Michelin's Full-Year Sales Decline Aligned with Expectations
French tire manufacturer Michelin has reported a 5.1% decrease in full-year sales volumes, meeting market estimates. The decline is attributed to a slowdown in new vehicle sales in Europe.
European Sales Slowdown
Sales of tires for new passenger cars and light commercial vehicles in Europe witnessed a 7% drop. This downturn stems from consumers' delayed purchases amid concerns over electric vehicle adoption and the reduction of EV subsidies in certain countries, such as Germany.
Additionally, Michelin experienced a 20% decline in European sales of new truck tires.
Impact of Tariffs and Investment Strategy
Michelin acknowledged that the 25% U.S. tariffs imposed on goods from Mexico and Canada could impact its sourcing and investment plans. The company hinted at the possibility of accelerating investments in the United States.
However, CFO Yves Chapot stated that the company has no plans of divesting in Europe to invest in the U.S. instead. Europe remains a significant market for Michelin, accounting for 35.5% of total sales in the first half of 2024.
Dividend and Outlook
Michelin has proposed a dividend of 1.38 euros per share, marginally higher than the previous year's payout. This falls short of analysts' expectations, which averaged 1.46 euros per share.
Despite challenges in the first half of the year, Michelin projects growth in its segment operating income and the generation of free cash flow exceeding 1.7 billion euros in 2025. The company reaffirmed its outlook for 2026.