Michelin has posted 2017 profit up 1.5% to EUR1.69bn (US$2.1bn), while operating income from recurring activities was EUR2.7bn or 12.5% of net sales, up EUR145m.
The French supplier said it had a “determined Group strategy to offset the more than EUR700m increase in raw materials costs,” which resulted in a neutral impact versus raw materials headwind on the non-indexed businesses.
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“In 2017, the Michelin Group performed in line with its 2020 roadmap,” said Michelin CEO, Jean-Dominique Senard. “The strength of its brand and its technological leadership helped to drive 2.6% growth and deliver historically high net income of EUR1.69bn, demonstrating the Group’s agility in a more challenging business environment.
“Michelin is pursuing the acquisitions that will support its ambitions for growth and value creation. The introduction of the new organisation in early 2018 will deepen employee engagement to enhance customer service, while enabling us to meet our competitiveness objectives.
“In this way, the Group is confidently moving into another year of progress in 2018 while pursuing its strategy in tyres, services, experiences and materials.”
Outlook:
In 2018, the Passenger car/Light truck and Truck tyre markets are expected to experience modest growth, while the mining tyre, agricultural original equipment and earthmover original equipment markets should remain buoyant.
Michelin estimates given the market conditions, price management will make it possible to generate a net positive effect from changes in the price mix and raw materials costs, assuming an estimated EUR50m EUR100m increase in raw materials prices.
Based on January 2018 exchange rates, the currency effect would reduce full-year operating income from recurring activities by around EUR300m.
In this environment, Michelin added its forecasts for 2018 are 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 EUR1.1bn.
