Raw materials to become a headwind for tyremakers in 2H24 – analysts
Foreign exchange rate differentials are expected to make a greater impact at Pirelli than at Michelin and Continental moving forward
Publishing its latest tracker of premium European tyremakers financial fundamentals, financial analysts report that pricing is currently a headwind and raw materials a tailwind year-to-date, however, raw materials will shift to a headwind in the second-half of 2024.
Writing in an investor’s note published 22 April, the Jefferies analysts describe the historically high-margin speciality sector as “the weakest end market followed by commercial vehicle and then passenger”.
Looking at the medium-term data, it is clear that while Michelin historically outperformed in pricing terms in the specialty tyre sector, since about 2020, the market has become much more competitive (see chart).
In addition, since exchange rates can have a significant impact on short-term earnings for tyre manufacturers, it is no surprise that those figures are also being tracked. When it comes to reporting the next batch of quarterly financial results “we expect a larger foreign exchange headwind at Pirelli and minor headwind at Michelin”, the analysts wrote.
Looking at the medium-term data, it is clear the market has become much more competitive
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