Analysts: Michelin 1Q figures below consensus

Following the publication of Michelin’s first quarter 2014 revenues, which show a 2.4 per cent drop in group sales, market analysts have responded by pointing out that the 4.758 billion euro figure fell just short of the 4.765 billion euro average of expectations. Nevertheless Michelin has held to its 2014 objectives including increasing volumes 3 per cent; increasing operating income before non-recurring items; and achieving structural free cash flow of greater 500 million euros along with capital expenditure of 2 billion euros.

Interestingly Morgan Stanley analysts highlighted the fact that Michelin’s price mix was slightly negative in the quarter. According to the company, the aim is for this to be balanced by the time full year results are published. Either way, the fact that Michelin saw OE demand for mining tyres improve in mature markets is also worth pointing out. The tyre manufacturer reports that this demand has been boosted by increased earthmover production. Whatever the reason, increased sales of these high value and high margin products are likely to have a beneficial effect on group product mix, perhaps even cancelling the headwinds of reduced first quarter sales revenues and negative foreign exchange costs.