Analysis: Michelin H1 earnings decline amid pressure on volumes

Paris – Michelin Group’s first-half 2025 performance showed sharp volume declines across all segments, weighing on profitability despite continued pricing strength and cost discipline.

In an investor’s presentation 11 Sept, the French group disclosed segment operating income (SOI) data for the first half of 2025.

SOI, it said, dropped to €1.45 billion, or 11.1% of sales, compared with €1.78 billion (13.2%) a year earlier. At constant forex, SOI stood at €1.5 billion, giving an 11.3% margin.

Michelin said its results were “hampered by volumes and multiple cost inflators” but supported by “strong price-mix and cost management.”

Lower sales volumes, it noted, cut €451 million from earnings, while higher raw material (€240 million) and manufacturing and logistics costs (€175 million) added further pressure.

During the first half of 2025, Michelin’s sales fell 3.4% year-on-year to €13.0 billion at current exchange rates, down from €13.5 billion in the first half of 2024. 

The decline was largely driven by a 6.1% drop in tire volumes, cutting €820 million from sales.

This was partly offset by a 4% year-on-year (€542 million) boost from price-mix, while non-tire businesses added €22 million (+0.2%). Currency effects trimmed €201 million.

Breaking down SOI for each segment, Michelin said its RS1 (car and motorcycle tires) business reported a decline in operating income from €946 million in the first half of 2024 to €865 million this year.

Segment margin was down to 12.2% from 13.2% while volumes dropped 2.5% year-on-year.

The RS2 (truck and speciality distribution) unit saw its operating income almost halved to €166 million from €306 million in the first half of 2024, as margin slipped to 5.5% from 9.5%.

Here, the group saw the largest decline in volumes which dropped 9.3% year-over-year.

Michelin’s RS3 (off-road, agricultural, aircraft) unit reported a decrease in operating income to €421 million from €530 million last year, with margin at 14.5% versus 17.1% in the first half of 2024.

Segment volumes were down 6.8%, Michelin added.