FRENCH tyre maker Michelin reported a 4.2 per cent drop in half-year sales on Wednesday (Jul 25), slightly below analysts’ expectations, citing an unstable economic environment in Europe and a weak performance in the French market. But the company managed to increase its segment operating margin thanks to its pricing policy.
Europe is struggling to compete internationally notably because of the prohibitive cost of energy, large influx of tyres produced in Asia entering the European market, and a loss in competitiveness, Michelin’s CEO Florent Menegaux said during a media call.
“Europe is uncompetitive when it comes to exports. Until now, we have resisted, but this is no longer possible, and this is creating overcapacity, hence the announcements in Germany and Poland, but other countries will also be affected,” Menegaux said, referring to the closure of some sites in Germany and some activities at one of its Polish sites.
“Since Covid, with the very sharp inflation in energy, transport costs and wages, exporting from Europe has become uncompetitive, whatever the European country of origin,” Menegaux added.
Sales fell 4.2 per cent year on year to 13.48 billion euros in the first half of 2024. That slightly missed the 13.53 billion euros expected by analysts in a company-provided consensus.
Segment operating income rose to 13.2 per cent of sales in the first half, compared with 12.1 per cent last year, driven by the change in the mix and operating expenses.
The company reiterated that it was confident in meeting its 2024 forecast for segment operating income of above 3.5 billion euros, after it last confirmed it in April.
Michelin will publish its third-quarter and nine-month sales on Oct 23.
Peers Goodyear, Pirelli and Continental are to report their half-year results on Jul 31, Aug 1 and Aug 7 respectively. REUTERS
