Michelin first-half earnings steady despite lower sales

Clermont-Ferrand, France — Michelin has reported flat first-half earnings amid lower reported sales, citing a "robust operational performance in a challenging economic environment."

Group sales fell 2.6% year-on-year to €12.69 billion in the six months ended 30 June, while segment operating income came in marginally below the year before at €1.4 billion, Michelin reported 27 July.

At constant exchange rates, Michelin said, revenue increased 0.5%.

The decline in revenue reflected a 0.9% volume effect and a 3.1% currency effect, partly offset by a 0.9% price-mix gain and a 0.7% positive consolidation effect.

Segment operating income totalled €1.446 billion, or 11.4% of sales, compared with €1.452 billion, or 11.1% of sales, a year earlier.

At constant scope and exchange rates, operating income increased €103 million, or 7%, said Michelin, noting robust operational performance.

The performance was driven by a €199 million favourable raw materials effect and a €78 million positive price-mix effect.

These offset a €130 million increase in manufacturing and logistics costs, including inflation and customs tariffs.

Michelin also cited a €114 million adverse currency effect, mainly related to the US dollar, Turkish lira and Japanese yen.

Segment performance

By reporting segment, consumer & related distribution sales declined 2.6% to €6.93 billion, while segment operating income rose slightly to €867 million, or 12.5% of sales, from €865 million and 12.2% a year earlier.

Volumes grew by 0.8% in the first half of the year, reflecting “strong momentum” in the automotive replacement and two-wheel segments, which offset “persistent weakness” in the automotive OE.

The market's “continued shift towards 18-inch and larger tires and other higher value-added products" supported the product mix.

Sales for the transportation & related distribution (truck tire) segment fell 6.4% to €2.81 billion, while segment operating income edged up to €167 million, or 5.9% of sales, from €166 million and 5.5% reported in the first half of 2025.

Volumes contracted by 2.6% year-on-year over the period, reflecting what Michelin described as “persistently weak OE sales and uneven replacement volumes depending on the regions.”

Performance was held back by weakness in the truck OE market, particularly in North America, while replacement demand was affected by "the continuing poor conditions in the freight market."

In the speciality segment, which includes aircraft, off-road and mining tires, sales fell 2.2% year-on-year to €2.22 billion.

Volumes were up 1.0% overall in the first half of the year, with the various business segments delivering mixed performances.

Segment operating income declined 2.5% year-on-year to €312 million, although the operating margin remained unchanged at 14.1%.

The business operated in "a mixed market environment," Michelin said, noting ‘beyond road’ activities continued to be affected by weak agricultural and materials handling OE markets.

Mining, infrastructure and aircraft businesses "continued to grow," the French group added.

The newly separated Polymer Composite Solutions (PCS) business increased sales 13.6% to €728 million, supported by the acquisitions of Cooley Group and Flexitallic.

Operating income for the segment came in at €99 million, down 2.9% from €102 million a year earlier, with margin falling to 13.6% from 15.9%.

Within the segment, the Conveyors business faced "tepid demand," particularly in the mining markets of Australia and the US, reflecting “the wait-and-see attitude adopted by mine operators in response to economic uncertainties.”

The Seals business experienced “strong growth, particularly in the sub-segments linked to hydraulic applications, gas compression solutions and aeronautics applications.”

Michelin said the Seal business’s focus on products designed for challenging technical environments continued to drive sales growth and improve the business mix.

The Belts business also continued to grow, helped by its industrial markets as well as by the development of new industrial applications in air and fluid management and the aeronautics sector.

By region, Europe was the only area to report growth, with sales rising 1.9% to €4.76 billion.

Sales in North America, including Mexico, declined 8.4% to €4.52 billion, while other regions slipped 0.5% to €3.41 billion.

Looking ahead, Michelin reaffirmed its 2026 guidance despite what it described as "a still uncertain economic and geopolitical environment."

"Our group is showing a marked improvement in our sales momentum," said managing chairman Florent Menegaux.

By leveraging solid fundamentals, Menegaux said, Michelin will remain “steadfast in its efforts within a very tense geopolitical environment and increasingly shrewd competitive pressure.”

"Michelin is agile, confident and acutely alert in steering its activities and the group maintains its strategic course," he added.