Michelin: Sales up 1.3% like-for-like in the first nine months of
2019, in an environment that deteriorated sharply over the period.
Contribution from acquisitions in line with expectations. 2019
market forecasts lowered; guidance confirmed
PRESS RELEASEClermont-Ferrand –
October 24, 2019
COMPAGNIE GÉNÉRALE DES ÉTABLISSEMENTS
MICHELINFinancial Information for the Nine Months
Ended September 30, 2019
Sales up 1.3%
like-for-like in the first nine months of 2019, in an environment
that deteriorated sharply over the period
Contribution
from acquisitions in line with expectations
Fourth-quarter
market forecasts lowered; guidance confirmed
- In weaker than expected markets, Michelin's volumes
declined by 0.8% in the first nine months of 2019, with in
particular:
- A contraction in Automotive tire volumes, in line with
the markets. Sustained growth in the 18-inch and larger
segment
- A decline in Truck tire volumes in increasingly
difficult markets
- Growth in the mining tire business, in line with
expectations
- A steeper than expected drop in the Agricultural and
Construction tire markets
- A 2.1% improvement in the price-mix effect,
attributable to:
- Disciplined price management in every business and
region, in particular with price increases in the third
quarter
- A strong mix effect, shaped by a favorable business-mix
and a firm product-mix in the Automotive segment
- Contribution from acquisitions in line with
expectations (+7.1%)
- Sustained deployment of the competitiveness
plan
Florent Menegaux, Chief Executive
Officer, said: “In response to a market downturn
that was sharper than expected, particularly in the Truck segment,
the Group is continuing to improve the competitiveness of its
operations, carefully manage its prices and strengthen its
positions in the fastest growing segments and businesses. In these
challenging times, I would above all like to commend all our teams
for their engagement and hard work in limiting the impact of this
unfavorable environment.”
q Guidance confirmed:
In 2019, the Passenger car and Light
truck tire markets are expected to decline by 1%, as the modest 1%
growth in the Replacement segment fails to offset the steep 6%
contraction in the Original equipment segment. Truck tire markets
are expected to weaken more quickly in the fourth quarter, to end
the year down 4%. Specialty tire markets will probably remain
stable over the full year, as sustained demand for Mining and
Aircraft tires helps to cushion the sharp contraction in the
Agricultural and Construction markets. The full-year impact of raw
materials costs and customs duties is estimated at around a
negative €100 million.
In this scenario, Michelin confirms its
guidance for 2019, with volume growth in line with global market
trends; segment operating income exceeding the 2018 figure at
constant exchange rates and before the estimated €150 million
contribution from Fenner and Camso; and structural free cash flow
of more than €1.45 billion.*
*Of which €150 million from the application of
IFRS 16.
Analysis of nine-month
sales
Sales (in € millions) |
Nine months 2019 |
Nine months 2018
Adjusted(1) |
% change |
Nine months 2018
reported |
RS1: Automotive & related distribution |
8,634 |
8,327 |
+3.7% |
8,332 |
RS2: Road transportation & related
distribution |
4,833 |
4,719 |
+2.4% |
4,324 |
RS3: Specialty businesses & related
distribution |
4,430 |
3,171 |
+39.7%(2) |
3,561 |
Group Total |
17,897 |
16,217 |
+10.4% |
16,217 |
- Following the acquisition of Camso and the merger of the
Off-road businesses, certain minor adjustments have been made to
the composition of the segments.
- Including the 34.4% positive impact from the first-time
consolidation of Camso and Fenner
Market Review
·Passenger car and Light truck tires
Nine months 2019/2018(in number of
tires) |
Europeincluding Russia &
CIS* |
Europeexcluding Russia &
CIS* |
North America |
Central America |
South America |
Asia(excluding India) |
Africa/ India/ Middle East |
Total |
Original equipment Replacement |
-5% -2% |
-6% -2% |
-2%** +3% |
+0% |
+1%
-1% |
-8% +4% |
-18% -0% |
-7% +1% |
Third quarter2019/2018(in number of
tires) |
Europeincluding Russia &
CIS* |
Europeexcluding Russia &
CIS* |
North America |
CentralAmerica |
South America |
Asia(excluding India) |
Africa/ India/ Middle East |
Total |
Original equipment Replacement |
-2% -0% |
-2% -0% |
+1%** +2% |
+1% |
+4%
+3% |
-5% +7% |
-20% -0% |
-4% +2% |
*Including Turkey
**North America and Central America
The number of Original equipment and Replacement
Passenger car and Light truck tires sold worldwide was stable in
the third quarter of 2019, but declined by 1% over the first nine
months, dragged down by the 7% fall in Original equipment demand
during the period.
- Original equipment
- In Western Europe, demand contracted by 6% over the nine months
ended September 30, due to the continued adverse impact of the
roll-out of WLTP standards (mainly in the first quarter), the
economic crisis in Turkey and a certain degree of consumer
hesitation in an uncertain economic environment. In addition,
European export sales remained dampened by China’s economic
slowdown and US protectionist measures. Demand in Eastern Europe
fell back 2% over the period.
- In North and Central America, despite a favorable economic
environment, markets slid by 2% over the first nine months as
domestic demand softened and, in particular, shifted to used
vehicle sales.
- Demand in Asia (excluding India) ended the first nine months
down 8%. In China, the market decline eased to 8% in the third
quarter from 15% in the second half, but only because of more
favorable comparatives, with demand remaining deeply impacted by
the trade war with the United States and the dealer inventory glut
of vehicles built before deployment of the China 6 standard in June
2019. Demand in the rest of the region was stable for the
period.
- The South American market rose by 1% over the first nine
months, as the rebound that began in the second quarter continued
with a 4% gain in the third. Higher demand in Brazil offset the
adverse impact of the financial crisis in Argentina.
- The contraction in the Africa/India/Middle East region is
deepening, with the OE market plummeting 20% in the third quarter
after dropping 16% in the first half, primarily because the weaker
rupee and tighter credit are weighing on domestic demand in
India.
- Replacement
- In Western Europe, the Replacement tire market ended the first
nine months down 2% overall, with declines in Germany (down 5%) and
the Iberian Peninsula (down 3%) and stability in France and the
United Kingdom. In an uncertain environment, dealers are only
slowly laying in winter tire inventory as the season begins.
However, demand for all-season tires remains as robust as
ever.
- Demand in Eastern Europe declined by 2%, dampened by the 5%
contraction in the Russian market.
- The North American market climbed 3% over the first nine
months, with a much faster 7.5% gain in the first quarter. Demand
is being driven by Asian tire imports, with the pool market up
slightly for the first nine months.
- In Asia (excluding India), the Replacement market rose by 4%
overall during the period. Demand continued to rebound in China,
with a 4% gain over the first nine months, and improved by 4% in
the rest of the region, with an 8% surge in the third quarter led
by the South Korean and Japanese markets. In the latter case,
demand was buoyed by buying ahead of the recent price increases and
the introduction of a higher sales tax rate on October 1,
2019.
- Central American markets remained unchanged over the first nine
months, particularly in Mexico.
- In South America, the market edged down 1% over the first nine
months, but demand rebounded by 3% in the third quarter, led by 3%
growth in Brazil. The Argentine market leveled off in the third
quarter after plunging 14% over the first half.
- In the Africa/India/Middle East region, demand held firm over
the first nine months, as declines in the Middle Eastern countries
were offset by gains in the other markets in the region (India up
1%; Central Africa up 3%).
· Truck tires (radial and
bias)
Nine months 2019/2018(in number of
tires) |
Europeincluding Russia &
CIS* |
Europeexcluding Russia &
CIS* |
North America |
CentralAmerica |
South America |
Asia(excluding India) |
Africa/ India/ Middle East |
Total |
Original equipment Replacement |
-7% +2% |
-7% +3% |
+5% -12% |
-34% -0% |
+29%
-2% |
-2% -1% |
-27% -2% |
-4% -2% |
Third quarter2019/2018(in number of
tires) |
Europeincluding Russia &
CIS* |
Europeexcluding Russia &
CIS* |
North America |
CentralAmerica |
South America |
Asia(excluding India) |
Africa/ India/ Middle East |
Total |
Original equipment Replacement |
-13% +9% |
-15% +11% |
-2% -15% |
-25% +5% |
+20%
-5% |
-4% +0% |
-33% -2% |
-8% -1% |
*Including Turkey
Global demand for new Original equipment and
Replacement Truck tires declined by 3% in number of tires sold in
the first nine months of 2019, primarily due to a sharp 4% slowdown
in OE demand and a 2% contraction in the Replacement markets.
- Original equipment
- After contracting by 4% in the first half, demand in Western
Europe dropped by a sharp 15% in the second quarter, to end the
nine-month period down 7% overall, with declines in all of the
region’s leading markets. Demand in Eastern Europe fell 4%, in line
with the 5% decline in the first half.
- The North American market turned downwards in the third quarter
of 2019 off of very high prior-year comparatives (up 16% in the
first nine months of 2018). After expanding by 9% in the first half
thanks to fleet upgrades, demand slipped by 2% in the third quarter
but remains very strong.
- In Asia (excluding India), demand cooled by 2% over the first
nine months, with a 4% contraction in the third quarter. The
Chinese market declined by 3% in the third quarter, in line with
the second-half trend. In Indonesia, the market continued to spiral
downwards, losing 27% in the third quarter. The Japanese market
eased back 1% over the first nine months.
- In Central America, Mexican demand dropped 34% over the
nine-month period.
- In South America, the market rose 29%, lifted by sustained 30%
growth in Brazilian demand.
- In the Africa/India/Middle East region, the market fell 27%,
primarily due to the 39% collapse in demand in India.
- Replacement
- In Europe, Replacement tire demand rose by 2% over the first
nine months. The Iberian Peninsula and UK markets delivered the
fastest growth, whereas demand in Turkey remained severely impacted
by the local economic crisis, losing 15% over the first nine
months. Chinese tire imports, which have declined since tariff
barriers were introduced in May 2018, have now been replaced by the
growing supply of low-cost tires from Vietnam and Thailand.
- The North American market fell a steep 12% overall in the first
nine months, with a faster 15% drop in the third quarter. As
freight demand cooled in the third quarter, Replacement tire
markets were adversely impacted by the strong expansion in OE
demand in the United States, which has lasted for more than a year
now. In addition, massive purchases of Asian tire imports between
late 2018 and early 2019, ahead of the introduction of customs
duties in mid-February, had a major impact on sales in both the
first half (as the resulting inventory was drawn down) and the
third quarter (due to the unfavorable basis of comparison).
- In Asia (excluding India), markets declined by 1% overall
during the first nine months. In China, demand contracted by 3%
over the period in a particularly uncertain economic environment.
After easing by a slight 1% in the first half, demand in Southeast
Asia rebounded by a strong 9% in the third quarter, led by the 17%
surge in the Japanese and South Korean markets.
- Markets in Central America were stable overall.
- The South American market ended the period down 2%, with demand
in Brazil tumbling 6% in the third quarter after holding firm in
the first half. The entire region remains impacted by the declines
in the Venezuelan and Argentine markets, by respectively 28% and 5%
over the first nine months.
- The Africa/India/Middle East market edged down 2%, reflecting
slower growth in India and the generally unstable economic and
geopolitical conditions prevailing in the rest of the
region.
- Mining tires: The mining tire market is still
being shaped by sustained growth in demand from mining
companies.
- Agricultural and Construction tires: In the
Agricultural segment, the cyclical Original equipment markets fell
sharply in Europe, South America and North America, while
Replacement demand was also impacted by US-China trade tensions in
North America and the financial crisis in Turkey. The Construction
segment was hurt by the steep drop in OE demand.
- Two-wheel tires: Motorcycle and scooter tire
markets enjoyed further growth in Europe, but declined in North
America. Demand in the commuting segment continued to trend
upwards.
- Aircraft tires: Led by the sustained increase
in passenger traffic, despite a slight slowdown over the summer,
the commercial aircraft tire market is continuing to expand, with
more pronounced gains in the Radial segment once again.
Michelin
sales
·Consolidated Sales
(in € millions) |
Nine months 2019 |
Sales |
17,897 |
Change - 9 months 2019/9 months 2018 |
|
|
Total change |
+1,680 |
+10.4% |
Of which Volumes* |
-134 |
-0.8% |
Price-mix |
+340 |
+2.1% |
Currency effect |
+315 |
+2.0% |
Changes in scope of consolidation |
+1,159 |
+7.1% |
*In tonnes.
Sales for the first nine months of 2019 totaled
€17,897 million, an increase of 10.4% from the year-earlier period
that was attributable to the following factors:
- A 0.8% or €134 million decrease due to lower
volumes, primarily as a result of the 1% decline in the Passenger
car and Light truck tire markets and the sharp deterioration in the
B2B markets (Truck, Agricultural and Construction tires).
- A 2.1% increase from the favorable price-mix
effect. Prices added 1.1%, reflecting once again the Group’s
disciplined price management, particularly the price increases
introduced in the third quarter. The mix effect added another 1.0%,
led by the sustained up-market shift in the product-mix and the
favorable
business-mix (OE/Replacement, Mining/Agricultural tires).
- A 2% increase from currency movements,
primarily the US dollar’s rise against the euro.
- A robust 7.1% increase from changes in the
scope of consolidation, primarily the inclusion of recently
acquired Fenner, Camso, Multistrada and Masternaut, as well as the
deconsolidation of TCi.
- Sales by reporting segment
- Automotive and related distribution
Sales climbed 3.7% year on year to €8,634
million in the first nine months of 2019.
In narrower markets hard hit by the 7% fall-off
in OE demand over the period, the Group’s volumes contracted by 1%.
The segment enjoyed a favorable price-mix effect, reflecting its
disciplined price management, supported by the powerful MICHELIN
brand and the continued up-market shift in its
product-mix. The effect of changes in
the scope of consolidation was slightly positive following the
deconsolidation of TCi and the first-time consolidation of
Multistrada.
q Road Transportation and related
distribution
Sales for the first nine months amounted to
€4,833 million, up 2.4% year on year.
Volumes declined by 2% in markets that fell
sharply over the period. The price-mix effect was robust,
reflecting the business’ selective focus on segments capable of
creating value.
q Specialty businesses and related
distribution
Nine-month sales totaled €4,430 million, a 39.7%
year-on-year gain that was primarily driven by the first‑time
consolidation of Camso and Fenner.
At constant scope of consolidation, segment
sales rose by 5.3% over the period, lifted by the strong
price-mix effect,
stable volume performance and favorable currency effect.
- Mining tires: Sales maintained their momentum thanks to the
Group’s solid positions in Surface Mining segment, its pricing
strategy and the growth of its service operations.
- Off-the road tires: The firm pricing policy and the Group’s
market share gains in the Replacement segment helped to offset the
unfavorable impact of the fall-off in demand.
- Two-wheel tires: Sales rose over the period, reflecting the
increase in tonnages sold, under both the MICHELIN and the Levorin
brands, notably in the commuting segment.
- Aircraft tires: Sales are continuing to expand, led once again
by growth in the Radial segment.
Third-quarter
2019 non-financial ratings
MCSI: Michelin has been rated
AA for 2019, with a score of 7.3 out of 10. The rating affirms the
Group’s very good performance in environmental, social and
corporate governance (ESG) practices, which has also been
recognized by ISS OEKOM (2019, PRIME), VIGEO EIRIS (2018, A1+) and
SUSTAINALYTICS (2018, OUTPERFORMER).
Social responsibility: Michelin
has been honored with the Corporate Social Responsibility Award
from French financial weekly AGEFI. The award recognizes the
commitment of everyone across the organization, who demonstrate and
embody Michelin’s social responsibility in their behavior and
decisions as they strive to make sustainable mobility a
reality.
Governance: In September 2019,
AGEFI awarded Michelin its Corporate Governance Grand Prize.
Third-quarter
2019 Highlights
- In New York, Michelin looks back at the MICHELIN Pilot Sport
tire’s maiden Formula E campaign. Over the season, the new tires
amply fulfilled their ambitious objectives for energy efficiency,
versatility, longevity and high performance. (July 15, 2019)
- WWF France and Michelin renew their “zero-deforestation”
partnership and extend their collaboration to sustainable mobility
and the protection of biodiversity. (July 26, 2019)
- Michelin to make Playstation’s Gran Turismo Sport even more
gripping for gamers. (August 23, 2019)
- The first MICHELIN Guide Beijing to be launched on November,
28. (September 3, 2019)
- Michelin, Continental and Smag create a joint venture to
develop Rubberway®, a smartphone app that maps sustainability
practices across the natural rubber industry. (September 12,
2019)
- With the construction of the first industrial-scale prototype
of a plant producing butadiene from bioethanol in France, Michelin,
IFP Energies Nouvelles and Axens take the BioButterfly project to
the next level. (September 26, 2019)
- CAMSO Introduces X4S, an innovative ATV (all-terrain vehicle)
and UTV (utility task vehicle) track system solution, that fits on
these two types of machines, designed specifically to meet any
usage and evolves with the user over time. (August 6,
2019)
- Michelin announces the closure of its plant in Bamberg, Germany
by early 2021. (September 25, 2019)
- By creating a new adhesive resin without any SVHCs, the
BioImpulse project is giving new impetus to biotechnology in
materials. (October 1, 2019)
- Michelin announces its intention to close its plant in La
Roche-sur-Yon, France by the end of 2020 and to deploy a
wide-ranging employee support program. (October 10, 2019)
A full description of
highlights for the first nine months of 2019may be found on the
Michelin website: http://www.michelin.com/en
Presentation and Conference
CallNine-month 2019 sales will be reviewed with analysts
and investors during a presentation today, Thursday, October 24,
2019 at 6:15 p.m. CEST.
WEBCASTThe presentation will be
webcast live on: https://www.michelin.com/en/finance/
CONFERENCE CALLPlease dial-in
on one of the following numbers from 6:05 p.m. CEST:
- In France
01 72 72 74 03 (English) PIN: 92581237#
- In the United Kingdom
0207 194 3759 (English) PIN: 92581237#
- In North America
+1 (646) 722 4916 (English) PIN: 92581237#
- From anywhere else
+44 (0) 207 194 3759 (English) PIN: 92581237#
The presentation of financial information for
the nine months ended September 30, 2019 (press release,
presentation) may also be viewed at http://www.michelin.com/en,
along with practical information concerning the conference
call.
Investor calendar
- Sales and results for the year ending December 31,
2019: Monday, February 12, 2020 after close of
trading.
- Quarterly information for the three months ending March
31, 2020: Thursday, April 29, 2020 after close of
trading.
Investor Relations Édouard de
Peufeilhoux+33 (0) 4 73 32 74 47+33 (0) 6 89 71 93 73
(mobile)edouard.de-peufeilhoux@michelin.com Humbert de
Feydeau+33 (0) 4 73 32 68 39+33 (0) 6 82 22 39 78
(mobile)humbert.de-feydeau@michelin.com Pierre Hassaïri+33
(0) 4 73 32 95 27+33 (0) 6 84 32 90 81
(mobile)pierre.hassairi@michelin.com |
Media Relations Corinne Meutey +33
(0) 1 78 76 45 27 +33 (0) 6 08 00 13 85 (mobile)
corinne.meutey@michelin.com Individual
Shareholders Isabelle Maizaud-Aucouturier +33
(0) 4 73 98 59 27isabelle.maizaud-aucouturier@michelin.com
Clémence Rodriguez +33 (0) 4 73 98 59
25clemence.daturi-rodriguez@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 Michelin website
https://www.michelin.com/en.
This press release may contain a number of forward-looking
statements. Although the Company believes that these statements are
based on reasonable assumptions 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.
- 20191024_Michelin_CP_Sales Q3 2019
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