Michelin 'uncertain' as tariffs, volumes weigh on 2025 results

London – Michelin has warned of wide ranging uncertainties around its fourth-quarter performance, citing a volatile business environment, weakened volumes and the impact of tariffs on its business.

The cautionary note accompanied an update of the French tire maker's full-year earnings assumptions in a presentation for a Jefferies investor roadshow held 6–8 Jan in the UK and Ireland.

In particular, Michelin said it expected segment operating income (SOI) to come in at €2.6-3.0 billion for 2025 at constant exchange rates – down from €3.4 billion forecast at the start of last year.

According to the presentation, lower volumes account for about two-thirds of the negative impact, with free cash flow absorption (FCA) making up the remaining third.

Price and mix were shown as partially offsetting the volume decline, while raw material costs were impacted by around €100 million due to EU deforestation regulation (EUDR) effects.

International trade tariffs were highlighted as another significant headwind, adding around €300 million to cost of goods sold.

As for fourth quarter 2025, Michelin outlined a range of potential year-on-year impacts, with volumes and FCA expected to weigh on results, partly offset by price and mix.

Under the high-end scenario, Michelin expects volumes and FCA to reduce its final quarter SOI by 1% year-on-year, with price and mix contributing 2%, operational performance flat and other factors adding 1%.

At the low end, volumes and FCA could decline by 5%, price and mix remain flat, operational performance fall by 2%, and other factors neutral.

Furthermore, Michelin pointed to 'regional risks' highlighting: weaker consumer sentiment and freight activity in North America, which it said have fallen to their “lowest levels in years.”

The group linked the softer outlook to trends already visible in its third-quarter results, where North American performance had shown signs of deterioration.

Additional risks flagged up in the presentation included uncertainty around global tariffs and competitive pressures, as well as weaker OE demand in both passenger car/light truck and truck markets, particularly in Europe.

Opportunities identified by the group included product plan execution, Chinese market dynamics and continued discipline on selling, general and administrative costs.