Michelin: Strong euro holds back Q1 2018 turnover

Blame for a -6.3 per cent decline in net sales during the first quarter of 2018 goes to the stronger euro, reports the Michelin Group. The tyre maker achieved total net sales of 5.2 billion euros in the three months to 31 March 2018, an amount that represents a 1.4 per cent improvement – had exchange rates remained constant. However, with currency effects of 7.7 per cent, Michelin was unable to match the 5.6 billion euros earned in the opening quarter of last year.

Original equipment passenger car and light truck tyre volumes were down one per cent year-on-year on a global level. In Europe (both including and excluding Russia & CIS), volumes were three per cent lower although original equipment demand remained strong in Europe; Michelin states that the decline was due to an unfavourable calendar effect. Global replacement car and light truck tyre volumes remained at the level seen a year ago, and this was also the case in Europe (including Russia & CIS); looking at Europe alone, Michelin’s replacement market was down two per cent, reflecting strong performance a year ago ahead of the price increases announced late in the first quarter of 2017.

News from Michelin’s truck tyre business was better, at least when it came to original equipment volumes. Global year-on-year growth of five per cent in the first quarter of 2018 was driven by a 45 per cent rise in volumes in South America and 20 per cent growth in North America. Volumes in Europe (excluding Russia & CIS) were up seven per cent (six per cent including Russia & CIS); Michelin comments that volumes were lower in Eastern Europe. Truck tyre aftermarket volumes were two per cent below where they were a year earlier. Replacement demand in Europe (including Russia & CIS) was unchanged over the period but was down two percent excluding Russia and CIS due to the high bases of comparison caused by early buying ahead of the price increases carried out in late first-quarter 2017.

Overall volumes were 2.3 per cent lower in the first quarter of this year. This was primarily due to the aforementioned higher sales and large dealer inventory build-ups in the first quarter of 2017 ahead of announced priced increases. Mining tyre sales maintained the momentum gained in 2017.

For full-year 2018, Michelin expects demand to increase slightly in the passenger car and light truck tyre markets and remain stable in the truck tyre markets. The mining tyre market should continue to enjoy robust growth. The currency effect will remain highly unfavourable throughout the year, with a currently estimated negative impact of 350 million euros on operating income from recurring activities.

Further information about Michelin’s Q1 2018 results can be read here.