Michelin grows earnings in “unstable” first-half trading conditions

Segment operating income represented 13.2 % of sales, up from 12.1 % in the first half of 2023, fueled by mix improvements and lower operating costs, noted the 24 July financial statement.

Gains were linked to a "strong" 1.9% mix improvement, which offset negative impacts including high levels of Asian tire imports in replacement markets.

Michelin was further hampered by a negative price effect from contracted price indexation and a "sharp downward cycle in certain OE markets.

Also, on the non-tire side, the group's 'polymer composite solutions' (PCS) markets were reported as "temporarily soft relative to high first-half 2023 comparatives."

As well, Michelin noted “weak ‘beyond’-road OE markets and negative impacts of price indexation clauses and high prior-year comparatives in mining and PCS.”

On the plus side, the French manufacturer benefited from lower operating costs across all business lines, particularly for raw materials, energy and sea freight.

Regarding full-year prospects, Michelin was sufficiently encouraged to maintain its previously issued earnings guidance: SOI above €3.5 billion at constant exchange rates.

“In an economic environment that remains particularly unstable, Michelin achieved a very solid first half," commented the group's CEO Florent Menegaux.

"I am convinced that our value-based approach, which positions us on very high value-added activities and the most accretive markets, is the right one,” added Menegaux.