Michelin's half-year operating margin increases despite instability in Europe
July 24 (Reuters) -French tyre maker Michelin MICP.PA reported a 4.2% drop in half-year sales on Wednesday, 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.
WHY IT'S IMPORTANT
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.
KEY QUOTE(S)
"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.
BY THE NUMBERS
Sales fell 4.2% 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% of sales in the first half, compared with 12.1% 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.
WHAT’S NEXT
Michelin will publish its third-quarter and nine-month sales on October 23.
Peers Goodyear GT.O, Pirelli PIRC.MI and Continental CONG.DE are to report their half-year results on July 31st, August 1st and 7 respectively.
Reporting by Olivier Cherfan and Gianluca Lo Nostro in Gdansk. Editing by Jane Merriman
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