Net sales for the Michelin Group dropped 6.3% in the first quarter of 2018 versus the year-ago period on decreased demand in the passenger, light truck and truck tire markets.   

In the North American market, demand for original equipment and replacement tires dropped by 5% and 1%, respectively.

Net sales totaled 5.2 billion euros versus 5.6 billion euros in the first quarter of 2017. The company did not release earnings.

Michelin attributed a 2.3% drop in volumes in 2018’s first quarter ended March 31 to particularly strong early buying of Michelin tires in the first quarter of 2017. The surge in tire buys was prompted by a price hike of up to 8% in North America which was announced on January 31, 2017, and a similar increase in Europe a few days later. The 2017 price increase was effective April 1.

Worldwide, Michelin reported a decline in original equipment in passenger car and light truck sales. Increased demand in South America and Africa/India/Middle East markets was offset by declines in other markets, especially North America (down 5%).  Global demand for replacement tires was flat overall, with demand in North America down 1% versus the year-ago quarter.

The company reported a highly unfavorable 7.7% currency effect caused by the stronger euro. Sales figures for the company’s three divisions are reported in euros.

Net sales 1Q 2018 1Q 2017 % change
Automotive and related distribution 2,772 3,056 -9.3%
Road transportation and related distribution (includes replacement light truck tires) 1,368 1,489 -8.2%
Specialty businesses (includes mining, earthmover, construction truck, ag, two-wheel and aircraft tires and high-tech materials) 1,078 1,022 +5.5%
Total 5,218 5,567 -6.3

Passenger car and light truck tires

Michelin says the number of original equipment (OE) and replacement passenger car and light truck tires sold worldwide declined somewhat in the first three months of 2018, with demand varying by region.

OE: "After an 8% drop in second-half 2017, the decline in North American demand slowed to 5% during the first quarter."

Replacement: "North American markets contracted 1% due to the particularly high bases of comparison for locally made tires (down 5%), while import sales were up off of low comparatives."

PLT demand by region Q1 2018 versus Q1 2017

Passenger and light truck market OE Replacement
North America (excludes Mexico) -5% -1%
Europe (including Russian and CIS) -3% +0%
Europe (excluding Russia and CIS) -3% -2%
Asia (excluding India) -2% -2%
South America +12% +9%
Africa/India/Middle East +6% +3%
Central America -1% -2%
Total -1% +0%

Truck tires (radial and bias)

Michelin says that with demand robust in the OE markets (up 5%) but cooling in the replacement segment (down 2%), the total number of new truck tires sold worldwide declined somewhat in first quarter 2018, while retreading demand rose in North America and Europe.

OE: "Strong 20% upsurge in the North American market, lifted by vigorous freight demand and favorable comparatives."

Replacement: "North American markets enjoyed brisk demand, gaining 4% in a buoyant economic environment, shaped by a very sharp upturn in imports even as demand for locally produced tires softened by 7%."

Truck tire demand by region Q1 2018 versus Q1 2017

Truck tires (radial and bias) OE Replacement
North America (excludes Mexico) +20% +4%
Europe (including Russian and CIS) +6% +0%
Europe (excluding Russia and CIS) +7% -2%
Asia (excluding India) -1% -6%
South America +45% +7%
Africa/India/Middle East +12% +1%
Central America -5% -1%
Total +5% -2%

Specialty tires

In the specialty tire division, net sales were up 5.5% and volumes were up 8%.

Earthmover: "The mining tire market pursued its robust recovery that began in late 2016, as inventory drawdowns came to an end among international mining companies, oil companies and regional mines. The OE and replacement infrastructure and quarry tire segments also rose sharply, buoyed by the favorable economic environment. 

Ag: "OE markets enjoyed their fourth straight quarter of strong growth, led by sustained demand from farm machinery manufacturers. As a corollary, replacement demand was weaker."

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