Michelin revenue up despite lower unit sales volume

CLERMONT-FERRAND, France—Michelin posted a 2-percent increase in sales for the first nine months of 2023 despite 3.6-percent lower unit sales volumes.

Sales revenue rose to $22.9 billion due in large part to a 7.2-percent gain from positive tire price-mix effects, which more than offset the lower unit volumes. The trend was in decline, though, Michelin said: Up 12.3 percent in the first quarter, 6.7 percent in the second and 3.3 percent in the third.

Michelin at this time did not disclose earnings, saying instead it expects to hit the operating income forecast of roughly $3.4 billion from earlier in the year, at constant exchange rates.

Michelin cited destocking by dealers, pressured by prevailing economic conditions and rising interest rates, for the dip in tire volumes. Michelin's exit from the Russian market, meanwhile, cut volume-growth by 0.7 points during the nine-month period.

Over the first three quarters, Michelin noted a positive price effect of nearly $1.4 billion from the full-period impact of price increases introduced in 2022 and early 2023. It also marked a mix-effect gain of $237 million due to the leveraging of the Michelin brand and growth in demand for larger tires in the light vehicle segment.

By segment, Michelin reported:

• Sales in the automotive and related distribution segment increased 3.6 percent to $11.5 billion on "robust" OE demand in certain regions, which helped offset reduced replacement market unit sales.

OE demand in North and Central America, for example, was up 3 percent for the quarter and 9 percent for the nine-month period, while replacement demand in North American fell by 4 percent over the nine-month period, despite a 6-percent gain the third quarter.

Michelin also reported steadily expanding demand for 18-inch and larger tires as well as inventory levels returning to normal levels, except for winter tires in Europe.

• Sales in the "Road Transportation and Related Distribution" segment declined by 4.3 percent to $5.6 billion, as replacement market demand fell in all key markets, including a 17-percent drop in North and Central America. OE demand, by contrast, was up 1 percent globally, with Europe (up 8 percent) offsetting declines in North and Central America (down 2 percent) and South American (down 23 percent).

• Sales in Michelin's specialty businesses segment increased 5.4 percent to $5.82 billion on strong demand for mining, aircraft and OE agricultural tires, but "soft" in the construction, replacement agricultural and two-wheeler markets.

Elsewhere, the group's non-tire markets expanded in the fleet services, mining and energy segments, while remaining "stable" in general industrial applications. A resulting 12.6-percent increase in non-tire sales was "led by the conveyor, seal and belt businesses and by the growth in fleet services solutions."

"Our group is reporting solid sales revenues in a complex market environment, CEO Florent Menegaux said of Michelin's latest results. "We are continuously tightly steering our operations and adapting to the market's shifting needs."