Michelin stays on target despite slowing markets

Clermont-Ferrand, France – Michelin expects some loss of momentum in markets for passenger car and light truck tire and truck tires both in North America and Europe, duriing the second half of 2016.

On the other hand, China's passenger car and light truck segment should remain buoyant, the French tire maker said in a first half results announcement.

The specialty tire market, meanwhile, is expected to continue to be impacted as mining companies complete their inventory drawdowns.

Overall, Michelin said a positive price mix/raw materials effect over the full year should see it hit full-year targets of market-beating volume growth and increased operating income.

The forecasts accompanied a 26 July results statement for the six months to 30 June, showing operating income from recurring activities of €1,405 million, or 13.7 percent of net sales.

Demand for Michelin passenger car and light truck tires grew in the first half, though replacement sales levelled off in the second quarter. Truck tire markets were less dynamic and earthmover markets contracted further.

Volumes rose 2.5 percent: rising 4 percent in passenger car and light truck tires and 1 percent in truck tires, and declining by 2 percent in the specialty businesses.

Operating income from recurring activities grew strongly to €241 million, helped by: a €115 million positive impact of changes in the price mix and raw materials costs; €155 million in gains from a competitiveness plan, which offset higher production costs and overheads.

Summarising, Michelin CEO Jean-Dominique Senard said: "In a highly competitive marketplace, our company is focused more than ever on the four areas of improvement designed to fulfil our strategic vision: enhancing the quality of customer service, streamlining our operating procedures, deploying digital solutions and increasing the empowerment of our teams."