The Clermont group has posted a net profit of 1.7 billion euros, new historical high and higher than the consensus Inquiry Financial for Thomson Reuters, which gave 1.665 billion. On the other hand, net sales (+ 5% to 21.960 billion) and operating profit on current activities (+ 1.9% to 2.742 billion) are lower than the consensus, which gave respectively 21.988 billion and 2.768 billion.
“In 2017, the group achieved a performance in line with its roadmap by 2020 (…) demonstrating its agility in a more difficult external environment,” said Jean-Dominique Senard, chairman of the group, quoted in a statement. Last year, Michelin was negatively impacted by the impact of raw materials by 738 million euros, offset by a positive price mix of 668 million euros and a net positive effect of savings of 36 million euros.
In 2018, the materials effect should be reduced (between -50 and -100 million euros expected) and Chief Financial Officer Marc Henry told the press that at this stage of the year, the rate increases were “not a subject”. However, he works with a hypothesis of rising oil prices in the second half.
A “material effect”
Goodyear lowered this month’s combined earnings forecast for 2020 as a result of higher commodity prices, overshadowing results and better-than-expected sales. While Michelin anticipates a material effect (oil and rubber) significantly smaller in 2018 than in 2017, he warned that the currency effects should instead reach about -300 million this year, against -95 million last year.
He also said he expects in 2018 an increase in operating income on current activities, a target that excludes the impact of foreign exchange, and an increase in volumes in line with global market developments. Michelin also intends to continue its acquisitions, “which will contribute to its ambitions for growth and value creation”. He announced Monday the acquisition of a 20% stake in the German company ATU automotive services.
by Gilles Guillaume Published by Benjamin Mallet