Michelin sales up 7.4% in Q1 2023

Benefitting from “premium positioning” in Q1 2023 despite “weak markets” around the world, Michelin increased its consolidated sales 7.4 per cent year-on-year, to 6.96 billion euros.

Tyre volumes, on the other hand, were down 6.6 per cent, reflecting an unfavourable comparison with the heavy inventory rebuilding during Q1 2022 and also driven by reductions in distribution inventories. The end of operations in Russia as of 15 March 2022 accounted for around 25 per cent of the total decline.

Michelin confirms its 2023 full-year guidance of segment operating income above 3.2 billion euros and reports free cash flow, excluding M&A, of more than 1.6 billion euros.

Passenger car & light truck tyres

Global demand for passenger car and light truck tyres contracted by three per cent year-on-year in Q1 2023, reflecting a four per cent decline in the replacement segment and a one per cent gain in original equipment.

The European original equipment market ended the quarter up 14 per cent year-on-year, but this improvement primarily stemmed from the very favourable comparison with first-quarter 2022, when demand was severely impacted by automaker supply shortages and the outbreak of the war in Ukraine.

The European replacement market ended the first three months down nine per cent in comparison with a particularly robust first-quarter 2022. Dealer inventory drawdowns over the period weighed on sell-in demand, while sell-out demand proved more resilient.

Truck tyres

The global truck tyre market (excluding China) contracted by two per cent in the first three months of 2023. In China, where Michelin’s presence is negligible, demand rose by seven per cent over the period.

The original equipment market in Europe was up ten per cent, with truck manufacturers’ order books full through second-half 2023.

The fall-off in Europe’s replacement market was steep, with a 14 per cent year-on-year decrease, primarily due to the very high basis of comparison. In addition, the improvement of global supply chains allowed fleets and dealers to reduce inventory levels that remained high at the end of March.

Specialty businesses

Agricultural tyre markets are still trending upwards overall, supported by original equipment demand and persistently high commodity prices. The construction tyre market, on the other hand, is being affected by the slowdown in homebuilding, impacted by rising interest rates. The infrastructure segment is continuing to expand.

Demand for mining tyres remains high, with sustained growth in ore mining operations and ongoing inventory rebuilding.

Two-wheel tyre markets are experiencing slowing demand from high prior-year comparatives, primarily due to extensive inventory build-up, particularly in the bicycle tyre segment.

Demand for aircraft tyres is rising off still favourable comparatives, lifted by a return to pre-Covid passenger traffic on domestic flights in China.

The conveyer belt market remains robust, both in the mining segment, driven by demand for commodities, and in the manufacturing segment, supported by high capital spending.

Overall demand for specialty polymers is flattening out as the global economy cools.

Full-year guidance

Michelin confirms its projected scenario in markets trending towards the lower end of the initial ranges. Sales volumes are still expected to end the year within the [-4%; -0%] range. The company thus confirms its 2023 guidance, with segment operating income above 3.2 billion euros at constant exchange rates and reports free cash flow excluding M&A of more than 1.6 billion euros.

Further information about Michelin’s Q1 2023 financial performance is available here