Michelin results flat amid “challenging” environment

Clermont-Ferrand, France – Groupe Michelin has reported marginal improvements in sales and earnings for 2018 amid a “challenging” trading environment.

In an 11 Feb annual results statement, the French tire maker posted a 0.3% year-on-year growth in sales at €22.0 billion.

Sales, said Michelin, were impacted by a €838-million decrease from the “unfavourable currency effect.”

The currency impact was offset by a 0.9% - or €195 million – growth in volumes as well as a €444-million increase in “highly favourable price-mix effect.”

Operating income increased 1.2% year-on-year to €2.7 billion, or 12.6% of sales for the full year.

Here, Michelin reported a €158-million “adverse impact” from raw materials costs and a €271-million unfavourable currency effect.

The impact of these factors on earnings was, however, cushioned by price-mix improvements.

Other costs, including a €146-million provision for the closure of Michelin’s plant in Dundee, UK, were offset by a €317-million gain linked to a group ‘competitiveness’ plan.

Michelin reported a 5.1% decline in sales in the automotive unit, which supplies passenger-car and light-truck tires, to €11.3 billion.

This, it said, was mainly due to the deconsolidation of TCi distribution business with Sumitomo Rubber and adverse currency effects.

The automotive segment’s operating income fell 10% to €1.31 billion, compared to €1.46 billion the year before.

The decline, said Michelin, was primarily due to “adverse movements in exchange rates.”

Sales in the road transportation segment – truck & bus tires – declined 1.6% to €5.8 billion.

Segment operating income however, rose 6.2% to €513 million for the full year.

The improvement was led by a strong price-mix effect, which offset the “highly unfavourable currency effect.”

The speciality tire business, which includes mining tires, two-wheelers and aircraft tires, performed well.

Sales within the segment rose 19.1% to €4.8 billion.

Segment operating income also increased 19.6% to €948 million, helped by “the sustained rebound in demand for mining tires.”