Michelin H1 results up in 'difficult environment'

Clermont-Ferrand, France – Michelin has reported higher sales and operating income in the first half of 2019, despite a “more difficult than expected environment”.

Group sales rose to €11.8 billion in the first six months of the year, up 11% compared to the year before, the French tire & rubber company announced 25 July.

Operating income rose 8% to €1.43 billion, thanks to competitive gains and contribution from recently acquired businesses.

Volumes declined by 0.9%, primarily stemming from the sharp decline in demand for OE passenger car & light truck tires as well as the slowdown in replacement tire markets, in both the passenger car & light truck and truck segments.

In addition, the strong growth in the mining business was offset by a downturn in agricultural tire markets;

The first-half operating income reflected a €101-million increase from changes in the scope of consolidation, helped by the integration of Fenner and Camso and the removal of  North American wholesale business Tire Centers LLC (TCi) .

Michelin gained €176 million from the price-mix effect, which cushioned the €97 million adverse impact from raw materials costs – including customs duties.

The volumes decrease and fixed cost shortfall led to €49-million and €15-million negative impacts respectively.

Additionally, the French tire maker saw a €97-million increase in costs over the period, which was “more than offset” by €137 million gains in competitiveness gains.

Michelin posted a positive €34 million currency effect, mainly due to the US dollar’s rise against the Euro, despite the sustained decline in certain currencies such as the Russian ruble, the Argentine peso, the Turkish lira and the Brazilian real.

“In highly volatile markets, the group demonstrated its ability to protect its margins by tight price steering, and by rigorously implementing its competitiveness plan,” said Florent Menegaux, CEO, Michelin.

The company, he said, will continue its competitive initiatives and firm pricing policies to maintain its position in “this persistently uncertain business environment.”