Michelin Q1 revenue drops 8.3%; unit volume down 11.7%

CLERMONT-FERRAND, France — Group Michelin's revenue for the first three months of 2020 fell 8.3% to $5.8 million, as unit sales dropped 11.7% amid the COVID-19 pandemic-induced economic downturn.

Michelin did not, at this time, disclose earnings for the period, but stressed in its first-quarter results that it has taken a number of measures to "mitigate the financial impact of the impending deep recession."

While volumes were off by nearly 12% for the quarter, Michelin said the decline reflected an even steeper drop in March, especially in the last two weeks of the month.

By business unit, Michelin reported:

• Automotive & related distribution — Sales revenue fell 6.9% to $2.87 billion, based on a 10.5% drop in unit volumes offset to an extent by a "favorable" price-mix effect — which reflected in part the "continued enrichement" of the mix — and the consolidation of Indonesian tire maker P.T. Multistrada.

• Road transportation & related distribution – Sales declined 12.3% to $1.5 billion, based on a 14.9% drop in unit volumes "cushioned" by a favorable geographic mix and the resilience of its services and solutions offering and a "robust" price-mix effect.

• Specialty businesses & related distribution — Revenue down 6.9% to $1.51 billion, based on a 9.9% drop in volume due to the collapse of certain markets impacted by the health crisis, offset by the robust price-mix effect. Within this segment: sales of surface mining tires remained "resilient"; sales of other OTR tires declined steeply as markets collapsed; and sales of two-wheeler tires fell slightly, reflecting market share gains in a "sharply contracting" market; and sales of aircraft tires remained "somewhat firm," supported by the strong demand in the commercial aircraft tire segment early in the year and the resilience of the military segment.

Michelin declined, at this time, to publish an outlook for the remainder of 2020, saying the "direction of the pandemic and its economic impacts remain too uncertain to issue any reliable market forecasts and a related profit scenario.

"Nevertheless," the company said, "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."

In its results presentation, Michelin noted how the various market segments and geographic regions fared:

In the consumer (passenger and light truck tires) area, OE sales fell 23% and aftermarket demand was off 12%. Within this sector, Asia fared the worst, with OE off 32% and replacement down 20%; in North America, OE fell 12% and the aftermarket was down 11%.

In the commercial (truck and bus tires) area, OE sales dropped 24% and replacement sales were off 15%. As with the consumer segment, Asia showed the largest declines, with OE off 28% and replacement down 30%.