In weaker than expected markets, Michelin’s volumes declined by 0.9%, with in particular:
- Group positions maintained in Passenger Car and Light Truck tires, in markets down 2% due to the fall-off in Original Equipment demand.
- Stable volumes in Truck tires, in a market down 1%, benefiting notably from the deployment of Services and Solutions.
- Further growth in the mining tire business, helping to offset the steep drop in agricultural tire volumes, due to declining markets.
- The price-mix/raw materials effect added a net €79 million, thanks to sustained price discipline and continuous enhancement in the value of the mix.
- €40 million in competitiveness gains, net of inflation.
- €101 million contribution from recently acquired Fenner and Camso, as expected.
- Acquisitions of Multistrada and Masternaut in line with the Group’s growth strategy.
GUIDANCE CONFIRMED
In 2019, the Passenger Car and Light Truck tire markets are expected to decline by 1%, as the modest 1% growth in the Replacement segment fails to offset the steep 4.4% contraction in the Original Equipment segment. The Truck tire markets are expected to decline more quickly in the second half, to end the year down 2%. Mining and aircraft tire markets should continue to expand, offsetting the steep drop in agricultural tire markets and in Original Equipment demand in construction tire markets. The full-year impact of raw materials costs and customs duties is estimated at around a negative €100 million, as forecast.
In this scenario, Michelin confirms its guidance for 2019, with volume growth in line with global market trends; segment operating income exceeding the 2018 figure at constant exchange rates and before the estimated €150 million contribution from Fenner and Camso; and structural free cash flow of more than €1.45 billion.*
* Of which €150 million from the application of IFRS 16.
SOURCE: Michelin