Michelin sees China demand return to near-2019 levels

Clermont-Ferrand, France – With the strong upturn in global demand, which offset major supply chain disruptions and persistent Covid restrictions, Michelin has reported a strong start to 2021.

The French group posted sales of €5.5 billion for the first quarter of the year, up 2.3% after a negative 6% currency effect.

Passenger car/light truck and truck tire markets witnessed significant improvements year-on-year, rising by 9% and 20%, respectively, Michelin reported 26 April.

Speciality markets also saw a rebound, driven by the agricultural, construction and two-wheel tire businesses.

In particular, Michelin said demand rebounded sharply in China across every market, returning to near-2019 levels.

Here, OE passenger/light truck tires sales grew 80% year-on-year, offsetting the negative trend observed in almost every other region.

Michelin said European and North American OE markets declined in the first two months of the year as a "chip shortage" forced plants to suspend production,. March, however, saw "an extremely robust recovery off of weak prior-year comparatives hard hit by Covid-19."

In all, OE demand ended the first quarter down 4% in Western and Central Europe and down 8% in North and Central America.

In South America, demand declined by 5% over the full three months and remained negative in March "due to disruptions in the supply of electronic components."

In the car tire replacement segment, China led by a 36% year-on-year increase in sales.

Replacement markets in Western and Central Europe rebounded by 8%, as flat sales in the first two months were offset by a 24% upsurge in March.

Demand in Russia and the CIS remained down 1% in first-quarter 2021, reflecting the pandemic’s fairly light impact in the prior-year period.

In North and Central America, replacement demand rose by 10% overall, with gains in all of the leading markets of US, Canada and Mexico.

Demand in South America rebounded by 8% in the first quarter of 2021, back in line with 2019 levels.

In terms of overall volumes, the group posted a 7.5% growth year-over-year, contributing €400 million to total sales. 

The higher volumes were particularly notable in passenger car/light truck replacement markets and in the speciality businesses, helping offset the €321-million negative currency impact.

Michelin also registered a 0.3% increase from raised tire prices, which it said was in response to higher raw materials and logistics costs. 

The Clermont-Ferrand group also emphasised its strategy to diversify products, adding that it is opening up the capital of its medicine and cell therapy subsidiary Solesis to expand in healthcare markets.

Michelin did not provide an earnings update for the first quarter.

“Despite the disruptions from the Covid-19 pandemic and a certain amount of disorganisation in the supply chain, Michelin delivered a robust performance in a first quarter shaped by an upturn in global demand,” said Florent Menegaux, group CEO.