Michelin : Financial information for the three months ended september 30, 2018

€16.2 billion in net sales for the first nine months of 2018, up 3.9% at constant exchange rates thanks to a robust 2.2% gain from the price-mix effect 2018 markets scenario revised, EBIT guidance refined and structural free cash flow confirmed

Third-quarter net sales up on favorable prior-year comparatives, with a 2.9% increase in volumes and, as expected, a 0.5% positive impact from the price-mix effect as the environment weakened late in the period.

• Further market share gains in the 18-inch and larger Passenger car tire segment.
• 3% rebound in Truck tire sales.
• Sustained strong growth in the Specialty businesses, up 9%.
• Firm 0.5% gain from the price-mix effect, led by disciplined margin management.
• 3.4% increase from changes in the business base, following the arrival of Fenner in the Specialty businesses and the deconsolidation of TCi.

Given the significant decline in the Passenger car & light truck and Truck tire markets late in the third quarter and the further weakness expected in the fourth quarter, the Group has revised its 2018 markets scenario, notably in China.

As a result, the Group has refined its guidance and now expects:

• A slight increase in volumes over the full year. Fourth-quarter performance will be driven by sustained market share gains in the 18-inch and larger segment of the Passenger car and Light truck business and in the Specialty markets. Full-year volumes will be affected by the major price increases already introduced to offset the sharp currency depreciation in emerging markets.
• A year-on-year increase of at least €200 million in operating income from recurring activities, at constant exchange rates, with no net impact from changes in the price mix and raw materials costs in the second half and competitiveness plan gains offsetting inflation for the year. At the same time, the Group reaffirms the competitiveness plan's target of €1.2 billion in savings over the 2017-2020 period
• More than €1,100 million in structural free cash flow in 2018

Outlook for 2019:

• Current market horizon:
  • 1.5% growth in the Passenger car & Light truck tire market, with a 10% gain in the 18‑inch and larger segment and a slight upturn in the Chinese market
  • Stable Truck tire market
  • A 4% to 5% increase in the Specialty businesses
  • Around a €150 million year-on-year increase in EBIT from the latest acquisitions*, including the initial synergies from Fenner's highly successful integration.

^{*Pending the regulatory approvals expected to be obtained for Camso in November 2018}