COMPAGNIE GÉNÉRALE DES ÉTABLISSEMENTS
Financial information for the nine months ended September 30, 2021
Despite an increasingly turbulent environment,
The Group maintains its guidance for 2021.
The environment in which the Group is currently operating is characterised by:
- The persistent health crisis.
- Extensive disruption across every supply chain.
- Rising raw materials, logistics and, now, energy costs.
- Worsening labor shortages in
North America and, to a lesser extent, inEurope .
In this environment, and with less favorable comparatives than in the first half, tire demand saw the following movements in the third quarter:
- In Passenger Car and Light truck tire markets, a steep 21% decline in the Original Equipment segment, due primarily to the continued shortage of auto semi-conductors, and stable volumes in the Replacement segment.
- In Truck tire markets, a robust 7% gain outside
China and a sharp 30% contraction inChina . - Sustained demand in the Specialty businesses, with a particularly strong rebound in the
Original Equipment Construction and Agricultural tire segments.
With sales of €6 billion in the third quarter, consolidated sales ended the first nine months at €17.2 billion, up 15.6% year on year:
- 14.8% growth in tire volumes, of which 1.3% in the third quarter.
- A 4.1% increase from the tire price-mix effect, reflecting:
- price increases implemented to offset rising costs,
- continued enhancement of the product mix, with market share gains in
MICHELIN -brand 18-inch and larger tires, - a favorable OE/Replacement mix in the Passenger car and Light truck tire business.
- A 5.8% increase in non-tire sales.
- A 3.5% decrease from the still unfavorable currency effect.
“Despite the persistent health crisis, the Group posted a very solid performance,” said Managing Chairman
In 2021, in a still highly disrupted environment, Passenger car and Light truck tire markets are expected to expand by 6% to 8% over the year, impacted by semiconductor shortages, while Truck tire markets should rebound by 6% to 8% and the Specialty markets should see a gain of 9% to 11%. Barring any new systemic effect from Covid-191 and assuming slightly over-market growth in its sales,
The Group Governance:
On
Nine-month sales:
Sales (in € millions) | Nine months 2021 | Nine months 2020 | % change (at current exchange rates) |
RS1: Automotive and related distribution | 8,603 | 7,236 | +18.9% |
RS2: Road transportation and related distribution | 4,503 | 3,870 | +16.4% |
RS3: Specialty businesses and related distribution | 4,098 | 3,782 | +8.4% |
Group Total | 17,204 | 14,888 | +15.6% |
Market review
- Passenger car and Light truck tires
Nine months 2021/2020 (in number of tires) | Western & Central | CIS | North & Central America | | (excluding | Total | ||
Original Equipment Replacement | +5% +13% | +20% +16% | +7% +22% | +26% +38% | +5% +6% | +6% +6% | +31% +24% | +8% +16% |
Third quarter 2021/2020 (in number of tires) | Western & Central | CIS | North & Central America | | (excluding | Total | ||
Original Equipment Replacement | -30% -1% | -9% +5% | -24% +1% | -12% +29% | -20% -9% | -18% -5% | -14% +6% | -21% 0% |
* Including Turkey
The number of Original Equipment and Replacement Passenger car and Light truck tires sold worldwide rose by 14% in the first nine months of 2021. After rising sharply from very favorable prior-year comparatives in the first half, global demand declined by 5% in the third quarter, reflecting more normal bases of comparison and the highly adverse impact of the global semiconductor shortage on the OE segment.
- Original Equipment
After expanding quickly in the first half due to low comparatives (caused by automotive plant shutdowns in first-half 2020), Original Equipment tire demand was severely dampened in the third quarter by the worsening global shortage of auto semiconductors. As a result, the market dropped a steep 21% compared with the prior-year period, which was down only 3% year on year thanks to the sharp upturn in business.
During the quarter, constricted chip supply had an impact on demand in every region, driving declines of 30% in Western and
In all, the global OE tire market ended the first nine months down 17% year on year.
- Replacement
After surging 26% off of very favorable comparatives in the first half, global Replacement tire demand was stable year on year in the third quarter, while remaining down a slight 4% on third-quarter 2019.
Demand in Western and
In the CIS, demand rose by 5% in the third quarter, building on the strong 21% rebound in the first half and bringing the market back in line with 2019 for the full nine months.
Replacement tire demand remained high in North and
The South American market rose by 29% in the third quarter from low 2020 comparatives, when demand was heavily impacted by the Covid-19 epidemic. Over the full nine months, tire demand was 6% higher than in the same period in 2019.
Demand in
In
In the
- Truck tires (radial and bias)
Nine months 2021/2020 (in number of tires) | Western & Central | CIS | North & Central America | | (excluding | Total | ||
Original Equipment Replacement | +34% +17% | +23% +3% | +32% +26% | +47% +26% | -4% +6% | +17% +7% | +48% +13% | +8% +13% |
Third quarter 2021/2020 (in number of tires) | Western & Central | CIS | North & Central America | | (excluding | Total | ||
Original Equipment Replacement | +6% +1% | +17% +1% | +9% +14% | +32% +18% | -49% -18% | +19% +3% | +56% -4% | -27% -3% |
* Including Turkey
The number of new Truck tires sold worldwide declined by 8% in the third quarter of 2021, after climbing a sharp 25% in the first half on the back of the global economic recovery and the upturn in freight demand (-27% for Original Equipment, -3% for Replacement).
Growth varied widely by region, with strong 13% momentum in
- Original Equipment
The global Original Equipment Truck tire market, as measured by the number of new tires sold, declined by 27% in the third quarter, dragged down by the steep 49% fall in Chinese demand.
In Western and
Demand remained strong in North and
In
In the rest of the world, demand for Original Equipment truck tires continued to expand at a fast pace in the third quarter, rising 32% in
- Replacement
The global Replacement tire market contracted by 3% in the third quarter, as an 18% decline in Chinese demand overshadowed robust gains in
In Western and
Over the full nine months, the number of new tires sold was 8% higher than in the same period in 2019.
In North and
Markets in
Following a 28% increase in the first half, Replacement tire demand in
In the rest of the world, markets rose by a slight 3% in the third quarter in
Specialty businesses
- Mining tires: Surface mining tire markets ended the first nine months up slightly on the prior-year period, lifted by generally expanding ore markets. Overall demand, however, is being dampened by the pervasive disruption in global supply chains.
- Agricultural and Construction tires: Farm machinery tire markets are trending upwards compared to 2020, with very strong growth in Original Equipment sales driven by rising grain prices and farm incomes.
The Construction and Infrastructure segments are benefiting from the strong upturn in demand, particularly for OE tires, supported by the very fast growth in the construction industry.
- Two-wheel tires: With two-wheel vehicles offering an increasingly popular alternative to public transportation, demand for their tires remains buoyant. However, growth is being held back by the resurgence of the Delta variant in
Southeast Asia , parts shortages (which are weighing on OE motorcycle tire demand) and the supply chain constrictions experienced by tiremakers across the industry.
- Aircraft tires: Over the first nine months of 2021, aircraft tire markets enjoyed double-digit growth year on year, thanks to extremely favorable comparatives, but remained sharply down on 2019. The forthcoming reopening of commercial air routes from
Europe toNorth America points to a slight market improvement by year-end. Demand in the Military andGeneral Aviation segments continued to hold up well over the period.
- Conveyor belts: The mining conveyor belt market turned in a mixed performance. Demand in
Australia stabilized due to coal export restrictions, while the services and engineering segments were adversely impacted by Covid-19. InNorth America , industrial demand is recovering, but business is still suffering from buyer hesitation in a turbulent operating environment.
- Consolidated sales
(in € millions) | Nine months 2021 | |
Sales | 17,204 | |
Change – 9 months 2021/9 months 2020 | ||
Total change | +2,316 | +15.6% |
Of which Tire volumes* | +2,204 | +14.8% |
Tire price-mix | +618 | +4.1% |
Non-tire businesses | +47 | +0.3% |
Currency effect | -533 | -3.5% |
Changes in scope of consolidation | -20 | -0.1% |
* In tonnes
Sales for the first nine months of 2021 totaled €17,204 million, an increase of 15.6% from the year-earlier period that was attributable to the net impact of the following factors:
- A 14.8% or €2,204 million increase from very strong growth in tire volumes as markets rebounded on the robust recovery in global economic activity. Volume growth eased to 1.3% in the third quarter, reflecting the return to more normal bases of comparison.
- A 4.1% increase from the favorable tire price-mix effect, of which (i) a 2.8% gain from the price increases introduced by the Group to offset rising raw materials, logistics and energy costs and (ii) a 1.3% increase from the positive mix effect, reflecting the sustained up-market shift in the product mix and the favorable OE/Replacement business mix in the Automotive segment.
- A 0.3% increase from the 5.8% growth in non-tire sales.
- A 3.5% decrease from the currency effect, which remained negative over the first nine months.
- A slight decrease from changes in the scope of consolidation, with the removal of the printing, publishing and marketing businesses associated with Maps & Guides for
- Sales by reporting segment
Automotive and related distribution:
Sales in the Automotive segment rose by 18.9% year-on-year to €8,603 million in the first nine months of 2021.
After rebounding sharply in the first half, the Passenger car and Light truck tire market contracted by 5% in the third quarter, hard hit by the 21% drop in OE demand caused by the global auto semiconductor shortage.
In this environment, the segment reported a 16.3% increase in tire volumes sold in the first nine months, with a slight 1.7% decline in the third quarter.
Sales were also lifted by a very favorable price-mix effect combining (i) the impact of price increases deployed in 2021 in the Replacement business to offset rising costs; (ii) the favorable impact of the relative weighting of the OE and Replacement segments in the business mix; and (iii) the sustained up-market shift in the product mix, with market share gains in
Road transportation and related distribution:
Sales for the first nine months amounted to €4,503 million, up 16.4% year on year.
After rebounding 25% in the first half, demand for new truck tires fell back 8% in the third quarter, impacted by the decline in the Chinese market. In this environment, segment tire sales volumes rose by 16% over the first nine months and by 3.8% in the third quarter alone. The tire price-mix effect was robust for the period, reflecting the segment’s selective focus on creating value and the price increases introduced to offset rising raw materials, logistics and production costs.
Specialty businesses and related distribution:
Sales in the Specialty businesses segment rose by 8.4% year on year to €4,098 million in the first nine months of 2021.
Segment volumes rose by 10.2% over the first nine months, of which 6.2% in the third quarter. Sales were lifted by the rebound in demand for Agricultural tires and tracks and Construction tires, which was especially strong in the OE segment, and by the sustained strong growth in Two-wheel tire markets. In the mining tire operations, severe supply chain disruptions are still preventing the Group from fully meeting customer demand, which remains robust. The conveyor belt and specialty polymers businesses continued to expand over the period. The price effect was positive, but to a lesser extent than in the other two segments due to the time lag in applying raw materials clauses and the slightly negative business mix due to supply chain issues in mining tire operations.
The deconsolidation of Solesis reduced segment sales by 0.3% over the first nine months and by 1.3% in the third quarter.
"All Sustainable"
In line with the "All Sustainable" commitment embedded deep in its strategic vision,
Race to Zero – Business Ambition for 1.5°C: In
Michelin’s initial CO2 emissions reduction targets were validated by the SBTi in 2020. In response to the growing climate emergency, however, even more ambitious targets for lower CO2 emissions were announced in
Open letter from businesses to
Biodiversity commitments for 2030: In 2021, the Group reaffirmed its commitment to attenuating the impact of its operations across the value chain by setting new biodiversity targets for 2030 as part of the Act4nature international initiative. As part of the “All Sustainable” approach, the new targets cover three areas: research and development (by addressing biodiversity in lifecycle assessments), raw materials and production facilities.
In addition to flagship projects in support of sustainable natural rubber production, such as the
- Supporting Indonesian natural rubber producers:
Michelin and Porsche have broadened their partnership to sustainable natural rubber with a four-year program to train Indonesian smallholders in responsible labor and environmental practices, with the ultimate goal of improving living conditions for them and their families.
This is the first natural rubber project based on the findings of the ESG risk mapping exercise conducted with the RubberWay™ application, which is now being used across the supply chain by smallholders and their partners, a natural rubber processor, a tire manufacturer and a car manufacturer with the support of a local non-governmental organization.
- Developing agroforestry3 practices in
Thailand to support sustainable rubber tree farming:Michelin is funding a project run by the Global Platform for Sustainable Natural Rubber (GPSNR) inThailand that is helping small rubber producers diversify their sources of income with environmentally beneficial agroforestry practices. The three-year project is designed to provide additional income for smallholders, while reducing the use of agrochemical inputs, enhancing carbon sequestration and improving biodiversity.
Socially engaged through the
In third-quarter 2021,
SUSTAINALYTICS (ESG RISK RATING):
ISS ESG: In 2021,
Third-quarter 2021 highlights :
August 18, 2021 - Michelin’s first racing tire made from 46% biosourced and recycled materials takes its first laps around the Le Mans 24 Hours track, in a concrete illustration of the Group’s “All Sustainable” vision. By 2050, everyMichelin tire will be made entirely of sustainable materials, with an interim target of 40% by 2030.
August 25, 2021 -Michelin strengthens its presence in France’s online tire market by acquiring all outstanding shares of Allopneus SAS, the country’s leading online retailer of tires and tire fitting services.
September 2, 2021 -Michelin introducesMICHELIN CrossClimate 2, the new generation ofMICHELIN All-Season tires. The launch reflects the Group’s commitment to investing and innovating to develop premium tires delivering very high technological value.
September 13, 2021 -Michelin inaugurates the new reception building at its head office inClermont-Ferrand , illustrating its commitment to investing in infrastructure upgrades and the development of new business activities inFrance . The renovation illustrates Michelin’s deep attachment to its founding region and country, where it continues to invest in infrastructure upgrades and new business activities.
September 15, 2021 -Michelin and Dorna extend their MotoGP™ partnership, confirming thatMichelin will remain the exclusive official supplier of the premier class of motorcycleGrand Prix racing from 2024-2026.
September 24, 2021 - ENGIE supportsMichelin in decarbonizing its historic Cataroux plant inClermont-Ferrand , with the goal of reducing the facility’s energy use while cutting its greenhouse gas emissions. The partnership fits seamlessly with the Group’s "All Sustainable" vision, particularly the commitment to fighting global warming.
October 1, 2021 - At its fifth annual Supplier Awards,Michelin honors nine of its best suppliers based on five criteria: Sustainability, Innovation, Quality, Risk Management and Support provided during the crisis.Michelin believes that the quality and effectiveness of its supplier relations are essential drivers of its sustainable performance.
October 1, 2021 - Fenner™ Precision Polymers acquiresLumsden Corporation , a leading manufacturer of metal conveyor belting. The deal strengthens the position of Fenner™ Precision Polymers as a leading supplier of highly specialized conveying products.
October 5, 2021 - Acting in its capacity as Non-ManagingGeneral Partner of Compagnie Générale des ÉtablissementsMichelin (CGEM) and with the approval of the Supervisory Board, Société Auxiliaire de Gestion (SAGES) renewedFlorent Menegaux as ManagingGeneral Partner andYves Chapot as General Manager for new four-year terms, which will begin when their current terms end at the close of the next Annual Shareholders Meeting, onMay 13, 2022 , and end at the close of the Annual Shareholders Meeting to be held in the first half of 2026.
A full description of highlights for the third quarter of 2021
may be found on the
PRESENTATION AND CONFERENCE CALL
Nine-month 2021 sales will be reviewed with analysts and investors during a presentation today,
WEBCAST
The presentation will be webcast live on: https://www.michelin.com/en
CONFERENCE CALL
Please dial-in on one of the following numbers from
| +33 (0)1 72 72 74 03 – PIN : 43903018# |
| +44 (0)207 194 3759 – PIN : 43903018# |
| (+1) 646 722 4916 – PIN : 43903018# |
| +44 (0)207 194 3759 – PIN : 43903018# |
Financial information for the nine months ended
INVESTOR CALENDAR
- Sales and results for the year ending
December 31 , 2021:Monday, February 14, 2022 after close of trading. - Quarterly information for the three months ending
March 31, 2021 :Tuesday, April 26, 2021 after close of trading.
Investor Relations Édouard de Peufeilhoux +33 (0) 6 89 71 93 73 edouard.de-peufeilhoux@michelin.com Pierre Hassaïri +33 (0) 6 84 32 90 81 pierre.hassairi@michelin.com +33 (0) 7 77 85 04 82 flavien.huet@michelin.com | Media Relations Paul-Alexis Bouquet +33 (0) 6 79 33 51 47 paul-alexis.bouquet@michelin.com Hervé Erschler + 33 0 (6) 70 47 85 04 hervé.erschler@michelin.com Individual Shareholders Isabelle Maizaud-Aucouturier +33 (0) 4 73 32 23 05 isabelle.maizaud-aucouturier@michelin.com +33 (0) 4 73 32 15 11 clemence.daturi-rodriguez@michelin.com |
DISCLAIMER
This press release is not an offer to purchase or a solicitation to recommend the purchase of
This press release may contain a number of forward-looking statements. Although the Company believes that these statements are based on reasonable assumptions at the time of publishing this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or inferred by these statements.
1 Serious supply chain disruptions or restrictions on freedom of movement that would result in a significant drop in the tire markets.
2 Free Cash Flow is stated before dividend payments and financing transactions. It corresponds to net cash from operating activities less net cash used in investing activities, adjusted for net cash flows relating to cash management financial assets and borrowing collaterals.
3 Agroforestry is a farmland management system in which trees are grown among food crops.
Attachment
- 2021025_PR_Michelin_Q3 2021 Sales
© OMX, source