Michelin reports growth amid “shrinking markets”

Paris – Michelin Group has reported strong sales and profitability for the year 2019, despite what it described as “a deteriorated environment and shrinking markets.”

Sales rose 7.8% at constant exchange rates to €24 billion, lifted by acquisitions, Michelin said in its annual result published 10 Feb.

Operating income increased 8.4% - by €179 million - to €3 billion, said Michelin, adding that €127 million of the improvement was achieved through its recent acquisitions.

The French group said it enhanced its performance by “tight production management,” which included a €112-million reduction in inventories at constant scope of consolidation.

While volumes were down 1.2%, the tire maker achieved €324 million positive net impact from changes in the price mix and raw materials costs.

“In a highly unstable environment, Michelin successfully maintained its market share and improved its earnings,” said Florent Menegaux, managing chairman. 

Net sales for passenger car tires rose 5% to €11.8 billion over the course of 2019, despite volume declines in "steeply falling markets", said Michelin.  

The tire maker saw global demand volume for OE passenger car and light truck tires decline 6%, although signs of improvement were observed in China where the company registered 1% growth in the final quarter of the year.

Replacement volumes for the segment, Michelin said, are “trending upwards” in North America, led by imports, and declining in Europe, due to structural inventory adjustments and a warm winter. 

The market for replacement passenger car tires remained robust in China, with a 4% growth.

In the truck and bus segment, sales were up 1% year-on-year to €6.4 billion, while OE volumes fell in every region; North America posting a “faster drop” in the final quarter of the year.

Replacement volumes also registered a “steep plunge” in North America, mainly due to imports. The European market, Michelin said, was lifted by imports.

Michelin's specialities segment, which includes mining, off-road, aircraft and two-wheeler tires, continued strong performance with a 35% increase in sales to €5.8 billion.

Overall volumes remained flat for the segment despite a 3% increase in demand in the mining sector.

Off-road volumes saw a sharp fall in OE demand in construction and farm tires, while the replacement market was down slightly due to “unfavourable weather conditions.”

The French group registered growth in the two-wheel and aircraft segments.