PRESS
RELEASE
Clermont-Ferrand - October 19, 2017
COMPAGNIE GENERALE
DES ÉTABLISSEMENTS MICHELIN
Financial Information for the Nine Months Ended
September 30, 2017
Nine Months 2017
€16.4 billion in net sales, up 6.0%,
led by volume gains and efficient pricing management
2017 guidance confirmed, in line with the
Ambitions 2020 plan
o
Original equipment demand trending
upwards in every segment,
o Replacement
markets down slightly in the mature regions,
o Sustained
rebound in mining tire demand.
-
Nine-month volumes up 2.8%,
lifted by early dealer buying in the first quarter, the recovery in
mining tire sales throughout the nine months and a return to normal
dealer inventory levels.
-
Acquisitions added 0.6% to
growth.
-
Faster improvement in the
price-mix effect in the third quarter, to a positive 5%, for a
total 2.6% impact over the first nine months, reflecting:
-
The implementation of all of
the announced price increases,
-
The favorable mix effect,
primarily reflecting 21% growth in volumes in the premium 18-inch
and larger segment
-
The currency effect reduced net
sales by 3.7% in the third quarter and was neutral over the full
nine months.
Net
sales
(in € millions) |
Third Quarter |
Nine Months |
|
2017 |
2016 |
% change |
2017 |
2016 |
% change |
Passenger car/Light truck tires & related
distribution |
2,979 |
2,964 |
+0.5% |
9,242 |
8,880 |
+4.1% |
Truck tires & related distribution |
1,564 |
1,533 |
+2.0% |
4,605 |
4,440 |
+3.7% |
Specialty businesses1
|
792 |
682 |
+16.1% |
2,547 |
2,151 |
+18.4% |
Group Total
|
5,335 |
5,179 |
+3.0% |
16,394 |
15,471 |
+6.0% |
1Earthmover,
Agricultural, Two-Wheel and Aircraft tires; Michelin Travel Partner
and Michelin Lifestyle.
In the final
months of 2017, regardless of prevailing winter weather conditions,
replacement markets are expected to gradually move back in line
with their long-term trend. Demand for original equipment tires
should continue to expand in the Truck, Earthmover and Agricultural
segments, with slower growth in the Passenger car and Light truck
business. Sales of mining tires, which have been rebounding since
late 2016, should also continue to enjoy strong growth.
In the second
half, changes in the price mix and raw materials costs are expected
to have a net positive impact, as announced. For the full year, the
impact of higher raw materials costs is currently estimated at
approximately €(800) million.
For the full
year, Michelin confirms its targets of volume growth in line with
global market trends, operating income from recurring activities
exceeding the 2016 figure, excluding the currency effect currently
estimated at between €(110) million and €(120) million,
and structural free cash flow of more than
€900 million.
Nine months 2017
% change YoY
(in number of
tires) |
Europe
including Russia & CIS* |
Europe
excluding Russia & CIS* |
North America |
Asia
(excluding India) |
South America |
Africa/India/Middle East |
Total |
Original equipment
Replacement |
+2%
+3%
|
+1%
+1% |
-3%
-1% |
+3%
+5% |
+19%
+5% |
+8%
+2% |
+3%
+3% |
Third-quarter 2017
% change YoY
(in number of
tires) |
Europe
including Russia & CIS* |
Europe
excluding Russia & CIS* |
North America |
Asia
(excluding India) |
South America |
Africa/India/Middle East |
Total |
Original equipment
Replacement |
+3%
+1%
|
+2%
-1% |
-9%
-2% |
+4%
+4% |
+22%
-1% |
+6%
+2% |
+2%
+1% |
*Including Turkey.
In the first nine months of 2017,
the global original equipment and replacement Passenger car and
Light truck tire market grew by 3% in number of tires sold.
· Original equipment
-
The European market returned to growth in the
third quarter after an extremely mixed first half. The recovery
underway in Eastern Europe has gained momentum quarter after
quarter, with demand rising 11% over the first nine months.
-
The slowdown in North America is deepening, with
a 9% contraction in the third quarter leading to a 3% decline over
the first nine months.
-
Demand in Asia (excluding India) ended the
nine-month period up 3% overall, with the Chinese market also
gaining 3% after a recovery in the third quarter (up 2%) offset a
lackluster second quarter.
-
In South America, despite a tire-buying
environment shaped by gloomy consumer confidence and unfavorable
exchange rates, demand rebounded 19%, as automobiles were seen
almost as a safe haven in Argentina or an investment that could no
longer be postponed in Brazil.
· Replacement
-
After a very strong start to the year ahead of
the announced price increases, the European market cooled in the
following two quarters. The winter, all-season, 18 inch and larger
and budget segments are continuing to enjoy robust demand. In
Eastern Europe, growth remained firm throughout the period, with an
18% increase off of favorable prior-year comparatives. Budget
imports are continuing to pour into both Western and Eastern Europe
at a sustained pace.
-
In North America, the market ended the first
nine months down 1%, shaped by early buying in the first quarter,
the impact of the hurricanes that devastated the southern United
States in the third quarter, and the sustained rise in tire imports
over the entire period.
-
Demand in Asia (excluding India) ended the first
nine months up 5% overall. The Chinese market remained robust,
gaining 7% over the period, supported by strong demand for mobility
in the Tier 5 cities. While expanding 6% over the first nine
months, demand in Japan turned downwards in September following the
build-up in dealer winter tire inventory. The ASEAN markets have
been expanding slowly but surely since the beginning of the year,
with periodic buying spurts ahead of price increases.
-
Markets in South America slowed in the third
quarter, particularly in Brazil, where demand had surged in the
first half on the back of Asian imports.
9 months 2017
% change YoY
(in number of
tires) |
Europe
including Russia & CIS* |
Europe
excluding Russia & CIS* |
North America |
Asia
(excluding India) |
South America |
Africa/India/Middle East |
Total |
Original equipment
Replacement |
+7%
+6%
|
+6%
+5%
|
+10%
+3% |
+19%
+1% |
+8%
+5% |
-7%
-3% |
+12%
+2% |
Third-quarter 2017
% change YoY
(in number of
tires) |
Europe
including Russia & CIS* |
Europe
excluding Russia & CIS* |
North America |
Asia
(excluding India) |
South America |
Africa/India/Middle East |
Total |
Original equipment
Replacement |
+7%
+4%
|
+6%
+2%
|
+23%
+12% |
+20%
-1% |
+23%
+5% |
+8%
-2% |
+17%
+2% |
*Including Turkey.
Global demand for new original
equipment and replacement Truck tires rose by 4% in number of tires
sold in the first nine months of 2017, while retread markets
contracted over the period, particularly in Europe.
· Original equipment
-
The Western European market expanded by 6%,
buoyed by truck purchases in response to low interest rates and
sustained demand for overland transport. In Eastern Europe, the
rebound that began in late 2016 continued apace, driving a 16% gain
over the period.
-
The upturn in the North American market picked
up steam, led by demand for freight services in a favorable
economy.
-
Demand for radial and bias tires in Asia
(excluding India) climbed 19% overall. Growth remained as robust as
ever in China, as the legislation limiting truck size and weight
spurred a 23% increase in the market. Demand rose by a solid 7% in
Thailand, while truck production continued to slow in Japan,
leading to a 3% decline in the market.
-
The South American market has rebounded, gaining
8% since the beginning of the year and 23% in the third quarter
alone, lifted by exports from Brazil-based manufacturers despite
the continued slowdown in truck registrations.
· Replacement
-
In the highly competitive Western European
market, where dealer inventory remains high, demand ended the first
nine months up 5%, but the pace of growth slackened somewhat in the
third quarter, to just 2% in a market driven by the intermediate
and budget segments and by Asian imports. In Eastern Europe, the
market rose by 10%, as the rebound that began in late 2016
continued apace.
-
Demand in North America, which ended the first
nine months up 3%, gained momentum in the third quarter, when it
jumped 12% in response to the logistics and freight transport needs
of a still robust economy.
-
The markets for replacement radial and bias
tires in Asia (excluding India) have risen by 1% overall since the
beginning of the year. Demand in China was flat over the period,
held back by the robust OE market and by the impact of emissions
controls. In Southeast Asia, where demand rose by 4% overall, the
market climbed by a brisk 17% in Japan thanks to dealer winter tire
buying, but continued to soften, by 4%, in Thailand. Radial
technology enjoyed another period of strong growth in the ASEAN
markets.
-
The South American radial and bias tire market
has expanded by 5% since the beginning of the year, thanks to the
13% upturn in demand in Brazil in an improving economy.
Original equipment markets have
turned sharply upwards at a time of low inventory and rising demand
for mining machines.
Demand for infrastructure and
quarry tires is improving, lifted by the favorable economic
environment.
Replacement markets fell back in
the third quarter after expanding in the first half on early dealer
buying ahead of price increases.
-
Two-Wheel tires: motorcycle
tire markets are expanding in the mature regions and are also
trending upwards in the emerging economies.
-
Aircraft tires: Demand in
the commercial aircraft segment continued to grow, led by the rise
in passenger traffic.
(In € millions
and %)
|
Third Quarter 2017
|
Nine Months 2017
|
Net sales
|
5,335
|
16,394
|
|
Change
Year-on-year |
Change
Year-on-year |
Total change
|
+156 |
+3.0% |
+923 |
+6.0% |
Of which volumes*
|
+52 |
+1.0% |
+424 |
+2.8% |
Price mix
|
+259 |
+5.0% |
+404 |
+2.6% |
Currency effect
|
-193 |
-3.7% |
+5 |
+0.0% |
Changes in scope of consolidation
|
+38 |
+0.7% |
+90 |
+0.6% |
*In tonnes.
Net sales for the first nine
months of 2017 totaled €16,394 million, an increase of 6.0% from
the €15,471 million reported a year earlier. This was attributable
to the net impact of the following factors:
-
A €424 million increase from the 2.8% growth in
volumes, reflecting, as announced, the first-quarter surge in early
buying and the subsequent easing of demand over the rest of the
period.
-
A €404 million increase from the favorable 2.6%
price-mix effect. As announced, the price effect advanced rapidly
over the period, from a negative 1.0% in the first quarter to a
positive 2.1% in the second and a positive 4.4% in the third, to
end the nine months at a positive 1.8%, reflecting both price
increases in the replacement business and contractual adjustments
following application of raw materials indexation clauses. The mix
effect added 0.8% to growth, thanks to the still highly positive
product mix and the favorable impact of the rebound in the mining
tire business, which was somewhat dampened by the unfavorable
impact of the relative growth rates of OE and replacement tire
sales.
-
A €90 million increase from changes in the scope
of consolidation, particularly the first time consolidation of
Levorin, a Brazilian two-wheel tiremaker, and NexTraq, a
US telematics solutions provider.
-
Net sales by
reporting segment
· Passenger car
and Light truck tires & related distribution
Given an unfavorable currency
effect, net sales in the Passenger car and Light truck tires &
related distribution business stood at €9,242 million for the first
nine months of 2017, up 4.1% from €8,880 million the year
before.
-
Volumes ended the period up 2.2%, following the
sharp rise in the first quarter due to early buying ahead of price
increases and the subsequent easing in the second quarter.
-
The positive price effect reflected the impact
of price increases at a time of rising raw materials costs and the
impact of indexation clauses in the OE business, which has been
positive since July.
-
The mix effect remains favorable, thanks to the
success of the MICHELIN CrossClimate+ and MICHELIN Pilot Sport 4S
lines, which in particular helped to drive strong 21% growth in
sales of 18-inch and larger MICHELIN-brand tires.
· Truck tires
& related distribution
Taking into account the
unfavorable currency effect, nine-month net sales in the
Truck tires & related distribution business amounted to
€4,605 million, up 3.7% from the €4,440 million reported in
the year-earlier period.
-
Volumes edged back a slight 1.1%, reflecting the
priority focus on raising prices and improving margins in the third
quarter, in line with the target of achieving operating margin on
recurring activities of 9% to 13% by 2020.
-
The more favorable price effect stemmed from the
price increases implemented to offset rising raw materials costs
and the application of raw materials indexation clauses.
· Specialty
businesses
Net sales by the Specialty
businesses stood at €2,547 million in the first nine months of
2017, up 18.4% from €2,151 million the year before.
This 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.
-
Earthmover tires: net sales rose over the
period, lifted by growth in sales volumes and the application of
raw materials indexation clauses.
-
Agricultural tires: net sales increased, led by
growth in volumes. The sudden upturn in the OE market is
having an adverse impact on service levels in the replacement
segment.
-
Two-Wheel tires: the increase in net sales
(excluding Levorin) was driven by growth in volumes, which was
evenly spread between the recreational and commuting segments. The
consolidation of Levorin is supporting the growth strategy in South
America.
-
Aircraft tires: net sales were stable, with
gains in the commercial radial segment thanks to demand for NZG
technology.
Third-Quarter 2017 Highlights
-
MICHELIN ROADBIB, the
agricultural tire that holds the road (June 13, 2017)
-
Michelin acquires NexTraq, a
telematics solutions provider, to expand its commercial fleet
management capabilities in the United States (June 14,
2017)
-
24 Hours of Le Mans: Michelin
notches up its 20th consecutive
success (June 19, 2017)
-
Michelin and Safran develop the
first connected aircraft tire (June 20, 2017)
-
A new global reorganization
project to better serve Michelin customers (June 22,
2017)
-
MICHELIN®
X®TRA LOAD:
record productivity for rigid dump trucks (July 3, 2017)
-
Acquisition of a 40% stake in
Robert Parker Wine Advocate, the world's most widely read
independent consumers' guide to fine wine (July 5, 2017)
-
Michelin Enduro: a new line
delivering more grip (August 28, 2017)
-
Michelin acquires a 40%
minority stake in restaurant guide Fooding® (September 1,
2017)
-
Michelin presents the Vision
wheel, its concept for the tire of the future (September 6,
2017)
-
Rubberway: an application that
charts best practices in the natural rubber supply chain (September
7, 2017)
-
Michelin at the 67th Frankfurt
International Motor Show (September 14, 2017)
-
Michelin is included in the
FTSE4Good index (September 18, 2017)
-
MICHELIN ACORUS, a wheel that
bends but won't break (September 27, 2017)
-
MICHELIN, a brand denoting
trust and progress, according to the Reputation Institute for the
third year in a row (September 27, 2017)
-
Michelin signs an agreement
with Ashok Leyland (AL) to supply the new X Guard range for
AL's Captain line of trucks and other medium commercial vehicles
(October 10, 2017)
A full
description of third-quarter 2017 highlights
may be found on the Michelin website:
http://www.michelin.com/eng
Presentation and
Conference call
The quarterly information for the period ended September 30, 2017
will be reviewed during a conference call in English later today
(Thursday, October 19, 2017) at 6:30 pm, CEST. Practical
information concerning the call may be found at
http://www.michelin.com/eng.
You may follow the presentation
with slideshow synchronization at http://www.michelin.com/eng
If you would like to participate
in the conference call, please phone one of the following
numbers:
-
In France
01 70 77 09 41
-
In the United Kingdom
0203 367 9461
-
In North
America
(855) 402 7761
-
From anywhere else
+44 (0) 203 367 9461
Investor
calendar
February 12, 2018 after close of
trading
April 23, 2018 after close of
trading
Investor Relations
Valérie Magloire
+33 (0) 1 78 76 45 37
+33 (0) 6 76 21 88 12 (cell)
valerie.magloire@michelin.com
Matthieu Dewavrin
+33 (0) 4 73 32 18 02
+33 (0) 6 71 14 17 05 (cell)
matthieu.dewavrin@michelin.com
Humbert de Feydeau
+33 (0) 4 73 32 68 39
+33 (0) 6 82 22 39 78 (cell)
humbert.de-feydeau@michelin.com
|
Media Relations
Corinne Meutey
+33 (0) 1 78 76 45 27
+33 (0) 6 08 00 13 85 (cell)
corinne.meutey@michelin.com
Individual Shareholders
Jacques Engasser
+33 (0) 4 73 98 59 08
jacques.engasser@michelin.com
|
DISCLAIMER
This press release is not an offer to purchase or a
solicitation to recommend the purchase of Michelin shares. To
obtain more detailed information on Michelin, please consult the
documents filed in France with Autorité des Marchés Financiers,
which are also available from the www.michelin.com/eng
website.
This press release may contain a
number of forward-looking statements. Although the Company believes
that these statements are based on reasonable assumptions as at the
time of publishing this document, they are by nature subject to
risks and contingencies liable to translate into a difference
between actual data and the forecasts made or inferred by these
statements.
CP_Q3_EN_2017
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The issuer of this announcement warrants that they are solely
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information contained therein.
Source: Michelin via Globenewswire
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