Michelin delivered segment operating income of €3.4 billion in 2024 and generated a free cash flow of €2.2 billion, demonstrating its ability to adapt to uncertain market conditions.

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

Clermont-Ferrand - February 12, 2025 - 5:45 pm

COMPAGNIE GÉNÉRALE DES ÉTABLISSEMENTS MICHELIN

Michelin delivered segment operating income of €3.4 billion in 2024 and generated a free cash flow of €2.2 billion, demonstrating its ability to adapt to uncertain market conditions.

Group sales and segment operating income were supported by a powerful improvement in the mix, despite soft tire volumes. Margin at constant exchange rates was maintained at 12.6%.

• €27.2 billion in sales, with a highly positive 1.9% mix effect reflecting the Group's value-driven approach.
• Tire volumes down 5.1% due to the unprecedented simultaneous decline in OE demand across every segment, intensifying competition in mass markets, and one-off headwinds in Specialties.
• Market positions improved in targeted business segments and geographies, particularly 18-inch and larger Passenger car tires, high-end truck fleets, mining and aircraft tires.
• €3.4 billion in segment operating income, with a preserved 12.6% margin at constant exchange rates, fueled by mix enrichment and improved operating performance despite a low utilization rate of industrial capacity.
• Currency fluctuations reducing sales by 1.0% and segment operating income by 2.0%, with most currencies declining against the euro.

Automotive & Two-wheel (SR1): operating margin of 13.1% despite volumes penalized by the OE downcycle, supported by a strong enrichment of the sales mix, with 18-inch and larger segment reaching 65% of MICHELIN-branded Passenger car tire sales.

Road transportation (SR2): operating margin recovery confirmed at 9.0%, thanks to a targeted and value-based approach to the market, and to the enhanced valorization of our products and solutions. Operating income growing by 26% despite the slowdown of OE markets in Europe (down 20%) and North & Central America (down 11%).

Specialties (SR3): sales and operating margin facing a temporary drop, due to depressed OE markets in Agricultural and Construction activities, and to one-off headwinds in mining tires. Growth recorded in Aircraft and Polymer Composite Solutions activities. In markets with promising fundamentals, Group strengthening its position.

Strong cash generation leading to a stronger financial position.

• Free cash flow before acquisitions of €2.2 billion, with EBITDA reaching 19.7% of sales (up 0.3 points)
• Net income down slightly, of €1.9 billion.
• Dividend of €1.38 per share to be submitted to the Annual Meeting

Florent Menegaux, Managing Chairman: "My first words are for all our teams around the world, who demonstrate unfailing engagement on a daily basis. I want to salute them. Our 2024 results are solid, despite a particularly unstable economic and geopolitical context. To maintain our competitiveness, we also had to make difficult industrial restructuring decisions in Poland, China, Sri Lanka and France. Michelin continues to implement its "Michelin in Motion 2030” strategy”.

Guidance

2025 tire markets are expected with slight growth over the year, but declining in the first half due to lower OE demand.        

In a highly uncertain context, Michelin is expecting to improve its segment operating income at constant exchange rates on 2024, and to generate more than €1.7 billion in free cash flow before acquisitions.

The Group maintains its 2026 objectives released at the 2024 Capital Markets Day.

Key figures

¹ In the following review, 2023 data have been restated to reflect changes in the scope of the reporting segments in 2024. These changes mainly concerned the Two-wheel tire business, which is now consolidated in the Automotive, Two-wheel and related distribution segment, in alignment with the internal Group organization. 2022 data are based on the previous scope of reporting, when the Two-wheel tire operations were included in the Specialty businesses and related distribution segment.

² 2024 dividend subject to approval by the Annual Shareholders Meeting on May 16, 2025. 

3 Free cash flow 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.

⁴ In calculating ROCE, amortization of acquired intangible assets and the Group's share of profit/(loss) from equity-accounted companies are added to segment operating income. ROCE is calculated after tax using a standard rate of 23% in 2024, which is more in line with the effective tax rate than the standard 25% used in 2022 and 2023.

⁵ At period-end.

Market Review

Passenger car and Light truck tires & Two-wheel

PASSENGER CAR AND LIGHT TRUCK TIRES

* Including Turkey and Central Asia.

The global Passenger car and Light truck sell-in tire market grew by 2% over the year in 2024, as a 4% gain in Replacement sales offset a 2% decline in the Original Equipment segment.

PASSENGER CAR AND LIGHT TRUCK TIRES - ORIGINAL EQUIPMENT

In the Original Equipment segment, global demand ended 2024 down 2% year-on-year, with a steeper decline in Europe (down 7%) than in North America (down 2%) and a 3% increase in China.

Demand in Asia excluding China (mainly Japan and South Korea) also weakened over the year, declining by 8%.

In Europe, the quarter-by-quarter market decline (down 1% in Q1, 7% in Q2 and 9% in Q3) gained momentum in the final three months, with a 13% drop tracking OEM output. New vehicle sales were impacted by pressure on purchasing power from persistently high interest rates. Moreover, uncertainties over the pace of the market's transition to EVs, exacerbated by reductions in EV purchase subsidies in certain countries, in particular Germany, are leading consumers and fleets to push back new vehicle purchases.

The North and Central American market declined by 2% year-on-year. After holding relatively firm in the first half (up 1%), demand dropped 4% in the second six months, despite the favorable comparison with the prior-year period, when a strike in the fall slowed sales.

As in Europe, EV takeup was slower than expected. In addition, the North American market saw a shift to lower-trim models, with fewer features and less equipment, following the post-pandemic period when disrupted semiconductor and component supply chains prompted carmakers to focus on executive models.

The market in China improved by 3% over the year, with wide swings, however, from one quarter to the next. Demand steadily cooled quarter-by-quarter (up 6% in Q1 and 3% in Q2, then turning down 4% in Q3), as exports gradually failed to offset the increasingly steep decline in domestic demand.

However, the market rebounded strongly in the final three months, gaining 7% thanks to the vast demand-led economic stimulus package announced by the central bank and the Chinese government in late September.

PASSENGER CAR AND LIGHT TRUCK TIRES - REPLACEMENT

In Replacement tires, the 4% year-on-year increase in global demand hid significant disparities by region, with robust 9% growth in Europe and a slight 1% slowdown in China.

After growing 6% in the first half, the European market further accelerated in the second six months, with an 11% gain, reflecting the net impact of:

• an increase in imports in September and October, ahead of the application of the European Union Deforestation-free Regulation (EUDR) initially scheduled for January 1, 2025, but finally postponed by a year;
• relatively weak OE demand;
• robust demand for winter tires.

The gain was also lifted by the sustained move upmarket in the product mix, with faster growth in sales of 18-inch and larger tires.

Year-end dealer inventories were somewhat higher than normal due to the above-mentioned imports.

Demand in North America rose by 2% over the year, with the second half unchanged (0%) after a vibrant 4% increase in the first six months. In a resilient economy, the second-half slowdown reflected the leveling off of Asian import sales, after a first half powered by the lowering of anti-dumping duties on tires imported from Thailand in January 2024.

Year-end 2024 inventory levels had returned to normal.

In China, after a more or less stable first half (up 1%), the market ended the year down a slight 1%, with a steep 5% plunge in the third quarter, as domestic demand declined, and a return to stability (0%) in the final three months. Sluggish demand also reflected the shift in mobility patterns observed in recent years following the rapid improvement in rail infrastructure, as a decline in average kilometers driven offset the increase in the number of vehicles on the road.

In the other operating regions, demand edged up 2% in South America, with an upsurge in Asian imports, and remained unchanged in Asia excluding China.

The Indian market rose by 4%, with faster growth in demand for 18-inch and larger tires.

TWO-WHEEL

In the Motorcycle and Scooter segment, after a first half hurt by poor weather conditions, the second half saw a rebound in demand for sport touring motorcycle and premium scooter tires.

The Bicycle tire market remains vulnerable, particularly in the OE segment, which has been consolidating since 2023.

Truck tires (radial and bias)

* Including Turkey and Central Asia.

The global Truck tire sell-in market (excluding China) improved by a slight 1% in 2024, with the 7% decline in Original Equipment sales outweighing the 3% growth in Replacement demand.

In China, where the Group's presence is negligible, markets contracted by 5% over the year, including declines of 3% in the OE segment and 7% in Replacement.

ORIGINAL EQUIPMENT

In the Original Equipment segment, the global market (excluding China) declined by 7%.

In Europe, the first-half trend (down 19%) continued through the second half (down 22%). The decline, which was expected, reflected a return to more normal levels after three years of strong growth in the wake of the health crisis and the difficulties in the auto industry. In 2024, the uncertain economy and more restrictive financing weighed on new vehicle demand.

In North and Central America, the 11% drop in demand over the year follows the introduction of the new emissions standard of January 1^st 2024, which strongly boosted demand in 2023, especially in the second half of the year.

Market growth in South America surged 24% year-on-year, with demand comparing very favorably with 2023, which had been adversely impacted by a surge in new vehicles buying in 2022 ahead of the new emissions standard introduced in early 2023.

REPLACEMENT

The global Replacement sell-in market (excluding China) grew by 3% over the year.

Demand was stable year-on-year in Europe, where tons carried remained more or less unchanged. Demand rose by 6% in Western European markets, but declined in Central and Eastern Europe, penalized by a sharp 18% decline in the Turkish market.

Demand in North America was up 7% at the end of December, with seasonal fluctuations from inventory build-ups and drawdowns. The market was up by more than 15% as of end-July, buoyed by the massive buying of imports ahead of higher anti-dumping duties on Thai tires. The market then flattened out to 2023 levels in the second half, with freight demand broadly unchanged year-on-year.

Lifted by the sustained growth in freight demand, particularly in Brazil, the South American market rose by 5% over the year. The market is also seeing greater penetration from Asian import brands.

In the other operating regions, markets grew by 2% over the year, including a 3% gain in India.

Specialty businesses

Mining tires: while mining tire demand remains robust over the long term, supported by ever-increasing ore mining needs, in 2024, the market was dampened by extensive inventory drawdowns as supply chains returned to normal and mine operators focused more sharply on cash flow discipline.

Demand nevertheless firmed up in the final quarter, as inventories returned to normal by year-end.

Beyond-road tires: in these segments, where demand is almost equally divided between Original Equipment and Replacement sales, growth was mixed in 2024, with OE demand falling sharply across the board and Replacement demand demonstrating greater resilience.

In Agricultural tires, the highly cyclical OE markets, fell by over 20% in both the Americas and Europe, dragged down by the reduction in average farming income due to farm commodity prices, adverse weather events and high interest rates.

The Replacement market was slightly up year-on-year, but remained roiled by the growing penetration of budget brands, particularly in the Americas.

Demand for Construction tires contracted over the year, by around 15% in the OE segment and somewhat less in Replacement, due to the slowdown in homebuilding in both Europe and North America, where inflation and interest rates remain high. Infrastructure tire demand was more resilient in North America, supported by the growth in public spending.

The Materials Handling tire segment experienced a similar trend, with an almost 15% drop in OE sales and flat demand in the Replacement segment.

Aircraft tires: the commercial aviation market continued to expand, led by rising Chinese demand for international flights, which nevertheless remained a significant 30% lower than in 2019.

Polymer Composite Solutions: correlated over the long-term with demand from the mining industry, the fundamentals of the conveyor belt market remain buoyant, but business in 2024 was penalized by the very high basis of comparison with 2023 figures, and by the financial imperatives pushing mine operators to postpone their capital projects. On the other hand, demand for service activities, which play a critical role in maintaining and optimizing mining facilities, is continuing to trend upwards.

In the other segments (belts, seals, high-tech fabrics and engineered polymers), which serve a variety of market verticals, global demand is still returning to normal levels as built-up inventory is reduced across the value chain.

Sales and Results

Sales

Consolidated sales amounted to €27,193 million in 2024, representing a 4.1% decline from the €28,343 million reported in 2023. At constant exchange rates, the decline stood at 3.1% for the year.

The year-on-year change reflected the combined impact of the following factors:

• a 5.1% decline in sales volumes, stemming primarily from:
  • the very low output in all the Group's original equipment markets,
  • cyclical or one-off factors that particularly impacted the Specialty businesses, such as strict export controls, inventory drawdowns by certain mining operators and the closure of a large mine,
  • the Group's selective strategy of focusing on markets and segments that leverage the full value of its innovations and technologies;
• a 2.0% increase from the positive price-mix effect. Prices added a slightly favorable €31 million to full-year sales, overcoming the negative €105 million impact in the first half from applying raw materials-based and other contractual indexation clauses. The highly positive €538 million mix effect reflected the priority focus on the highest value products (MICHELIN brand tires, 18-inch and larger Passenger car tires, agricultural tracks, etc.) and the efficient management of the geographic and the Replacement/OE market mixes;
• a 1.0% decrease from the negative currency impact, due to the increase in the average annual euro exchange rate against the Turkish lira, the Brazilian real, the Chilean peso and most other operating currencies except the US dollar, where it remained stable over the year;
• a neutral impact from the non-tire businesses, as the 0.2% increase from changes in the scope of consolidation (mainly the inclusion of FCG on September 26, 2023) offset the slight decline in aggregate non-tire sales compared with the extremely high 2023 comparative (lifted by record sales of several businesses, notably conveyors).

Results

Segment operating income amounted to €3,378 million or 12.4% of sales for the year ended December 31, 2024, compared with €3,572 million and 12.6% in 2023.

The €194 million decrease reflected the net impact of the following factors:

• a €28 million increase from changes in the scope of consolidation, corresponding primarily to the inclusion of Flex Composite Group since late September 2023;
• a €756 million unfavorable volume effect reflecting:
  • the decline in volumes sold,
  • the fixed cost shortfall resulting from the general under-utilization of production capacity as output declined and certain plants were ramped down over the year;
• a €438 million increase from the favorable price-mix effect, led by:
  • a slight net increase in prices, stemming primarily from the application of contractual indexation clauses, whose impact swung to positive in the second half from negative in the first due to the time lag in applying the changes in their underlying raw materials and other price indexes;
  • a very favorable mix, shaped by a combination of several factors: growth in sales of 18-inch and larger Passenger car tires and, more generally, premium products; more dynamic sales in Replacement tires than in the OE markets, which weakened over the year; and a positive geographic mix;
• a €168 million increase from the first-half decline in the cost of raw materials used in production, which offset the second-half rebound in these costs;
• a slightly positive trend of €34 million in manufacturing and logistics costs. The impact of inflation, particularly on payroll costs, and of the temporary closure of certain plants at year-end was partly cushioned by lower maritime shipping costs and improved operating performance;
• a €162 million decrease from the year-on-year growth in SG&A expenses (including mainly administrative and general expenses, selling expenses and research and development expenses) in the Tire operations, reflecting the impact of inflation, particularly on payroll costs;
• a €144 million increase from other favorable cost factors, primarily comprising an adjustment in the variable compensation paid in respect to 2024;
• a €70 million decrease from exchange rate movements, led by the unfavorable impact of the gains in the euro against the Turkish lira, the Chilean peso, the Japanese yen and most other operating currencies.

Other operating income and expenses unallocated to the operating segments represented a net expense of €747 million in 2024 versus a net expense of €920 million in 2023. The improvement primarily corresponded to the year-on-year reduction in provisions for industrial restructuring projects.

Net financial position

Free cash flow after acquisitions ended the year at €2,225 million, virtually unchanged from the €2,343 million reported at December 31, 2023. This relative stability is explained on the one hand by the rise in working capital, led by the increase in inventory value as a result of higher raw material costs, and on the other hand by the absence of significant acquisition.

Gearing stood at 16.7% at December 31, 2024, corresponding to net debt of €3,112 million, down €169 million from December 31, 2023.

Segment information

* And related distribution.

NB: In the following review, 2023 data have been restated to reflect changes in the scope of the reporting segments in 2024. These changes mainly concerned the Two-wheel tire business, which is now consolidated in the Automotive, Two-wheel and related distribution segment, in alignment with the internal Group organization.

Automotive and Two-wheel

Sales in the Automotive, Two-wheel and related distribution segment fell by 1.3% year-on-year to €14,667 million in 2024.

Volumes sold contracted by 1.6% over the year, reflecting a steeper decline in the Original Equipment segment than in Replacement, due to both external factors (particularly a downturn in the automotive market) and the Group's internal management of the balance between Original Equipment and Replacement sales.

Despite the lower volumes and a general reduction in prices due to the application of indexation clauses in OEM contracts, the segment maintained its operating income and margin almost on a par with 2023. This was primarily thanks to the highly favorable mix effect, driven by (i) the sustained growth in sales of 18-inch and larger tires and other outcomes of the priority focus on the most value-accretive market segments; and (ii) the faster momentum in Replacement tire sales compared with Original Equipment sales.

Distribution operations increased their percentage of the segment sales stream and maintained its generally neutral bottom-line contribution.

Segment operating income amounted to €1,917 million or 13.1% of sales, versus €1,968 million and 13.2% in 2023 (at comparable scope of reporting).

Road Transportation

Sales in the Road transportation and related distribution segment totaled €6,599 million in 2024, down 4.9% from the prior year.

Premium truck tire manufacturers faced a complicated business environment in 2024, with Original Equipment markets cooling after expanding robustly in 2023 and Replacement markets reporting only slight growth that was in fact driven almost entirely by the waves of low-cost imports from Asia. In this context, volumes sold declined by 6.1% year-on-year, but disciplined management enabled the Group to deliver positive price and mix improvements. The Connected Solutions business, combined under the MICHELIN Connected Fleets brand, continued to expand, thanks mainly to more disciplined management and improved operating efficiency. It made a positive contribution to segment operating income.

Segment operating income totaled €597 million or 9.0% of sales, versus €474 million and 6.8% in 2023 (at comparable scope of reporting).

Specialties

Sales by the Specialty businesses and related distribution reporting segment declined by 9.4% year-on-year, to €5,927 million. Volumes sold, which only concern Specialty tires, declined by 9.1% over the year.

Segment operating income amounted to €864 million or 14.6% of sales, versus €1,130 million and 17.3% the year before (at comparable scope of reporting).

Mining tires: in an ore market that remains on a long-term growth trend impelled by rising demand for metals, particularly to support the energy transition, volumes sold were dampened by a number of short-term factors. The inventory drawdowns undertaken by certain mining companies in second-half 2023 continued in 2024 before gradually petering out at year-end. Business in Europe and Central Asia slowed considerably after export controls were further tightened. Lastly, Central American operations were hurt by the closure of a large mine in Panama. Despite the impact of these one-time factors, mining tire sales rose by volume and in value, led by a very positive operating performance and a product and service portfolio well aligned with customer priorities for the productivity and safety of their operations. This helped to drive market share gains and significant growth in service volumes sold.

Beyond-road tires: sales of agricultural, materials handling and construction tires were severely impacted by the steep decline in Original Equipment markets in every segment. This did not prevent the Group from launching new products demonstrating its technological leadership, such as the MICHELIN CEREXBIB 2 tire for New Holland's new CR11 combine, which significantly reduces soil compaction and helps to meet emerging farming challenges.

In the more mixed Replacement markets, the Group pursued its strategy of prioritizing key segments. In agricultural tires, for example, it gained market share in Europe, primarily by targeting sales of tires for high-power tractors. In the construction segment, the Group announced in December its withdrawal from bias tires and tracks for compact equipment to focus on radial technology and announced the sale of two production plants and the CAMSO brand.

Aircraft tires: in markets that were slightly up for the year, the Group increased its sales, particularly in mature regions. Operating difficulties encountered by aircraft manufacturers slowed growth in Original Equipment demand, and shifted sales towards Replacement which improved the business line's sales mix.

Polymer Composite Solutions sales declined somewhat year-on-year, mainly due to comparison with the record highs reported in 2023, particularly in the conveyor belt business. In 2024, in an economy pressured by rising interest rates, mining companies postponed certain capital projects, which weighed on sales of new conveyor belt systems. However, this impact was partially offset by sales of maintenance services. The other segments (seals, belts, engineered fabrics, etc.) held sales firm overall, in markets that retain their medium- and long-term growth prospects despite temporary downturns.

The financial statements for the year ended December 31, 2024, were approved for publication by the Managing Chairman on February 11, 2025 after being reviewed by the Supervisory Board. At the date of this press release, the audit procedures have been carried out and the statutory auditors' report is being issued.

Non-financial performance

The Group is recognized for its engagement and its environmental, social and governance performance.