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Michelin’s Resilient Tire Sales Defy Market Headwinds: Q3 2024 Financial Results Unveiled

Clermont-Ferrand, France – October 23, 2024 – In a challenging global economic landscape, Michelin has demonstrated remarkable resilience in its tire sales, as revealed in the company’s Q3 2024 financial results. Despite facing significant headwinds in various market segments, the French tire giant has managed to navigate through turbulent times, showcasing the strength of its diversified portfolio and strategic focus on high-value products.

Global Tire Market Trends: A Mixed Bag

The global tire industry has experienced a series of contrasting trends across different segments in the first nine months of 2024:

• Passenger Car and Light Truck Tires: The worldwide market grew by 2% year-on-year, with replacement markets showing strength, particularly in Europe and North America.
• Commercial Vehicle Tires: Excluding China, the market expanded by 2%, with significant regional variations.
• Specialty Tire Segments: Performance varied, with agriculture and construction sectors facing challenges, while aircraft and two-wheel tire markets showed positive momentum.

Michelin Q3 2024 Financial Results: Key Highlights

Michelin’s financial performance for the first nine months of 2024 reflects both challenges and opportunities:

• Total sales reached €20.2 billion, down 3.4% at constant exchange rates.
• Tire volumes declined by 5.3% over the period, with a 7.1% decrease in Q3.
• The price-mix effect improved by 2.0%, demonstrating Michelin’s focus on value-accretive segments.
• Specialty businesses faced headwinds, particularly in mining and conveyor belt markets.

Despite these challenges, Michelin’s tire sales resilience is evident in its ability to maintain market share in key segments and improve its product mix.

Automotive OEM Demand Decline: Navigating the Downturn

One of the most significant challenges faced by Michelin has been the automotive OEM demand decline. This downturn was particularly pronounced in Europe and North America:

• In Europe, OE demand fell by 6% over the nine-month period, with a sharper 9% decline in Q3.
• North America saw a 1% overall decline, with Q3 experiencing a 5% drop.
• Factors contributing to this decline include high interest rates, consumer uncertainty about EV adoption, and a shift towards lower-trim vehicle models.

Replacement Tire Market Growth: A Silver Lining

In contrast to the OEM sector, the replacement tire market growth has been a bright spot for Michelin:

• Global replacement tire demand rose by 3% year-on-year in the first nine months of 2024.
• European markets showed particularly strong growth, up 7% over the nine-month period.
• North American replacement demand increased by 3%, supported by resilient economic conditions.

This growth in the replacement sector has helped offset some of the losses in the OEM segment, demonstrating the importance of Michelin’s balanced market approach.

Michelin’s Tire Pricing Strategy: Adapting to Market Dynamics

Michelin’s tire pricing strategy has played a crucial role in maintaining profitability amidst challenging market conditions:

• The price effect softened to a negative 0.3% over the nine-month period.
• However, the third quarter saw a positive turn in pricing, indicating a recovery from earlier headwinds.
• The company’s focus on high-value segments and the MICHELIN brand has supported a positive mix effect.

This strategic pricing approach, combined with a focus on premium products, has helped Michelin maintain its market position and profitability.

Specialty Tire Segment Performance: Mixed Results

The specialty tire segments presented a complex picture for Michelin:

• Mining tire business faced challenges due to inventory drawdowns by mining operators.
• Agricultural and Construction tire markets experienced significant downturns, particularly in OE segments.
• Aircraft and Two-wheel tire segments showed positive growth trends.
• The Polymer Composite Solutions business saw a temporary decline compared to high 2023 comparatives.

Despite these mixed results, Michelin continues to strengthen its core market positions in key specialty segments.

Looking Ahead: Adjusted Guidance and Future Prospects

Based on the current market scenario, Michelin has adjusted its full-year guidance:

• Sales volumes are expected to end the year within the [-6%; -4%] range.
• Segment operating income at constant exchange rates is now projected to be around €3.4 billion.
• Free cash flow excluding M&A is estimated at more than €1.7 billion.

Despite the challenges, Michelin remains confident in its strategy and ability to navigate the complex global tire market landscape.

Conclusion: Resilience in the Face of Adversity

Michelin’s Q3 2024 financial results demonstrate the company’s ability to withstand significant market pressures while maintaining its strategic focus on high-value segments. The resilience shown in replacement tire sales, coupled with a smart pricing strategy and ongoing innovation in specialty segments, positions Michelin well for future growth despite current market headwinds.

As the global tire industry continues to evolve, Michelin’s balanced approach and strong brand positioning are likely to be key factors in its ongoing success. Investors and industry watchers will be keen to see how the company navigates the challenges and opportunities that lie ahead in the dynamic global tire market.

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