Growth in mature markets drives up Michelin’s H1 results

Michelin reports a year-on-year rise in its net sales, operating income and net income in the first half of 2015. Net sales rose 8.5 per cent to €10.5 billion in the six months to 30 June 2015. Operating income increased 8.9 per cent to €1.3 billion, while operating margin remained constant at 12.0 per cent. At €707 million, net income was up 13.3 per cent year-on-year.

First half sales volumes rose 2.4 per cent, an amount that Michelin says outperformed the markets. The tyre maker states that its sales of passenger car and light commercial vehicle tyres “clearly outpaced” the market, while truck and specialty business tyre volumes were only “slightly better” than market levels. Growth was strong in mature economies and “sluggish” in most new markets.

“Michelin achieved strong growth in the first half of the year by leveraging its broader portfolio of solutions, by expanding access to customers and by capturing the rising demand in its traditional markets,” stated chief executive officer Jean-Dominique Senard. “The success of our most recent lines, like the Michelin CrossClimate and the new BFGoodrich tyres, as well as our strengthened positions in the original equipment segment, confirm the importance of innovation for the group’s growth. Combined with the expected deployment of the competitiveness plan, Michelin can confirm its full-year guidance.”

Tyre demand is expected to continue rising in mature markets throughout 2015, however Michelin believes it will be “more challenging” in new markets, The company’s objective for the second half of 2015 is to pursue the growth trends observed in the first six months of the year. Changes in price mix and raw materials prices are expected to have over the full year a net negative effect on the businesses subject to contractual raw materials indexation clauses and a net neutral effect on the remaining businesses. Michelins says the sustained deployment of its competitiveness plan will help to offset cost inflation over the year.

The company confirms its target of delivering an increase in operating income before non-recurring income excluding the currency effect, a return on capital employed in excess of 11 per cent, and structural free cash flow of more than €700 million, while pursuing a capital expenditure program totalling around €1.8 billion.

Further information about Michelin’s H1 2015 results can be found in our company profiles and reports section.