Michelin sales decline amid market and currency headwinds

Clermont-Ferrand, France - Michelin Group has experienced a 6.3% year-on-year decline in its first-quarter sales at €5,218 million in 2018, the company announced 24 April.

For the first three months of 2018, the French tire-maker reported a fall in demand in passenger-car, light-truck and truck tire markets.

The reversal, it said, was due to lower OE demand for passenger and light vehicle tires in China and North America. Additionally, replacement demand was comparatively weaker due largely to a spike in buying early last year.

Volumes for all tires fell by 2.3% during the period. This, said Michelin, was due to an “unfavourable basis of comparison” with first-quarter 2017.

A price-mix effect, which increased net sales by 3.4%, combined with a €171-million favourable price effect, helped offset higher raw materials costs with a €19-million gain overall.

Michelin, however, reported a 7.7% negative currency effect for the first quarter, as the Euro’s value increased against the group’s operating currencies, especially the US dollar.

Indeed, Michelin expects currency effects to remain “highly unfavourable” throughout the year, with a currently estimated €350-million negative impact on operating income from recurring activities.

Over the full year, though, the tire maker expects demand to increase slightly in the passenger car and light truck tire markets and to remain stable in the truck tire market.

The mining tire market, which maintained the momentum gained in 2017, should continue to enjoy robust growth, Michelin said.

Michelin also announced the roll-out of a new close-to-the-customer organisation in the first quarter of the year, which it expects to help margins.

As part of the organisational changes, the group’s replacement light truck tires business has been transferred from reporting segment Automotive to the Road Transportation segment.

Construction truck tires have been transferred from reporting segment Road Transportation to reporting segment Speciality businesses.

The Speciality segment, therefore, now includes: mining, earthmover, construction truck, agricultural, two-wheel and aircraft tires and high-tech materials.

“Sales volumes will be lifted by the new closer-to-the-customer organisation and a large number of new product launches,” the French group said.

The Clermont-Ferrand-based tire-maker added that it would continue to “agilely manage prices” to protect its unit margins in the “increasingly competitive marketplace”.

Future prospects for leading tire makers, including Michelin, will be discussed and debated at Future Tire Conference 2018, taking place 30-31 May, during the Tire Cologne international trade fair in Cologne, Germany.  Click here for more information.