Net sales for the Michelin Group increased 3% in the third quarter, but the company says the North American passenger and light truck tire market has shrunk during the first nine months of 2017 — and the decline is evident in both original equipment and replacement tires.
Michelin, which regularly publishes a market review alongside the company’s financial performance, notes the North American market is the only region showing a decline for the first nine months of the year in passenger and LT tires. The company says OE units are down 3%, and replacement units are down 1%.
As for OE, “the slowdown in North America is deepening, with 9% contraction in the third quarter, leading to a 3% decline over the first nine months.”
The decline in replacement units was shaped by three factors, Michelin says:
- early buying in the first quarter (ahead of price increases);
- the impact of hurricanes in the southern U.S.; and
- the sustained rise in tire imports over the whole period.
In the third quarter, ended Sept. 30, 2017, Michelin recorded 5.3 billion euro in net sales, up 3% from about 5.2 billion euro for the period in 2016. The sales figure translates to $6.3 billion as of the exchange rate on the final day of the period.
For the first nine months of the year, net sales are up 6%, to about 16.4 billion euro from about 15.5 billion euro a year ago.
The company did not report its net income.
Passenger and light truck tires continue to account for much of Michelin’s business, with almost 3 billion euro in net sales for the third quarter, up 0.5% for the quarter and up 4.1% for the year so far.
Truck tires account for almost 1.6 billion euro, up 2% in the quarter from 1.5 billion euro in 2016, and up 2.7% for the first nine months of 2017.
The biggest increase, in terms of percentage, has come from Michelin’s specialty businesses, which includes its earthmover and agricultural tires, as well as motorcycle and aircraft tires and travel and lifestyle businesses. Combined, those businesses increased 16.1% in the third quarter, from 682 million euro to 792 million euro. For the year, those units have recorded an 18.4% increase.
For the nine-month period, Michelin says the increase “was attributable to the robust 14.6% growth in volumes related to the continued rebound in demand for the group’s mining tires and the clear upturn in earthmover and agricultural tire sales. Indexation clauses, which were still resulting in price cuts in the first half, began yielding price increases in July.”
