2018 First-Half Results
Analyst / Investor conference webcast
€917 million in net income, up 6%
€1,327 million in operating income from recurring activities, up €152 million or 11% at
2018 guidance confirmed
- Volumes up 2.6% in the second quarter and, as expected, stable over the first half due to unfavorable prior-year comparatives.
- Sustained strong growth in the Specialty businesses, led by the buoyant mining, agricultural and construction tire markets
- Accelerating growth in 18’ and larger Passenger car tire sales in the second quarter (up 14%)
- Passenger car and Truck tire OE sales growth in line with the markets
- Focus on margins in the Passenger car and Truck replacement segments, in a persistently competitive market environment
- €264 million positive impact from the net price-mix and raw materials costs effect, reflecting disciplined price management, market share gains in 18’ and larger Passenger car tires and a very good performance by the Specialty businesses.
- Unfavorable currency effect, totaling a negative €218 million.
- Faster external growth, in line with Group strategy, in the Specialty businesses (Fenner, conveyor belts activity and Camso acquisition project), high-tech materials (Fenner) and market access (TBC joint venture with Sumitomo Corp.).
- Free cash flow before acquisitions in line with annual objectives, at a negative €79 million.
- Credit rating agencies have confirmed that the Group’s financial position remains robust after taking planned 2018 acquisitions into account.
Thanks to the commitment of all its teams, Michelin not only rolled out a new, closer to the customer organization during the first half of 2018, but also delivered a noteworthy €152 million improvement in operating income at constant exchange rates. Deployment of the Group’s strategy will pick up speed in 2018, with the acquisition of Fenner, the creation of a leading North American wholesaler in partnership with Sumitomo Corp., and the projected acquisition of Camso, which will create the world leader in off-the-road mobility.
Over the second half of the year, replacement markets are expected to remain on an upward trend, regardless of prevailing winter weather conditions. Demand for original equipment tires should remain strong in the Earthmover segment, but lose momentum in the Passenger car and Truck segments. Sales of mining tires should also continue to enjoy strong growth.
For the full year, Michelin confirms its 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.
Year over year comparison
|In € millions||First-Half 2018||First-Half 2017|
|Operating income from recurring activities||1,327||1,393|
|Operating margin on recurring activities||12.5%||12.6%|
|Passenger car and light truck tires and related distribution||11.5%||12.7%|
|Truck tires and related distribution||7%||7.3%|
|Operating income/(loss) from non-recurring activities||23||27|
|Earnings per share in EUR 1||5.12||4.76|
|Employee benefit obligations||3,904||4,570|
|Free cash flow 2||-2,049||-305|
|Employees on payroll 3||113,600||112,800|
1 Attributable to shareholders of the Company
2 Free cash flow: net cash from operating activities less net cash from investing activities less net cash from other current financial assets, before distributions
3 At period-end