Michelin confirms guidance for FY2018

Paris – Groupe Michelin has confirmed its guidance for the financial year 2018, after having reviewed external factors such as the markets, raw materials costs and currency effects.

“The global replacement passenger car and light truck tire market is benefiting from growth in the European markets, which is offsetting a slowdown in the Chinese market,” Michelin pointed out in an investor presentation at its autumn conference 13 Sept.

Michelin also noted that the OE passenger car and light truck tire market is contracting, due in particular to weaker growth in China.

Additionally, the company said strong demand from the freight industry in Americas and Europe had lifted truck tire market while the speciality markets “continue to grow at a fast pace.”

In the second half of this year, the Clermont-Ferrand-based tire maker expects the impact of raw material costs to be neutral on operating income. This is due in part to “more favourable” natural rubber prices countering rising Brent oil prices.

Overall, the company expects the impact of raw materials costs for the whole year to be around €50 million, having experienced a negative €67-million impact in the first half.

Moreover, Michelin noted that the rise of the US dollar against the Euro is offsetting the negative impact of currency depreciation in emerging markets, notably the Argentine peso and the Turkish lira, the currencies of countries in which the group has "substantially increased its prices".

The company is therefore expecting roughly a €60 million negative currency impact in the second six months of the year. Overall, in 2018, the company expects a €280-million negative currency impact, the presentation confirmed.