Michelin targets 32% earnings growth in 2021

Clermont-Ferrand, France – Michelin has posted a fairly upbeat assessment of its business prospects for 2021, despite what it described as a “still highly uncertain environment as the health crisis unfolds.” 

Passenger car and light truck tire markets are expected to grow by 6% to 10% over the year, managing chairman Florent Menegaux said in an announcement of the group’s 2020 results.

Demand for truck tires is set to expand by between 4% and 8%, while the speciality tire market should grow by 8% to 12%, the Michelin boss added in the statement issued 15 Feb.

“In this market scenario, and barring any new systemic impact from Covid-19,” Michelin aims to deliver a segment operating income of over €2.5 billion. 

To help deliver this goal, Menegaux said the group is pursuing competitiveness programmes shifting production toward premium and speciality tires and expanding in high-tech materials and services & solutions.

For 2020, Michelin reported a 37% year-on-year decline in segment operating income for 2020, to €1.9 billion, on sales of €20 billion, 15% lower than the prior-year level.

The reversals were linked to the Covid-19 crisis. This, said Michelin, led to “a €1.7 billion decrease due to a 14% decline in volumes, under-absorption of production plant fixed costs, and a €98-million [spend] on dedicated protective measures.”

The negative factors were only partly offset by management of the price-mix (up 1.2%) at a time of declining raw material prices and a €240-million reduction in SG&A expenses.

Structural free cash flow came to €2 billion, due to “disciplined cash management during the crisis and the exceptionally low level of year-end inventories due to the sustained recovery in demand in the second half.”