Michelin 2019 3rd quarter and 9 months sales

• Sales up 1.3% like-for-like in the first nine months of 2019, in an environment that deteriorated sharply over the period
• Contribution from acquisitions in line with expectations
• Fourth-quarter market forecasts lowered; guidance confirmed

In weaker than expected markets, Michelin's volumes declined by 0.8% in the first nine months of 2019, with, in particular:

o A contraction in Automotive tyre volumes, in line with the markets. Sustained growth in the 18-inch and larger segment

o A decline in Truck tyre volumes in increasingly difficult markets

o Growth in the mining tyre business, in line with expectations

o A steeper than expected drop in the Agricultural and Construction tyre markets

❑ A 2.1% improvement in the price-mix effect, attributable to:

o Disciplined price management in every business and region, in particular with price increases in the third quarter

o A strong mix effect, shaped by a favourable business-mix and a firm product-mix in the Automotive segment

❑ Contribution from acquisitions that were in line with expectations (+7.1%)

❑ Sustained deployment of the competitiveness plan

Florent Menegaux, Chief Executive Officer, said: “In response to a market downturn that was sharper than expected, particularly in the Truck segment, the Group is continuing to improve the competitiveness of its operations, carefully manage its prices and strengthen its positions in the fastest growing segments and businesses. In these challenging times, I would above all like to commend all our teams for their engagement and hard work in limiting the impact of this unfavourable environment.”

❑ Guidance confirmed:

In 2019, the Passenger car and Light truck tyre markets are expected to decline by 1%, as the modest 1% growth in the Replacement segment fails to offset the steep 6% contraction in the Original equipment segment. Truck tyre markets are expected to weaken more quickly in the fourth quarter, to end the year down 4%. Specialty tyre markets will probably remain stable over the full year, as sustained demand for Mining and Aircraft tyres helps to cushion the sharp contraction in the Agricultural and Construction markets. The full-year impact of raw material costs and customs duties are estimated at around a negative €100 million.

In this scenario, Michelin confirms its guidance for 2019, with volume growth in line with global market trends; the segment operating income exceeding the 2018 figure at constant exchange rates, and before the estimated €150 million contribution from Fenner and Camso; and a structural free cash flow of more than €1.45 billion.*

The number of Original equipment and Replacement Passenger car and Light truck tyres sold worldwide was stable in the third quarter of 2019, but declined by 1% over the first nine months, dragged down by the 7% fall in Original equipment demand during the period.

Third-quarter 2019 Highlights

• In New York, Michelin looked back at the MICHELIN Pilot Sport tyre’s maiden Formula E campaign. Over the season, the new tyres amply fulfilled their ambitious objectives for energy efficiency, versatility, longevity and high performance. (July 15th, 2019)
• WWF France and Michelin renewed their “zero-deforestation” partnership and extend their collaboration to sustainable mobility and the protection of biodiversity. (July 26th, 2019)
• Michelin to make Playstation’s Gran Turismo Sport even more gripping for gamers. (August 23rd, 2019)
• The first MICHELIN Guide to Beijing to be launched on November 28th. (September 3rd, 2019)
• Michelin, Continental and Smag created a joint venture to develop Rubberway®, a smartphone app that maps sustainability practices across the natural rubber industry. (September 12th, 2019)
• With the construction of the first industrial-scale prototype of a plant producing butadiene from bioethanol in France, Michelin, IFP Energies Nouvelles and Axens have taken the BioButterfly project to the next level. (September 26th, 2019)
• CAMSO introduced X4S, an innovative ATV (all-terrain vehicle) and UTV (utility task vehicle) track system solution, that fits on these two types of machines, designed specifically to meet any usage and which evolves with the user over time. (August 6th, 2019)
• Michelin announced the closure of its plant in Bamberg, Germany by early 2021. (September 25th, 2019)
• By creating a new adhesive resin without any SVHCs, the BioImpulse project has given new impetus to biotechnology in materials. (October 1st, 2019)
• Michelin announced its intention to close its plant in La Roche-sur-Yon, France by the end of 2020 and to deploy a wide-ranging employee support program. (October 10th, 2019)

Source: Michelin