Michelin reports having met its financial objectives in 2016 and its chief executive officer considers the year “a successful milestone in our strategic roadmap.” The tyre maker’s sales volumes increased 2.1 per cent during the year, outperforming the market, and an increase in operating and net income was also recorded.
“Our growth, which once again outpaced the markets, was driven by the strength of the Michelin brand, our steady stream of innovations, the improvement in the quality of our customer service and the success of our intermediate lines,” commented CEO Jean-Dominique Senard. “Our pricing policy, which is designed to capture the full value of our technological leadership, and our sustained commitment to improving competitiveness enabled us to fulfil the financial guidance announced early in the year.”
Volumes for passenger car and light truck tyres rose three per cent year-on-year in 2016, while truck tyre volumes increase one per cent and volumes within specialty businesses were down one per cent.
Consolidated net sales stood at €20.9 billion for the year. This figure was down 1.4 per cent on 2015 and reflects unfavourable price-mix effects, currency effect and an increase from the consolidation of BookaTable, which Michelin acquired at the start of 2016. These factors more than counterbalanced the €440 million increase achieved through the 2.1 per cent growth in volumes.
Consolidated operating income from recurring activities amounted to €2.7 billion or 12.9 per cent of net sales, compared with the €2.6 billion million and 12.2 per cent reported in 2015. Net income came in at €1.7 billion, up 43.3 per cent from the €1.2 billion achieved in the prior year.
This year, tyre markets are expected to track the trends observed in late 2016, in particular with the upturn in mining tyre sales. The year will also see an increase in raw materials costs, for an estimated impact of approximately €900 million, in response to which Michelin will “agilely manage prices so as to hold unit margins firm in businesses not subject to indexation clauses.” In this market environment, Michelin states that its objectives for 2017 are volume growth in line with global market trends, operating income from recurring activities equal to or exceeding the 2016 figure at constant exchange rates, and structural free cash flow of more than €900 million.
“Looking ahead, 2017 is expected to be another year of growth, in line with the Group’s 2020 objectives,” shares Senard.
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