PARIS—Michelin’s sales revenue rose 11.3 percent in the quarter ended March 31 to $6.6 billion thanks to “robust” price-mix component and the first-time contributions of newly acquired businesses.
Michelin’s revenue increase came despite a 0.5 percent drop in tonnage volumes, the company reported, as was aided by a favorable currency-exchange effect.
Michelin did not disclose earnings at this time but said the first-quarter performance is allowing it to confirm its earlier-published expectations for 2019—segment operating income to exceed the 2018 levels (at constant exchange rates) and volume growth in line with global market trends.
Based on April 2019 exchange rates, Michelin said the currency effect is expected to have a relatively favorable impact on segment operating income while the impact of raw materials costs is estimated at around a negative $114 million, mainly affecting first-half results.
Outgoing CEO Jean-Dominique Senard said Michelin “once again demonstrated the resilience afforded by our group’s exposure to different economic sectors” even in difficult markets.
Senard noted that Michelin anticipates modest growth in replacement passenger/light truck tire markets but a contraction in original equipment business; a slight contraction in truck/bus markets; and “dynamic” business in the mining, aircraft and two-wheel segments.
Last year’s key acquisitions Camso Inc. and Fenner P.L.C. provided roughly 75 percent of the additional revenue Michelin reported in the quarter. Their additional sales went into Michelin’s Specialty Businesses segment, putting on nearly equal footing with the Road Transportation (commercial vehicle) segment at 25 percent of the firm’s overall revenue.
Michelin’s Automotive (passenger/light truck tire) segment reported 0.2 percent revenue growth to $3.17 billion as OE business fell 8 percent and replacement business was up 1 percent. OE sales were off in every region, while replacement sales were up in North and Central America, Asia and Africa/Middle East.
Replacement demand was up 5 percent in the U.S., driven by rising imports ahead of possible new import duties, Michelin said.
In the truck/bus tire business, replacement sales fell 2 percent while OE sales were up 4 percent. In North America OE business was up 12 percent while replacement sales slid 7 percent as dealers focused on reducing inventories that were built up in late 2018 ahead of anticipated new import duties on Chinese products.