Michelin CGDE : Financial information for the three months ended March 31, 2015
April 22, 2015 at 12:00 pm EDT
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Michelin reports first-quarter 2015 net sales of €5 billion,
with above-market unit sales growth of 1.5%
Unit sales up 1.5% versus high prior-period comparatives, despite narrower markets:
Above-market growth in Passenger car/Light truck tire sales,
Truck tire and Specialty business volumes in line with the markets.
Unfavorable change in price mix, in an environment shaped by persistently low raw materials prices, reflecting:
The impact of applying raw materials-based price indexation clauses,
The added effect of price cuts introduced during 2014 and in early 2015.
2015 guidance confirmed, with additional details
Lower raw materials prices are now expected to have a favorable impact of around €600 million over the year, the aim being to ensure that changes in price mix and raw materials prices have a net positive effect in 2015, with the second half offsetting the negative first-half effect,
The currency effect is now expected to add more than €350 million to operating income for the year,
Michelin confirms its objectives of growing unit sales in line with global trends in its markets, delivering an increase in operating income before non-recurring items beyond the currency effect, reporting a return on capital employed in excess of 11%, and generating structural free cash flow of approximately €700 million, with around €1.8 billion in capital expenditure.
Uses of cash
Michelin will pursue its policy of value-creating investment, focusing on the growing Passenger car/Light truck tire businesses, as well as on innovation, Truck fleet operator services, the digital strategy, raw materials and semi-finished products and customer service,
A €750 million share buyback program will be carried out over a period of 18 to 24 months.
Compagnie Générale des Etablissements Michelin is one of the world leaders in manufacturing and marketing of tires. The products are mainly sold under the Michelin, BFGoodrich, Kleber, Uniroyal and Taurus brands. Net sales break down by activity as follows:
- sale and distribution of tires (75.2%): tires for light vehicles (67.3% of net sales) and heavy trucks (32.7%). The group also offers services and solutions to improve the efficiency of transportation;
- other (24.8%): sale of specialty tires for agricultural and civil engineering machines, two-wheeled vehicles, and aircraft. In addition, Michelin offers solutions to support travels and trips (road maps and gastronomic and tour guides, ViaMichelin, Tablet and Robert Parker) and develops high-tech materials for many fields.
Net sales are distributed geographically as follows: France (8.8%), Europe (26.1%), North America (39.2%) and other (25.9%).