Webcast of the Analyst / Investor Conference on April 24, 2019
Documents to download
- In response to the pandemic, Michelin first focused on safeguarding the health of its employees and their families by implementing all of the recommended precautions. The Group is actively engaging with its host communities in every country, offering its technological expertise, repurposing its production capacity and donating both equipment and funding.
- Global tire demand dropped in the first quarter, as lockdown policies gradually spread around the world, impacting every business segment.
- Passenger car and Light truck tire markets dropped +15% after carmakers suspended production and consumers went into isolation.
- Truck tire markets fell by +17% year on year.
- In the Specialty Businesses, certain mining markets and the Replacement agricultural tire markets showed some signs of resilience.
- First-quarter sales declined by +8.3% year on year at current exchange rates, reflecting:
- An +11.7% contraction in volumes, which accelerated in March (down +21%)
- A +2.0% gain from the robust price-mix, led by the strength of the MICHELIN brand
- A +1.0% increase from changes in the scope of consolidation.
- To mitigate the financial impact of the impending deep recession, in mid-March the Group implemented the following measures:
- Tracking supply and demand on a weekly basis to keep inventory under control,
- Reducing capital expenditure by €500 million,
- Reducing the dividend submitted to shareholder approval by €330 million,
- Suspending the share buyback program, except for the firm commitments outstanding for 2020,
- Reducing overhead costs.
- In addition, the Group reaffirms that it has the sources of financing in place to deal with the uncertainty surrounding the crisis. Stress tests, based on volumes declining by between +20% and +35% over the full year, have shown that the Group has sufficient cash and cash equivalents, without drawing down its confirmed back-up lines of credit.
I would like to thank all of our employees for their dedication, commitment and agility, which I am sure will enable Michelin to weather this unprecedented global crisis of still unknown proportions. This exceptional situation has deepened our belief that the Group's future is anchored in the balance between the engagement of its employees, without whom nothing is possible, the sustainable growth of its business operations and the robust strength of its finances.
So far, the direction of the pandemic and its economic impacts remain too uncertain to issue any reliable market forecasts and a related profit scenario. Nevertheless, at a time of steeply declining raw material prices, the Group expects to see a more positive net price-mix/raw materials effect, which should slightly attenuate the much more pronounced impact of lower volumes.
Comparison with 2019
|In million of euros||First Quarter 2020||First Quarter 2019||% Change|
|SR1: AUTOMOTIVE AND RELATED DISTRIBUTION||2,597||2,788||-?6.9?%||0|
|SR2: ROAD TRANSPORTATION AND RELATED DISTRIBUTION||1,360||1,550||-?12.3?%||0|
|SR3: SPECIALTY BUSINESSES AND RELATED DISTRIBUTION||1,370||1,471||-?6.9?%||0|