Michelin Group global sales increased 19.6% in the first half of 2021, and the tiremaker sold 22.8% more tires in the period. Michelin says it gained market share in every segment.
The 11.2 billion euros in sales is a clear improvement over 2020, but it’s still shy of pre-pandemic results. (Michelin had first-half 2019 sales of nearly 11.8 billion euros.) Net income for the first half of 2021 has exceeded what was recorded in 2019. Net income so far in 2021 is 1.0 billion, up from a loss of 137 million euros in the first half of 2020, and a profit of 844 million euros in 2019.
CEO Florent Menegaux said, “As markets continued to recover, the Michelin Group had a very good first half. These solid results should not overshadow the persistent impact of the health crisis, which is causing major disruptions, particularly in the supply chain. I would therefore like to personally thank the Michelin teams for their unwavering commitment to enabling our Group to sustain its leadership in our tire businesses and to continue deploying our sustainable growth strategy.”
Michelin says it gained 126 million euros in “positive net price-mix/raw materials effect.”
The tiremaker acknowledges that comparisons for the second half of 2021 will be more difficult.
“After recovering sharply in the first half, global demand will not benefit from as favorable a base in the second half of the year, when it will likely continue to be impacted by global supply chain disruptions. Passenger car and light truck tire markets are expected to expand by between 8% and 10% over the year and truck tire markets by between 6% and 8%. The specialty markets should deliver 10% to 12% growth over the year.”
As a result, Michelin is improving its outlook for 2021, with the caveat that everything depends on no new “systemic effect from COVID-19” — which means the supply chain disruptions don’t get worse and there aren’t more lockdowns and restrictions put in place.
The company is increasing its segment operating income expectation to more than 2.8 billion euros, versus the previously stated 2.5 billion euros. Michelin is also calling for structural free cash flow to exceed 1 billion euros, up from the previously stated 1 billion euros estimate.
From Michelin's perspective, the global demand for passenger and light truck tires is strong, and has been strong throughout 2021. The one region showing weakness is China, where in the second quarter demand for both original equipment and replacement tires was down. Otherwise, every region in the world is showing gains. Globally, Michelin says the replacement market and original equipment markets were up 46% in the second quarter.
Here's the replacement tire picture specific to North America:
"Tire demand in North and Central America rose a steep 37% in the first half, with a faster 74% gain in the second quarter led by very favorable comparatives and the partial rebuilding of dealer inventories.
"By the end of June, the replacement market had climbed back above 2019 levels."
