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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Michelin | EU:ML | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.64 | -1.75% | 35.96 | 35.75 | 36.60 | 36.62 | 35.79 | 36.30 | 1,521,609 | 16:40:00 |
Clermont-Ferrand, July 26, 2021- 5:45pm
COMPAGNIE GÉNÉRALE DES ÉTABLISSEMENTS MICHELIN Financial information for the six months ended June 30, 2021
First-half 2021: The Michelin Group reports sales of €11.2 billion – up 19.6% – and segment operating income of €1.4 billion, representing 12.7% of sales.The Group raises its full-year guidance.
Florent Menegaux, CEO, said: “As markets continued to recover, the Michelin Group had a very good first half. These solid results should not overshadow the persistent impact of the health crisis, which is causing major disruptions, particularly in the supply chain. I would therefore like to personally thank the Michelin teams for their unwavering commitment to enabling our Group to sustain its leadership in our tire businesses and to continue deploying our sustainable growth strategy.”
After recovering sharply in the first half, global demand will not benefit from as favorable a base in the second half of the year, when it will likely continue to be impacted by global supply chain disruptions. Passenger car and Light truck tire markets are expected to expand by between 8% and 10% over the year and Truck tire markets by between 6% and 8%. The Specialty markets should deliver 10% to 12% growth over the year.
Barring any new systemic effect from Covid-192, Michelin plans to strengthen its positions in the prevailing market environment. Consequently, the Group is raising its objectives for the full year, targeting segment operating income in excess of €2.8 billion at constant exchange rates (versus > €2.5 billion as previously announced) and structural free cash flow3 of more than €1 billion (versus around €1 billion).
(in € millions) | First-half2021 | First-half2020 |
Sales | 11,192 | 9,357 |
Segment operating income | 1,421 | 310 |
Segment operating margin | 12.7% | 3.3% |
Automotiveand related distribution | 13.1% | -0.8% |
Road transportation and related distribution | 9.9% | -1.3% |
Specialty businessesand related distribution | 14.8% | 14.7% |
Other operating income and expenses | 16 | (133) |
Operating income | 1,437 | 177 |
Net income/(loss) | 1,032 | (137) |
Earnings per share | 5.74 | (0.75) |
Segment EBITDA | 2,277 | 1,192 |
Capital expenditure | 543 | 490 |
Net debt | 3,679 | 5,510 |
Gearing | 26.7% | 45% |
Provisions for post-employment benefit obligations | 3,408 | 3,858 |
Free cash flow1 | 346 | (351) |
Free cash flow before acquisitions | 361 | (310) |
Employees on payroll2 | 123,686 | 124,000 |
1 Free cash flow: net cash from operating activities less net cash used in investing activities, adjusted for net cash flows relating to cash management financial assets and borrowing collaterals.
2 At period-end.
Market review
First-half2021/2020(in number of tires) | Western&CentralEurope* | CIS | North& CentralAmerica | South America | China | Asia(excluding India & China) | Africa/ India/ Middle East | Total |
Original Equipment Replacement | +26% +22% | +38% +19% | +36% +37% | +57% +40% | +22% +15% | +17% +12% | +48% +27% | +27% +25% |
Second-quarter2021/2020(in number of tires) | Western&CentralEurope* | CIS | North& CentralAmerica | South America | China | Asia(excluding India & China) | Africa/ India/ Middle East | Total |
Original Equipment Replacement | +93% +45% | +80% +52% | +146% +74% | +282% +89% | -8% -2% | +50% +21% | +132% +81% | +46% +46% |
* Including Turkey
In the first half of 2021, the global Original Equipment and Replacement Passenger car and Light truck tire market rebounded by 26% in number of tires sold.
Worldwide unit sales of Original Equipment tires rebounded by 27% in the first half of 2021. However, this sharp market upturn from the low 2020 base was dampened by the impact of semiconductor shortages on the global automotive industry, such that OE demand ended the period still down 14% compared with first-half 2019.After a first quarter shaped by a 78% upsurge in Chinese demand off of favorable prior-year comparatives, the second three months saw the European and North American markets increase sharply, for the same reasons, by 93% and 146% respectively. In China, however, supply chain issues caused demand to contract by 8% over the quarter.The other regions (South America, Africa/India/Middle East and Southeast Asia) also enjoyed, as expected, a strong recovery in the second quarter.
The global Replacement market rebounded by 25% in the first half, with a faster 46% gain in the second quarter from much more favorable comparatives in Europe and the Americas, at a time of sustained recovery in mobility and buying ahead of price increases.In Western and Central Europe, growth was stronger in the Southern countries, which had experienced stricter lockdowns in first-half 2020, with demand rising 30% in France, 51% in Spain and 28% in Italy, countries where restrictions on freedom of movement remained in place until May 2021. Several dealers replenished their inventories ahead of rising prices. In all, European tire demand ended the period down slightly on 2019 levels.Tire demand in North and Central America rose a steep 37% in the first half, with a faster 74% gain in the second quarter led by very favorable comparatives and the partial rebuilding of dealer inventories. By the end of June, the Replacement market had climbed back above 2019 levels.In South America, Replacement demand ended the first half up 40% year on year, with an 89% increase in the second quarter and particularly strong growth in Brazil. By period-end, the South American market had made up all of the shortfall since first-half 2019.In China, after a particularly strong first quarter (up 38% on highly favorable comparatives and inventory rebuilding), demand was down a slight 2% year-on-year in the second three months, reflecting the return to normal market conditions in the prior-year period.In Southeast Asia, Replacement demand rose by 12% over the first half, with a faster 21% gain in the second quarter. In 2020, the market drop had not been as steep as in the other regions. As of end-June 2021, demand was still below 2019 levels.In the Africa/India/Middle East region, markets rebounded by 27% in the first half, with an 81% increase in the second quarter led by the strong recovery in demand in India (up 225%) and North Africa (up 87%). Replacement demand, however, remained significantly below 2019 levels.
First-half2021/2020(in number of tires) | Western&CentralEurope* | CIS | North& CentralAmerica | South America | China | Asia(excluding India & China) | Africa/ India/ Middle East | Total |
Original Equipment Replacement | +50% +27% | +16% -5% | +46% +35% | +55% +29% | +23% +28% | +15% +9% | +44% +16% | +29% +22% |
Second-quarter2021/2020(in number of tires) | Western&CentralEurope* | CIS | North& CentralAmerica | South America | China | Asia(excluding India & China) | Africa/ India/ Middle East | Total |
Original Equipment Replacement | +98% +38% | +19% +2% | +119% +56% | +117% +47% | -11% +4% | +45% +19% | +127% +34% | +12% +26% |
* Including Turkey
The number of new Truck tires sold worldwide climbed a sharp 24% in the first half of 2021, lifted by the global economic recovery and the resulting upturn in freight demand.
The global Original Equipment Truck tire market, as measured by the number of new tires sold, grew by 29% in the first half of 2021.The first quarter delivered growth of 50%, impelled by the 88% increase in Chinese demand ahead of implementation of the China 6 emission standards.Growth slowed to 12% in the second three months, reflecting: - an 11% decline in China, as trucking companies completed their fleet upgrades;- strong growth in the other regions, off of very favorable comparatives and in sharply rebounding economies. Global OE demand rose significantly above first-half 2019 levels in first-half 2021, led by the brisk growth in China, but remained below them in the European and US markets.
Demand for Replacement Truck tires rose by 22% over the first half, with a faster 26% gain in the second quarter.In Western and Central Europe, in an environment shaped by very favorable economic conditions but also impacted by inventory rebuilding, the Replacement market expanded by 27%, led by very high demand in the Southern countries (up 48% in the Iberian Peninsula, 49% in Italy and 31% in France). As a result, the market ended the period above its 2019 levels. In North and Central America, the Replacement market climbed 35% over the first six months, with a faster 56% increase in the second quarter. Impelled by the economic upturn in the region, this surge in growth lifted the market well above its pre-crisis levels by the end of June.In South America, the Replacement market ended the period up 29%, as the 38% economic recovery-led gain in Brazil more than offset the 11% decline in Argentina. Demand now exceeds 2019 levels.Demand in Southeast Asia increased by 9% in the first half, with a sharp acceleration to 19% in the second quarter. Growth varied widely by country, from 18% in Thailand and 12% in Indonesia to 7% in Japan and South Korea, and 3% in Australia. The market remains significantly below its pre-crisis levels.Replacement demand in the Africa/India/Middle East region rose by 16%, led by a 27% increase in India, but remained lower than in 2019.
First-Half 2021 Net Sales and Earnings
Sales for the first six months of 2021 totaled €11,192 million, an increase of 19.6% from the year-earlier period that was attributable to the net impact of the following factors:
Segment operating income amounted to €1,421 million or 12.7% of sales, versus €310 million and 3.3% in first-half 2020.
The change in segment operating income primarily reflected:- a €1,195 million increase from the strong growth in tire volumes sold and improved fixed cost absorption;- a robust €229 million increase from the tire price-mix effect, led by disciplined, responsive pricing management, sustained enhancement of the product mix and a favorable business mix;- a €103 million decrease from higher raw material prices and related transportation costs;- a €103 million decrease from the increase in tire SG&A expenses, which were exceptionally low in first-half 2020, but which remain far lower than in first-half 2019;- a €24 million decrease from the Group’s manufacturing and logistics performance, as manufacturing performance gains were seriously impacted by the sharp €45 million increase in logistics costs;- a €9 million improvement in segment operating income from the non-tire businesses;- a €56 million gain stemming primarily from the year-on-year decline in Covid-19-related expenditure, including the cost of purchasing and producing masks and hand sanitizer;- a €150 million decrease from the unfavorable currency effect.
Other operating income and expenses amounted to a net income of €16 million, corresponding to the €41 million amortization of intangible assets acquired in business combinations, the €113 million disposal gain on the Group’s investment in Solesis following the sale of a stake to the Altaris fund, and restructuring costs.
In all, net income for the first half came to €1,032 million.
Free cash flow ended the first half at €346 million, a €697 million improvement on the year-earlier period. The increase was mainly attributable to the strong upturn in EBITDA driven by the growth in volumes, less the outlays to partially rebuild working capital. Gearing stood at 26.7% at June 30, 2021, corresponding to net debt of €3,679 million, up €148 million from December 31, 2020.
In € millions | Sales | Segment operatingincome | Segment operatingmargin | |||
H1 2021 | H1 2020 | H1 2021 | H1 2020 | H1 2021 | H1 2020 | |
Automotive andrelated distribution | 5,562 | 4,394 | 730 | (35) | 13.1% | -0.8% |
Road transportation and related distribution | 2,897 | 2,411 | 286 | (30) | 9.9% | -1.3% |
Specialty businesses andrelated distribution | 2,733 | 2,552 | 405 | 375 | 14.8% | 14.7% |
Group | 11,192 | 9,357 | 1,421 | 310 | 12.7% | 3.3% |
Sales in the Automotive and related distribution segment rose by 26.6% to €5,562 million, from €4,394 million in the first six months of 2020.
Segment operating income amounted to €730 million or 13.1% of sales, versus a loss of €35 million and -0.8% in first-half 2020.
The year-on-year improvement was primarily led by (i) the solid 28% increase in volumes, which drove market share gains, particularly in the MICHELIN-branded 18-inch and larger segment; and (ii) the favorable impact of the relative performances of Replacement and OE tire sales, with the latter hit by the shortage of auto semiconductors. Responsive pricing management helped to offset the increase in raw material prices and related transportation costs. Exchange rate movements had a negative impact on the segment’s operating income.
Sales in the Road transportation and related distribution segment amounted to €2,897 million in the first half of 2021, a 20% increase from the €2,411 million reported for the same period in 2020.
Segment operating income totaled €286 million or 9.9% of sales, versus a loss of €30 million and -1.3% in first-half 2020.
With the upturn in global demand and a favorable geographic mix, the segment enjoyed a 24% increase in tire volumes sold over the period. The segment’s selective marketing strategy and responsive pricing management helped to offset higher raw material and related transportation costs. The Services & Solutions business is stepping up the pace of growth, led by fleet management solutions. Exchange rate movements had a negative impact on the segment’s operating income.
Sales in the Specialty businesses and related distribution segment rose by 7.1% over the period, to €2,733 million from €2,552 million in first-half 2020.
Segment operating income stood at €405 million or 14.8% of sales, versus €375 million and 14.7% in first-half 2020.
From a less favorable base than the other two segments, the Specialty businesses reported a 12% increase in tire volumes, led by sales of Construction and Agricultural tires, which resulted in a negative business mix. Rigorous price management on non-indexed activities partially offset negative impact of raw material clauses in first-half; from the second half of the year, these clauses will turn favorable. The conveyor belt and high-tech materials businesses continued to expand over the period. Exchange rate movements had a negative impact on the segment’s operating income.
“All Sustainable” Michelin – First-Half 2021
Diversity and inclusion: One of the ambitious objectives in the Group’s “All Sustainable” strategy is to set the standard in diversity and inclusion. To track its engagement in this area, Michelin has introduced a Diversities & Inclusion Management Index (IMDI), with the goal of reaching 80/100 by 2030, compared with a base of 50/100 in 2019 and a score of 62/100 at year-end 2020.The index will measure the Group’s performance in embracing diversity and inclusion with 12 quantitative and qualitative indicators, organized into 5 categories: Gender balance, Identity, Multi-national management, Disability, and Equal opportunity.
The Michelin Global Works Council: Designed to foster open, constructive and socially responsible dialogue at the international level, the Michelin Global Works Council was set up by Michelin in 2020 with the IndustriALL Global Union. It expresses the Group’s commitment to creating a new forum for discussions with employee representatives from most of its host countries, so as to facilitate greater understanding of Michelin’s economic, social and environmental challenges around the world and to improve, in every host country, employee support during periods of business transformation.
The Council’s first meeting, held on June 28 and 29, 2021, provided an opportunity to discuss the Group’s sustainable growth vision, based on the right balance between people, profit and planet.
Vigeo Eiris non-financial rating: In 2021, MICHELIN was once again awarded the highest A1+ ESG Rating by Vigeo Eiris (Moody’s), with a five-point improvement in its overall score, to 73/100. This ranked the Group at the top of the 39 companies rated in the Automobile sector. According to Vigeo Eiris, Michelin “demonstrates an advanced commitment and ability to integrate ESG factors into its strategy, operations and risk management.” The Group also earned a score of 100/100 for the rating’s “Environmental strategy” aspects.
Value Balancing Alliance: In late March, Michelin joined the Value Balancing Alliance (VBA), an organization of multinational companies from a variety of industries that is developing and testing a methodology capable of translating environmental and social impacts into comparable financial data.VBA is seeking to transform the way that companies measure, assess and disclose information about the environmental, human, social and financial value that they create for society. Its goal is to provide every stakeholder with comprehensive, reliable data to improve decision-making, business management and performance assessment.
By participating in the alliance, Michelin can work with companies from a variety of industries to lay the groundwork for widespread implementation. The approach is fully in line with the Group’s All Sustainable vision, based on the right balance between personal fulfillment, business and financial performance and safeguarding the planet. It will facilitate the program underway since 2020 to assess the monetary value of the economic, environmental and social impact of the Group’s operations across the value chain.
Sustainable materials rate in tires: In June, Michelin offered a further illustration of its “All Sustainable” vision by unveiling a track tire with 46% sustainable materials content. This very high percentage was achieved by increasing the tire’s natural rubber content and using recycled carbon black recovered from end-of-life tires. In this way, Michelin is showcasing its ability to incorporate an ever-higher proportion of sustainable materials into its products without compromising on their performance. This latest milestone is fully aligned with the Group’s commitment to using 100% sustainable materials in all its tires by 2050.
First-Half 2021 Highlights
A full description of first-half 2021 highlights may be found on the Michelin website: http://www.michelin.com/en
Presentation and Conference CallFirst-half 2021 results will be reviewed with analysts and investors during a presentation today, Monday, July 26, 2021 at 6:30 p.m. CEST. The event will be in English, with simultaneous interpreting in French.
WEBCASTThe presentation will be webcast live on: www.michelin.com/en/finance
CONFERENCE CALL Please dial-in on one of the following numbers from 6:20 pm CEST:
In France (French) | +33 (0)1 70 71 01 59 | PIN code: 38844528# |
In France (English) | +33 (0) 1 72 72 74 03 | PIN code: 83809618# |
In the United Kingdom | +44 (0) 207 194 3759 | PIN code: 83809618# |
In North America | (+1) (646) 722 4916 | PIN code: 83809618# |
From anywhere else | +44 (0) 207 194 3759 | PIN code: 83809618# |
The presentation of financial information for the six months ended June 30, 2021 (press release, presentation, financial report) may also be viewed at http://www.michelin.com/en, along with practical information concerning the conference call.
Investor calendar
Investor RelationsÉdouard de Peufeilhoux+33 (0) 6 89 71 93 73 edouard.de-peufeilhoux@michelin.comPierre Hassaïri+33 (0) 6 84 32 90 81pierre.hassairi@michelin.comFlavien Huet+33 (0) 7 77 85 04 82flavien.huet@michelin.com | Media Relations +33 (0) 1 45 66 22 22groupe-michelin.service-de-presse@michelin.comIndividual ShareholdersIsabelle Maizaud-Aucouturier+33 (0) 4 73 32 23 05isabelle.maizaud-aucouturier@michelin.comClémence Rodriguez+33 (0) 4 73 32 15 11clemence.daturi-rodriguez@michelin.com |
DISCLAIMERThis press release is not an offer to purchase or a solicitation to recommend the purchase of Michelin shares. To obtain more detailed information on Michelin, please consult the documents filed in France with Autorité des Marchés Financiers, which are also available from the www.michelin.com/eng website.This press release may contain a number of forward-looking statements. Although the Company believes that these statements are based on reasonable assumptions at the time of publishing this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or inferred by these statements. In accordance with EU regulation no. 596/2014, we hereby inform you that this press release may contain inside information.
1SOI: Segment Operating Income2 Deeper supply chain disruptions or tighter restrictions on freedom of movement that would result in a significant drop in the tire markets.
3 Structural free cash flow corresponds to free cash flow before acquisitions, adjusted for the impact of changes in raw material prices on trade payables, trade receivables and inventories.
4 Polyethylene terephthalate (PET) is a plastic that is currently oil based, with its two monomers, ethylene glycol and terephthalic acid, being derived from petroleum. It is the raw material for one of the main polyester fibers used in tire reinforcements.
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