CLERMONT-FERRAND, France — Group Michelin posted a 7.7% improvement in segment operating income in the six months ended June 30, to $1.66 billion, on 18.7% higher first half sales of $14.4 billion.
The gains, Michelin said, came despite "turbulent" trading conditions over the first six months of 2022, with impacts from the war in Ukraine and the continuing COVID crisis.
Due to the lower earnings growth, the operating ratio slipped a full point to 11.5% from a year ago.
Supply chain disruptions and cost inflation intensified over the period, further dragging tire markets down to the lower end of forecasts, Michelin stated.
Tire volumes fell by 2.2%, though excluding sales in eastern Europe and China, levels were stable. The specialty business sector — which includes much of Michelin's non-tire-related activities along with the earthmover, two-wheeler and aircraft tire units — generated 178% higher revenue.
Michelin linked efforts to offset rising costs to a tire price-mix effect of 13.9%, while also posting a positive currency effect of 5.2%, helped mainly by the U.S. dollar.
With market projections lowered to reflect global economic growth uncertainties, Michelin said it barring any new systemic impacts it is maintaining its fiscal 2022 earnings guidance from earlier this year — full-year segment operating income of over $3.4 billion at constant exchange rates.
"Assertive pricing management effectively addressed the full range of cost inflation factors and maintained unit margins over the period," Michelin said in relation to its higher earnings.
Michelin reported double-digit revenue increases in all three of its operating segments: automotive and related distribution, up 18.6%; road transportation and related distribution, up 19.7%; and specialty businesses and related distribution, up 17.9%.
The company did not provide regional sales breakdowns, but did say "robust" economic growth in North America kept replacement passenger and light truck demand "very high" during the period, lifting the market up about 1% over the first half of 2021, but still 20% lower than in 2019.
In the truck tire sector, replacement market demand was "especially strong" in Europe and the Americas, Michelin said.
Net earnings fell 18.3% to $916 million, in part due to a $212 million earnings impairment linked to the suspension of operations in Russia.
"We've delivered good results in an extremely unsettled environment, led by the remarkable commitment of all our teams," Managing Chairman Florent Menegaux commented.
