Michelin’s H1 profit drops slightly, on track for year-end goal.
Michelin has announced operating profit was 0.9% lower at €1.39 billion ($1.62 billion) during H1 (JanuaryJune) 2017 on a 7.4% increase in revenue to €11.06 billion ($12.8 billion). The slight drop was despite a significant increase in sales of high-margin earthmover tyres.
The tyre maker’s net income for H1 was €863 million, up 12% over the comparable period last year. Savings initiatives generated €146 million in H1 toward a €300 million full-year goal, countering inflation that wiped €142 million off earnings. Volumes were up 4.1% (3.6% at constant scope of consolidation) over H1 2016, dampened in Q2 by heavy buying in Q1 ahead of price increases.
Passenger car and light truck tyre volumes were up 3%, while truck tyre volume was stable, Michelin said. The French company saw sustained resurgence in mining tyre demand and a sharp upturn in OE earthmover and agricultural tyre sales. The specialty tyre division revenue jumped nearly 20% to €1.76 billion on rebounding demand in the mining sector. Michelin CEO Jean-Dominique Senard said: “Michelin’s good performance, compared with a strong firsthalf 2016, is in line with our 2020 roadmap.
The main drivers of the period include an increase in volumes, tight pricing policy management, further improvements in our competitiveness, and the commitment of our employees to serving customers. Today, we are confirming our guidance for 2017, with a second half that will benefit from the improved margins resulting from the price increases.”