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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-0.14 | -0.39% | 36.18 | 35.83 | 36.75 | 36.71 | 35.93 | 36.32 | 2,485,899 | 16:40:00 |
PRESS RELEASE
Clermont-Ferrand - July 25, 2017
COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN
Financial Information for the Six Months Ended June 30, 2017
Net income of €863 million, up 12%
Volumes up 4.1% (3.6% at constant scope of consolidation)
Operating income from recurring activities of €1.4 billion, stable and in line with the Group's roadmap
2017 guidance confirmed
Jean-Dominique Senard, Chief Executive Officer, said: ''Michelin's good performance, compared with a strong first-half 2016, is in line with our 2020 roadmap. The main drivers of the period include an increase in volumes, tight pricing policy management, further improvements in our competitiveness and the commitment of our employees to serving customers. Today, we are confirming our guidance for 2017, with a second half that will benefit from the improved margins resulting from the price increases."
Over the second half of the year, regardless of prevailing winter weather conditions, replacement markets are expected to recover from their decline after the surge in early buying. Demand for original equipment tires should remain on an upward trend in the Truck, Earthmover and Agricultural segments, with growth slowing in the Passenger car and Light truck segment. Sales of mining tires are expected to remain buoyant.
Given the full-year impact of higher raw materials costs, which are currently estimated at €800 million, Michelin will continue to agilely manage prices, holding unit margins firm in businesses not subject to indexation clauses and applying those clauses in businesses that are. As a result, changes in the price mix and raw materials costs are expected to have a net positive impact in the second half of the year.
For the full year, Michelin confirms its targets of volume growth in line with global market trends, operating income from recurring activities exceeding the 2016 figure at constant exchange rates, and structural free cash flow of more than €900 million.
(in € millions ) | First-Half 2017 | First-Half 2016 |
Net sales | 11,059 | 10,292 |
Operating income from recurring activities | 1,393 | 1,405 |
Operating margin on recurring activities | 12.6% | 13.7% |
Passenger car/Light truck tires and related distribution | 12.8% | 13.8% |
Truck tires and related distribution | 7.5% | 9.9% |
Specialty businesses | 20.8% | 20.6% |
Operating income/(loss) from non-recurring activities | 27 | (51) |
Operating income | 1,420 | 1,354 |
Net income | 863 | 769 |
Earnings per share1 (in €) | 4.76 | 4.24 |
Capital expenditure | 585 | 623 |
Net debt | 1,685 | 1,719 |
Gearing | 16% | 18% |
Employee benefit obligations | 4,570 | 5,273 |
Free cash flow2 | (305) | 8 |
Employees on payroll3 | 112,800 | 112,400 |
1 Attributable to shareholders of the Company.
2 Free cash flow: net cash from operating activities less net cash from investing activities less net cash from other current financial assets, before distributions.
3 At period-end.
Market Review
First-Half 2017 % change YoY (in number of tires) | Europe including Russia & CIS* | Europe excluding Russia & CIS* | North America | Asia (excluding India) | South America | Africa/India/Middle East | Total |
Original equipment Replacement | +1% +4% | +1% +2% | +1% +1% | +3% +5% | +13% +7% | +8% +2% | +3% +4% |
Second-Quarter 2017 % change YoY (in number of tires) | Europe including Russia & CIS* | Europe excluding Russia & CIS* | North America | Asia (excluding India) | South America | Africa/India/Middle East | Total |
Original equipment Replacement | -4% +0% | -4% -2% | -1% -1% | +1% +3% | +8% +7% | +4% +3% | -0% +1% |
*Including Turkey.
In the first half of 2017, the global original equipment and replacement Passenger car and Light truck tire market grew by 3% in number of tires sold. It rose by 5% in the first quarter, driven by purchases ahead of the price hikes announced by most tiremakers, and by 1% in the second quarter as demand cooled.
· Original equipment
· Replacement
First-Half 2017 % change YoY (in number of tires) | Europe including Russia & CIS* | Europe excluding Russia & CIS* | North America | Asia (excluding India) | South America | Africa/India/Middle East | Total |
Original equipment Replacement | +6% +7% | +6% +6% | +4% -2% | +17% +3% | -3% +3% | -8% -3% | +9% +1% |
Second-quarter 2017 % change YoY (in number of tires) | Europe including Russia & CIS* | Europe excluding Russia & CIS* | North America | Asia (excluding India) | South America | Africa/India/Middle East | Total |
Original equipment Replacement | +3% +2% | +2% +3% | +14% -9% | +16% -3% | -0% -0% | -14% -3% | +9% -3% |
*Including Turkey.
Global demand for new original equipment and replacement Truck tires rose by 3% in number of tires sold in the first six months of 2017, with increases in replacement sell-in prices spurring a 7% gain in the first quarter followed by a 3% contraction in the second and with robust 9% growth in the OE segment over the full period.
· Original equipment
· Replacement
Original equipment markets have turned upwards at a time of low inventory and rising demand for mining machines.
Infrastructure and quarry tire markets also rose over the period, partly in response to the announced price increases by tiremakers.
Despite low farm commodity prices, replacement markets expanded over the period, led by dealer purchases ahead of announced price increases.
First-Half 2017 Net Sales and Earnings
Net sales for the first six months of 2017 totaled €11,059 million, an increase of 7.5% from the year earlier period that was attributable to the net impact of the following factors:
Consolidated operating income from recurring activities amounted to €1,393 million or 12.6% of net sales in the first six months of 2017, compared with €1,405 million and 13.7% in first-half 2016. The €27 million in net operating income from non-recurring activities corresponded to gains on amendments to the US post-retirement healthcare plan and the UK pension plan, which were partially offset by changes in the fair value of non-current assets.
Operating income from recurring activities was first shaped by growth in volumes, which contributed €139 million. As announced, the €145 million positive price-mix effect partially offset the full-period €331 million negative impact of higher raw materials costs. In line with the implementation schedule, the competitiveness plan delivered €146 million in gains that helped to absorb the €142 million increase in production costs and overheads. Lastly, the currency effect added €37 million to the reported figure.
In all, net income for the period came to €863 million, an increase of 12%.
Taking into account the negative free cash flow, the payment of €585 million in dividends and the €101 million in share buybacks, gearing stood at 16% at June 30, 2017, unchanged from a year earlier and corresponding to net debt of €1,685 million, compared with gearing of 9% and net debt of €944 million at December 31, 2016.
In € millions | Net sales | Operating income from recurring activities | Operating margin on recurring activities | |||
H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | |
Passenger car/Light truck tires and related distribution | 6,263 | 5,916 | 800 | 814 | 12.8% | 13.8% |
Truck tires & related distribution | 3,041 | 2,907 | 229 | 288 | 7.5% | 9.9% |
Specialty businesses | 1,755 | 1,469 | 364 | 303 | 20.8% | 20.6% |
Group | 11,059 | 10,292 | 1,393 | 1,405 | 12.6% | 13.7% |
· Passenger car/Light truck tires and related distribution
Net sales in the Passenger car/Light truck tires and related distribution segment rose by 5.9% to €6,263 million, from €5,916 million in the prior-year period.
Operating income from recurring activities came to €800 million or 12.8% of net sales, versus €814 million and 13.8% in first-half 2016.
The change was primarily attributable to the 3% growth in sales volumes and the improvement in the price mix, which offset almost all of the impact of higher raw materials prices. The still favorable mix effect reflected the success of the MICHELIN CrossClimate+ and MICHELIN Pilot Sport 4S lines, which drove strong growth in sales of MICHELIN brand tires (up 4%) and 18-inch and larger tires (up 23%). Sales of other Group brands grew 3 % over the period.
· Truck tires & related distribution
Net sales in the Truck tires and related distribution segment amounted to €3,041 million in the first half of 2017, a 4.6% increase from the €2,907 million reported a year earlier.
Operating income from recurring activities amounted to €229 million or 7.5% of net sales, compared with €288 million and 9.9% in first-half 2016.
The change primarily reflected the stable volume performance, stemming from the priority focus on raising prices to deliver higher margins in the second half. New products and services continued to be introduced over the period, which was shaped by the success of the MICHELIN X Multi, MICHELIN X Works, intermediate tire lines and Tire Care services.
· Specialty businesses
Net sales by the Specialty businesses stood at €1,755 million for the period, compared with €1,469 million a year earlier.
Operating income from recurring activities stood at €364 million or 20.8% of net sales, versus €303 million and 20.6% in first-half 2016.
The increase stemmed from the robust 16% growth in volumes, led by the sustained rebound in demand for the Group's mining tires and the sharp upturn in Earthmover and Agricultural original equipment sales. This amply offset the impact of higher raw materials costs and continued price reductions over the period in application of contractual indexation clauses.
COMPAGNIE GÉNÉRALE DES ÉTABLISSEMENTS MICHELIN
Compagnie Générale des Établissements Michelin ended the first half with net income of €906 million, compared with €1,338 million in the first six months of 2016.
The financial statements were presented to the Supervisory Board at its meeting on July 24, 2017. A review was performed by the statutory auditors, who issued their related report on July 25, 2017.
First-Half 2017 Highlights
A full description of first-half 2017 highlights
may be found on the Michelin website: http://www.michelin.com/eng
Presentation and Conference call
First-half 2017 results will be reviewed with analysts and investors during a presentation today, Tuesday July 25, at 6:30 p.m. CEST. The event will be in English, with simultaneous interpreting in French.
Webcast
The presentation will be webcast live on www.michelin.com/eng
Conference call
Please dial-in on one of the following numbers from 6:20 p.m. CEST:
The presentation of financial information for the six months ended June 30, 2017 (press release, presentation, interim financial report) may also be viewed at http://www.michelin.com/eng, along with practical information concerning the conference call.
Investor calendar
Thursday, October 19, 2017 after close of trading
Investor Relations Valérie Magloire +33 (0) 1 78 76 45 37 +33 (0) 6 76 21 88 12 (cell) valerie.magloire@michelin.com Matthieu Dewavrin +33 (0) 4 73 32 18 02 +33 (0) 6 71 14 17 05 (cell) matthieu.dewavrin@michelin.com Humbert de Feydeau +33 (0) 4 73 32 68 39 +33 (0) 6 82 22 39 78 (cell) humbert.de-feydeau@michelin.com | Media Relations Corinne Meutey +33 (0) 1 78 76 45 27 +33 (0) 6 08 00 13 85 (cell) corinne.meutey@michelin.com Individual Shareholders Jacques Engasser +33 (0) 4 73 98 59 08 jacques.engasser@michelin.com |
DISCLAIMER
This 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 as 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.
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