Michelin has unveiled half-year net income up 12% to EUR863m (US$1bn) , while volume rose 4.1%, dampened in Q2 by heavy buying in Q1 ahead of price increases.
There was growth in passenger car and light truck tyre volumes (up 3%) and stable volumes in truck tyres.
There was a sustained rebound in mining tyre demand and sharp uppturn in OE earthmover and agricultural tyre sales, while the competitiveness plan gains offset inflation, as expected.
“Michelin’s good performance, compared with a strong first-half 2016, is in line with our 2020 roadmap,” said Michelin CEO, Dominique Senard. “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.”
Outlook:
For 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 tyres are expected to remain buoyant.
Given the full-year impact of higher raw materials costs, which are currently estimated at EUR800m, Michelin adds it 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 EUR900m.
