• 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.
Michelin’s good performance, compared with a strong first-half 2016, is in line with our 2020 roadmap. The main drivers of the period include an increase in volumes, tight pricing policy management, further improvements in our competitiveness and the commitment of our employees to serving customers. Today, we are confirming our guidance for 2017, with a second half that will benefit from the improved margins resulting from the price increases.
Jean-Dominique Senard, Chief Executive Officer

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.

 

  • Nine-month volumes up 2.8%, lifted by early dealer buying in the first quarter, the recovery in mining tire sales throughout the nine months and a return to normal dealer inventory levels

 

  • Acquisitions added 0.6% to growth

 

  • Faster improvement in the price-mix effect in the third quarter, to a positive 5%, for a total 2.6% impact over the first nine months, reflecting:
    • The implementation of all of the announced price increases
    • The favorable mix effect, primarily reflecting 21% growth in volumes in the premium 18-inch and larger segment

 

  • The currency effect reduced net sales by 3.7% in the third quarter and was neutral over the full nine months

 

 

2017 guidance confirmed

 

In the final months of 2017, regardless of prevailing winter weather conditions, replacement markets are expected to gradually move back in line with their long-term trend. Demand for original equipment tires should continue to expand in the Truck, Earthmover and Agricultural segments, with slower growth in the Passenger car and Light truck business. Sales of mining tires, which have been rebounding since late 2016, should also continue to enjoy strong growth.

In the second half, changes in the price mix and raw materials costs are expected to have a net positive impact, as announced. For the full year, the impact of higher raw materials costs is currently estimated at approximately €(800) million.

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, excluding the currency effect currently estimated at between €(110) million and €(120) million, and structural free cash flow of more than €900 million.

€16.2 billion in net sales for the first nine months of 2018, up 3.9% at constant exchange rates thanks to a robust 2.2% gain from the price-mix effect
2018 markets scenario revised, EBIT guidance refined and structural free cash flow confirmed

Third-quarter net sales up on favorable prior-year comparatives, with a 2.9% increase in volumes and, as expected, a 0.5% positive impact from the price-mix effect as the environment weakened late in the period.

  • Further market share gains in the 18-inch and larger Passenger car tire segment.
  • 3% rebound in Truck tire sales.
  • Sustained strong growth in the Specialty businesses, up 9%.
  • Firm 0.5% gain from the price-mix effect, led by disciplined margin management.
  • 3.4% increase from changes in the business base, following the arrival of Fenner in the Specialty businesses and the deconsolidation of TCi.

 

Given the significant decline in the Passenger car & light truck and Truck tire markets late in the third quarter and the further weakness expected in the fourth quarter, the Group has revised its 2018 markets scenario, notably in China.

As a result, the Group has refined its guidance and now expects:

  • A slight increase in volumes over the full year. Fourth-quarter performance will be driven by sustained market share gains in the 18-inch and larger segment of the Passenger car and Light truck business and in the Specialty markets. Full-year volumes will be affected by the major price increases already introduced to offset the sharp currency depreciation in emerging markets.
  • A year-on-year increase of at least €200 million in operating income from recurring activities, at constant exchange rates, with no net impact from changes in the price mix and raw materials costs in the second half and competitiveness plan gains offsetting inflation for the year. At the same time, the Group reaffirms the competitiveness plan’s target of €1.2 billion in savings over the 2017-2020 period
  • More than €1,100 million in structural free cash flow in 2018

Outlook for 2019

  • Current market horizon:
    • 1.5% growth in the Passenger car & Light truck tire market, with a 10% gain in the 18‑inch and larger segment and a slight upturn in the Chinese market
    • Stable Truck tire market
    • A 4% to 5% increase in the Specialty businesses
    •    Around a €150 million year-on-year increase in EBIT from the latest acquisitions*, including the initial synergies from Fenner’s highly successful integration.

*Pending the regulatory approvals expected to be obtained for Camso in November 2018

 

Ventes nettes du troisième trimestre en croissance sur des bases de comparaison favorables, avec un effet volume de + 2,9 % et un effet prix-mix à + 0,5 %, conformes aux attentes, dans un environnement dégradé sur la fin de la période.

  • Poursuite des gains de part de marché en pneus Tourisme 18 pouces et plus
  • Rebond des ventes Poids lourd à + 3 %
  • Croissance des activités de Spécialités toujours dynamique de + 9 %
  • Effet prix mix solide de + 0,5 %, résultat d’un pilotage rigoureux des marges
  • Effet périmètre de + 3,4 %, intégration de Fenner au sein des activités de Spécialités et déconsolidation de TCi

Compte tenu de la baisse significative des marchés Tourisme camionnette et Poids lourd sur la fin du troisième trimestre et celle envisagée au quatrième trimestre, le Groupe revoit le scenario de marchés 2018, notamment en Chine.

Dans ce contexte, le Groupe précise sa guidance et attend :

  • une croissance des volumes légèrement positive sur l’année. Le quatrième trimestre bénéficiera de la poursuite des gains de parts de marché en 18 pouces et plus en Tourisme camionnette et sur les marchés de Spécialités. Les volumes de l’année seront affectés par les hausses de prix importantes déjà mises en œuvre pour compenser les fortes dépréciations des devises de pays émergents
  • un progrès de résultat opérationnel sur activités courantes supérieur d’au moins 200 M€ par rapport à 2017, à taux de change constants, avec un effet net prix-mix/matières premières neutre sur le deuxième semestre et un plan de compétitivité qui compense l’inflation sur l’année. Le Groupe réaffirme à cette occasion son objectif de plan de compétitivité de 1 200 M€ sur la période 2017-2020
  • un Free Cash Flow Structurel 2018 supérieur à 1 100 M€

Perspectives 2019

  • Marchés envisagés à ce stade :
    • Tourisme camionnette en croissance de 1,5 % avec un segment 18 pouces et plus en progression de 10 % et une légère reprise du marché chinois
    • Poids lourd stable
    • Activités de Spécialités en hausse entre 4 % et 5 %
  • Contribution des acquisitions* pour environ +150 M€ de ROSAC par rapport à 2018, dont les premières synergies résultant de la très bonne intégration de Fenner.

*Sous réserve des autorisations règlementaires attendues pour l’acquisition de Camso courant novembre 2018

First Quarter 2018:
Michelin announces net sales of €5.2 billion, up 1.4% at constant exchange rates.

2018 guidance confirmed.

 

  • Slight decline in the Passenger car, Light truck and Truck tire markets, as announced:
    • OE demand down in Passenger car and Light truck tires, impacted by the Chinese and North American markets, and robust in Truck tires
    • Replacement demand comparatively weaker due to early buying in Q1 2017
  • Sustained strong demand for Specialty tires.
  • Favorable 1.1% net impact from the price-mix/volume effect in Q1, in line with the 2018 scenario:
    • Positive 3.4% price-mix effect, led by disciplined price management
    • Volumes down 2.3%, given the particularly strong early buying of MICHELIN brand tires in Q1 2017
  • Highly unfavorable 7.7% currency effect caused by the stronger euro.
  • Recommended cash offer made for Fenner PLC and joint venture formed with Sumitomo Corporation of Americas, in line with the Group's strategy.
  • Roll-out of a new close-to-the-customer organization.

2018 guidance confirmed

 

Over the full year, demand is expected to increase slightly in the Passenger car and Light truck tire markets and remain stable in the Truck tire markets. The mining tire market should continue to enjoy robust growth.
The currency effect will remain highly unfavorable throughout the year, with a currently estimated €350 million negative impact on operating income from recurring activities (of which -€250 million in the first half).
Against more favorable prior-year comparatives, sales volumes will be lifted by the new closer-to-the-customer organization and a large number of new product launches. The Group will continue to agilely manage prices so as to protect its unit margins in an increasingly competitive marketplace.
Michelin confirms its 2018 targets of volume growth in line with global market trends, operating income from recurring activities exceeding the 2017 figure at constant exchange rates, and structural free cash flow of more than €1,100 million.

  • 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.

    • Volumes up 3.7%, outpacing the market in all business segments, increasing 4% for Passenger Car and Light Truck tires, 3% for Truck tires and remaining stable (0%) for Specialty businesses. Growth was achieved in the following market conditions:
      • Robust demand in the Passenger Car and Light Truck and Truck segments in mature markets,
      • Mixed demand in the new markets, with strong Passenger Car and Light Truck tire demand in China, buoyant sales in India and a marked decline in South America,
      • Specialty tire markets still affected by ending inventory drawdowns at mining companies.

     

    • Price effect negative at 0.8%, an improvement shaped by the Group’s active management approach, and the success of its new product and service offerings for the Group's different brands.

    2016 guidance confirmed

     

    Over the full year, tire markets are forecast to remain mixed, with demand for Passenger Car, Light Truck and Truck tires expected to continue rising in mature markets while staying in line with 2015 trends in new markets. These developments will remain favorable for Michelin. The Specialty tires market is expected to continue to be affected by mining company inventory drawdowns.

     

    In this environment, for 2016, Michelin is targeting volume growth that outpaces global markets, and confirms its objectives to increase operating income before non-recurring items at constant exchange rates and generate structural free cash flow of more than €800 million.

    Compagnie Générale des Établissements Michelin

    Volumes up 3.4% in first-quarter 2014
    €4.8 billion in net sales,
    up 2.5% at constant scope of consolidation and exchange rates

     

    • Recovering Passenger car and Light truck and Truck tire markets, except in Eastern Europe, with sustained drawdown in mining customer inventory, as expected.

     

    •  Price mix slightly negative, due to:
      • The impact of indexation clauses and managed price repositionings, in a still favorable raw materials cost environment.
      • Price increases that attenuated the unfavorable impact of certain currencies.
      • The effectiveness of the premium strategy.

     

    •  A 4.6% negative currency effect, attributable to the strong euro.

     Outlook for 2014

     

    With tire demand rising as fast as expected in the first quarter of 2014, except in Eastern
    Europe, Michelin maintains its objective of around a 3% increase in volumes over the full
    year.

     

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

     

    Against this backdrop, Michelin is confirming its 2014 objectives of i) an increase in 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.

     

     

    Investor RelationsMedia RelationsIndividual shareholders
    Valérie Magloire
    +33 (0) 1 78 76 45 37
    +33 (0) 6 76 21 88 12 (cell)
    valerie.magloire@fr.michelin.com

    Matthieu Dewavrin
    +33 (0) 4 73 32 18 02
    +33 (0) 71 14 17 05 (cell)
    matthieu.dewavrin@fr.michelin.com

    Corinne Meutey
    +33 (0) 1 78 76 45 27
    +33 (0) 6 08 00 13 85 (cell)
    corinne.meutey@fr.michelin.com
    Jacques Engasser
    +33 (0) 4 73 98 59 08
    jacques.engasser@fr.michelin.com

    Disclaimer

     

    This press release is not an offer to purchase or a solicitation to recommend the purchase of Michelin shares. To obtain more detailed information on Michelin, please consult the documents filed in France with Autorité des Marchés Financiers, which are also available from the www.michelin.com website.

     

    This press release may contain a number of forward-looking statements. Although the Company believes that these statements are based on reasonable assumptions as at the time of publishing this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or inferred by these statements.

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