For the first time in 12 years, there is a new name at the top of the global tire rankings. Michelin, with the help of a couple of acquisitions, edged Bridgestone to take the No. 1 spot away from the Japanese company, which had held the mantle for 11 straight years.
In most years, that would be cause for celebration. Time to break out some champagne—true French champagne, of course.
But 2020 isn't most years. The rankings are based on 2019 tire revenues, so since the time these numbers were put in the book, the novel coronavirus pandemic burst on the scene and put the whole world in flux.
Taking a look at the first-half financials of tire manufacturers from around the globe gives a good indication of just how much the tire business has been impacted. Among the 12 larger tire makers that have reported first-half earnings, nine reported net losses, all had high double-digit drops in operating income and sales dropped anywhere between 16 percent and 32 percent.
For its part, Michelin posted a net loss of $160.7 million, its operating income dropped 78 percent and sales fell 20.6 percent. Bridgestone, the firm it passed to become the world's No. 1 tire maker, also saw a net loss, as its operating earnings plummeted 68.3 percent and sales declined 22.1 percent.
Both attributed the performance to the economic impact of the global pandemic.
While uncertainty still abounds because of COVID-19, many tire makers don't want to provide guidance on how they expect the second half of 2020 to go. Still, there is some room for optimism, even on a relative basis. Most expect the second half still to be down, but not as bad as the first.
Michelin, in fact, said that barring any new "systemic impact from COVID-19," it expects full-year segment operating income to exceed $1 billion, with cash flow topping $500 million. If those numbers become a reality, you can be assured the French tire maker will be celebrating—whether it remains the No. 1 tire maker or not.