Michelin's 3Q Results Were Negative and Positive
Groupe Michelin posted net sales of 16.2 billion euros for its third quarter ended Sept. 30, 2018. That compares to net sales of 16.4 billion euros for the same period last year.
Based on the exchange rate on Sept. 30, 2018, Michelin recorded net sales of $18.8 billion dollars for 3Q 2018.
Despite the 1.1% decline in sales year over year, Michelin's volume sales increased 2.9%, especially in the 18-inch and larger passenger tire segment.
Not everything in the third quarter was positive, however. Michelin said there was a "significant decline in the passenger car and light truck and truck tire markets late in the third quarter, (with)... further weakness expected in the fourth quarter."
Full-year volumes "will be affected by the major price increases already introduced to offset the sharp currency depreciation in emerging markets," adds Michelin.
Groupe Michelin Sales Breakdown (in billions of euros)
Tire Segment* 3Q 2018 3Q 2017 % difference
Automotive 8.3 8.8 -5.9%
Road Transportation¹ 4.3 4.5 -2.9%
Specialty Businesses² 3.6 3.1 +15.2%
Total 16.2 16.4 -1.1%
* As part of the new organization introduced earlier in the year,Michelin's reporting segments (RS) have been adjusted as follows:
(1) Replacement light truck tires have been transferred from RS1 (Automotive) to RS2 (Road Transportation).
(2) Construction truck tires have been transferred from RS2 to RS3 (Specialty Businesses). RS3 includes the following businesses: mining, earthmover, construction truck, agricultural, two-wheel and aircraft tires, and high-tech materials.
Not everything in the third quarter was positive, however. Michelin said there was a "significant decline in the passenger car and light truck and truck tire markets late in the third quarter, (with)... further weakness expected in the fourth quarter." As a result, company has refined its guidance and now expects:
* a slight increase in volumes over the full year. "Fourth-quarter performance will be driven by sustained market share gains in the 18-inch and larger segment of the passenger car and light truck business and in the specialty markets. Full-year volumes will be affected by the major price increases already introduced to offset the sharp currency depreciation in emerging markets."
* a year-on-year increase of at least 200 million euros in operating income from recurring activities, at constant exchange rates, with no net impact from changes in the price mix and raw materials costs in the second half and competitiveness plan gains offsetting inflation for the year. At the same time, Michelin reaffirms the competitiveness plan’s target of 1.2 billion euros in savings over the 2017-2020 period.
* More than 1.1 billion euros in structural free cash flow in 2018
The company's overall outlook for 2019 was positive.
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