Michelin confirms its objectives despite headwinds

Michelin resists successive crises. The famous tire manufacturer announced on Tuesday April 26 that it had generated 6.481 billion euros in turnover over the first three months of the year, which represents an increase of 19% compared to the first quarter of 2021 and a result higher than that expected by analysts. The leeway still afforded by its more premium price positioning and positive exchange rate effects eclipsed the impact of near-sluggish volumes over the period. In March alone, demand for original equipment tires, which are fitted to new vehicles when they leave the factory, fell by 14%, in a context already affected by the global shortage of electronic components which is hampering production.

« In 2022, in a very uncertain context, the markets should show slight growth “, added Michelin in a press release, while specifying that this growth would be “ in the lower part of the ranges initially planned “. Despite the doubts, the Clermont-based group has maintained its annual target of an operating result of the sectors above 3.2 billion euros at constant parities (against 2.97 billion in 2021) and that of a structural free cash flow greater than 1.2 billion, “ excluding intensification of systemic effects “. During a conference call with analysts, Chief Financial Officer Yves Chapot said he remains confident for 2022 despite a negative impact from inflation that is a billion euros higher than expected before the start. of the war in Ukraine at the end of February.

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Russian factory closed

The conflict has caused major disruptions in supplies from Russia, a major supplier of petroleum-derived products, such as carbon black. Yves Chapot added that the alternative sources of supply should allow Michelin to no longer be at all dependent on Russian deliveries from the beginning or mid-June. The group also indicated in mid-March suspending its exports to Russia and temporarily closing the doors of its Russian factory in Davydovo, where 750 employees manufacture between 1.5 and 2 million tires each year, or around 1% of its production. world.

Regarding China, which represents 6% to 7% of the company’s sales, the largest of its three factories has reopened and the other two should follow in early May. The resurgence of Covid-19 should affect the results, but the strong demand for passenger cars should limit the breakage, estimates the financial director.

With Reuters (Gilles Guillaume, edited by Jean-Michel Bélot and Bertrand Boucey)

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