Michelin released its annual sales results guide for 2023, which revealed slightly lower sales numbers in 2023 compared to 2022. The company said sales for the year amounted to €28.3 billion (approx. $30.6 billion), down 0.9% from 2022. Sales were up 2.0% at constant exchange rates, though, Michelin said. The company said that it also increased its segment operating income to €3.6 billion (approx. $3.9 billion) in 2023 and generated €3.0 billion (approx. $3.2 billion) in free cash flow. Operating segment performance is measured primarily on the basis of sales and segment operating income, according to the same measurement principles used in the consolidated income statement, Michelin said.
The North American market expanded by 9% in 2023, led by sustained new car demand throughout the year, Michelin said. The automaker strikes called in late third quarter and early fourth quarter weighed somewhat on second-half growth (up 6%), although they did not prevent automakers from rebuilding their vehicle inventories. Nevertheless, the North American market ended the year 5% down on 2019.
In replacement tires, Michelin said the stability of global demand compared with 2022 hid significant disparities by region, with brisk growth in China offsetting a decline in Europe.
The North American sell-in market was unchanged over the year, with demand dampened, as in Europe, by dealer inventory drawdowns. In the second half, however, demand continued to trend upwards (by 9%) in a resilient economy, with favorable prior-year comparatives emerging in September. Year-end 2023 inventory levels had returned to normal.
In the Original Equipment (OE) segment, the company said global demand climbed by 9% year-on-year, impelled by an expanding market dynamic as automakers took advantage of easing supply chain restrictions to steadily rebuild vehicle inventory. Robust EV sales, particularly in China, also helped to support demand for new vehicle tires, Michelin said.
According to the manufacturer, the year-on-year change reflected the combined impact of the following factors:
- A 4.7% decline in tire volumes, stemming from extensive de-stocking across every segment and value chain as the uncertain economic environment and soaring interest rates prompted dealers and business customers alike to drastically draw down inventory and reduce their standard stock levels. Michelin said the volume decline was partially offset by an increase in sales in its proprietary dealership networks;
- A 5.7% increase from the positive price-mix effect. The positive price effect resulted from the full-year impact of the price increases introduced in 2022 and early 2023 to cover the full range of cost inflation factors (raw materials, freight, energy, payroll, etc.) Michelin said. The price effect remained positive over the second half; it declined compared to the first half of 2023 due to the 2022 second-half comparison basis, and the deferred impact on certain activities of raw materials-based and other indexation clauses;
- A 2.9% decrease from the negative currency effect, due in particular to the decline in the US dollar, as well as the Chinese yuan and the Turkish lira, against the euro;
- A 0.5% increase from changes in the scope of consolidation, led by the inclusion of FCG on Sept. 26, of CPS in Australia, acquired in July 2022, and of US-based Blacksmith, following the acquisition of all its outstanding shares in April 2023.
