in the Passenger car and Light truck segment. Sales of mining tires are expected to remain buoyant.
Given the full-year impact of higher raw materials costs, which are currently estimated at €800 million, Michelin will continue to agilely manage prices, holding unit margins firm in businesses not subject to indexation clauses and applying those clauses in businesses that are. As a result, changes in the price mix and raw materials costs are expected to have a net positive impact in the second half of the year.
For the full year, Michelin confirms its targets of volume growth in line with global market trends, operating income from recurring activities exceeding the 2016 figure at constant exchange rates, and structural free cash flow of more than €900 million.
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