Consumer tire sales leading the way for Michelin

Posted on July 28, 2015

Groupe Michelin’s sales of passenger and light truck tires “clearly outpaced the market” during the first half of 2015, the company said, with net sales of consumer tires rising 13.4% compared to the same period a year ago.

Overall, Michelin’s net sales and net income both increased for the first half of 2015, ended June 30, 2015. The company recorded net sales of 10.5 billion euros, up from more than 9.6 billion euros in 2014. Net income was 707 million euros, up from 624 million euros in 2014.

Based on the exchange rate on June 30, 2015, Michelin recorded net sales of nearly $11.8 billion and net income of $793 million. Its income-to-sales ratio was 6.7%.

Tire sales, by segment

Tire type  Net sales 1H 2015 (in euros) Net sales 1H 2014 (in euros)
Consumer 5.9 billion 5.2 billion
Truck   3.1 billion 2.9 billion
Specialty   1.6 billion 1.6 billion
Total 10.5 billion 9.7 billion

Michelin says its tonnages increased by 7%, “far outpacing the market,” and the company attributed that growth to the success of its Michelin-branded CrossClimate and Premier All-Season tires, as well as the BFGoodrich KO2 and Comp-2 tires in the replacement market, plus its 4% gain in original equipment sales.

“Price variations reflected the application of raw materials indexation clauses in the OE segment and the increasingly aggressive competitive environment, especially in China. The highly favorable impact from the product mix was dampened by the shift in the brand mix driven by the strong sales growth in the Tier 2 and Tier 3 segments. In Europe, price increases were announced in the second half to offset the impact of the euro's decline against the dollar on raw materials prices.”

Jean-Dominique Senard, Chief Executive Officer, said: "Michelin achieved strong growth in the first half of the year by leveraging its broader portfolio of solutions, by expanding access to customers and by capturing the rising demand in its traditional markets.

The success of our most recent lines, like the Michelin CrossClimate and the new BFGoodrich tires, as well as our strengthened positions in the original equipment segment, confirm the importance of innovation for the Group's growth. Combined with the expected deployment of the competitiveness plan, Michelin can confirm its full-year guidance."

Outlook for 2015

“With tire demand expected to remain on an upward trend in mature regions but more challenging in new markets, Michelin's objective for the second half is to pursue the growth trends observed in the first six months of the year. Changes in price mix and raw materials prices are expected to have over the full year a net negative effect on the businesses subject to contractual raw materials indexation clauses and a net neutral effect on the remaining businesses. The sustained deployment of the competitiveness plan will help to offset cost inflation over the year.

“The Group confirms its target of delivering an increase in operating income before nonrecurring income excluding the currency effect, a return on capital employed in excess of 11%, and structural free cash flow of more than 700 million euros, while pursuing a capital expenditure program totaling around 1.8 billion euros.”

Related Topics: Jean-Dominique Senard, Michelin financials

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