Jean-Dominique Senard has said his (almost) farewell to Michelin. The key figure in the French car industry, gathering up to the next meeting of Bibendum on 17 May, the presidencies of Michelin and Renault, did indeed present the results of the tire manufacturer on Monday 2018 far above the expectations of the market. They are also praised as it should be on the stock market, as the caracole action exceeds CAC 40 with an increase of more than 11%.
While the consensus established by FactSet was a turnover of 21.7 billion and a current operating profit of 2.67 billion, revenue was 22 billion and operating profit was higher than analysts' forecasts of 102 million to 2.77 billion. "It is a great result, illustrating Michelin's ability to respond in difficult market times," emphasized Jean-Dominique Senard. In October, the group had published the publication of its quarterly sales and issued a warning to the market, with the prognoses for the developments in the tire market being scaled down sharply after the sharp inflection observed at the end of the third quarter. The reaction was immediate: the share had dropped by 11% in one session, coincidentally a percentage corresponding to the increase recorded today.
Market share gains and strict cost management
"The market scenario was quite similar to what we were expecting in the passenger car and special tires sector, and in the heavyweights our forecasts were a little too pessimistic, but our sales in October and November exceeded expectations in both tourism and heavyweight replacement. Europe and the United States, we gained market share gains, and on the other hand we have made great efforts in terms of cost with good industrial productivity and heavy pressure on general and administrative costs ", explains Marc Henry, the CFO. As a result, the operating result, which is expected to increase by 200 million at constant exchange rates, even increased by 304 million. The price mix effect, ie the combination of price increases and upscaling (the group gains market share in the evolving segment of 18-inch tires and more equipping vehicles high-end, including SUVs), was almost three times higher ( 444 million vs. 158 million) for the negative impact of rising raw materials (rubber, petroleum derivatives). This also made it possible to compensate for the very negative effect of parities (271 million), where the group suffered from the evolution of the dollar, but also the real or Argentine peso.
Another positive factor, Fenner, a company acquired last year, contributed to the operating result of 63 million, an amount that exceeded expectations. Influenced by higher operating expenses mainly due to provisions related to the planned closure of the Scottish plant in Dundee, the net result decreased slightly to $ 1.66 billion. However, this did not stop the company from announcing a slight increase of the dividend to € 3.70, which represents a yield of 3.7% at the current price.
"Keep the prices fixed"
For 2019, the company expects very slight volume growth, similar to that of the market, and a further increase in operating income, excluding currency effects expected slightly positive, and not counting the positive effect of 150 million the full year integration of the Fenner. and Camso companies, which recently entered the scope of the group. "It is a measured vision on volumes, but rather confidence in our ability to achieve goals." Our priority is to maintain prices, insists on Marc Henry. The competitiveness plan, which generated savings of 317 million euros this year, is expected to accelerate, especially in the area of overheads, to keep the group up to date with Bibendum's main competitors.