Michelin announces “very strong” 2023 results

Publishing its financial results for 2023, Michelin Group reports that “despite adverse market conditions and currencies” it achieved “high segment operating income” during the year. The company opines that this achievement underscores the resilience of its business model and its commitment to enhancing employee engagement and advancing sustainability initiatives.

“In a challenging business environment, our highly engaged teams have contributed to deliver the very strong results that we are announcing today for 2023,” states Florent Menegaux, chief executive officer of Michelin. “I would like to thank them warmly for their tremendous ability to adapt daily. With these results, our Group has demonstrated its ability to deliver the targets set for 2023 within its ‘Michelin in Motion 2030’ strategy and is looking forward to the next deployment steps.”

OE & non-tyre sales growth

Sales reached 28.3 billion euros, marking a 2.0 per cent year-on-year increase at constant exchange rates, driven by a favourable product mix and pricing strategies which offset unfavourable market conditions. Non-tyre sales grew by ten per cent.

While the global tyre sell-in markets remained steady, there was a shift in mix, with Original Equipment seeing growth across most segments while Replacement witnessed significant destocking, a process that Michelin considers to now be completed. Tyre sales volumes declined by 4.7 per cent. Price and mix effects increased by 5.7 per cent, with 1.2 per cent pulled by both product and geographical mix.

Segment operating income reaches new high

Segment operating income reached a record high of 3.6 billion euros, up 5.2 per cent year-on-year, with a margin increase of 0.7 percentage points to 12.6 per cent of sales. This improvement was driven by the lagged impact of 2022 adjustments in pricing, strategic market targeting, and enhanced value proposition, which outweighed inflationary cost pressures.

Free cash flow before acquisitions amounted to 3.0 billion euros, reflecting improved EBITDA and a significant reduction in working capital. EBITDA increased by 4 per cent to 5.5 billion euros, representing 19.4 per cent of sales. Working capital decreased by 1.0 billion euros, driven by lower inventory volumes and value. Joint ventures and associates, notably the TBC distribution JV in the USA, contributed positively with 0.2 billion euros.

Return on capital employed (ROCE) rose to 11.4 per cent, up by 0.6 percentage points, reflecting strong intrinsic performance and effective portfolio management. Despite 0.6 billion euros in industrial restructuring provisions, net income remained stable at 2.0 billion euros. Michelin will propose an 8 per cent increase in dividend per share to 1.35 euros at its Annual Meeting.

Full details of Michelin Group’s 2023 financial results are available here.