Michelin’s Net Income Rises Almost 24% in 2 Years
Despite a drop in net sales of about 2%, Groupe Michelin says its tire volumes in the first half of 2016 beat the market in every segment. Passenger and light truck tires were the leaders, with a 4% increase over the same period a year ago.
Michelin recorded net sales of almost 10.3 billion euros, down 2% from 10.5 billion euros in the first half of 2015. Net income increased almost 8.8%, to 769 million euros, from 707 million euros a year ago. Since 2014 Michelin’s net income has jumped 23.2%.
The tire maker’s income-to-sales ratio was 7.5% for the first six months of 2016, period ended June 30, 2016.
Here’s a look at how the tire segments have performed so far in 2016 compared to 2015:
|Net sales (in euros)||Operating income|
|Passenger and light truck tires||5.9 billion (down 1%)||814 million (up 28.8%)|
|Truck tires||2.9 billion (down 5.2%)||288 million (down 1.7%)|
|Specialty tires||1.5 billion (down 6.4%)||303 million (down 10.1%)|
|Total||10.3 billion (down 2%)||1.4 billion (up 11.3%)|
In contrast to those downward sales figures, Michelin shared these volume reports:
- Passenger and light truck tires: up 4%
- Truck tires: up 1%
- Specialty tires: down 2%
From the CEO
CEO Jean-Dominique Senard said, “In the first half, Michelin delivered a strong business performance driven by the quality of its tires and services, the effective management of the balance among growth and pricing, as well as by cost competitiveness.
“In a highly competitive marketplace, our company is focused more than ever on the four areas of improvement designed to fulfill our strategic vision: enhancing the quality of customer service, streamlining our operating procedures, deploying digital solutions and increasing the empowerment of our teams.”
“Over the rest of the year, the passenger car/light truck and truck tire markets are expected to lose some momentum in North America and Europe, but to remain buoyant in China's passenger car/light truck segment. The specialty tire market is expected to continue to be impacted as mining companies complete their inventory drawdowns.
“In this environment, margin management in the second half should help to deliver a positive price mix/raw materials effect over the full year.
“As a result, Michelin is confirming its full-year targets of volume growth exceeding global trends in its markets, an increase in operating income from recurring activities at constant exchange rates, and structural free cash flow of more than 800 million euros.”