Michelin reports sales up 20.2 percent in 2022

Clermont-Ferrand, France – With sales up 20.2% in 2022, Michelin delivered its segment operating income guidance by reaching €3.4 billion.

Amid market turbulence and a highly inflationary context, Michelin sales increased to €28.6 billion and segment operating income totaled €3.4 billion. Free cash flow was punctually impacted by inflation and year-end trade timing. Over the 2019-2022 period, the Group has demonstrated the resilience of its business model.

Sales rose 20.2% to €28.6 billion, lifted by firm pricing discipline and fast-growing non-tire sales:

Tire markets up slightly in 2022, supported by Original Equipment (from a low comparison basis) and sustained demand from Truck and Mining tire customers.

Tire sales volumes down, mainly impacted by the conflict in Ukraine and the Covid consequences in China, and reflecting the Group’s priority set on margin protection.

The price-mix effect came to 13.7%, demonstrating the Group’s determination to offset all cost inflation factors.

Non-tire sales grew by 22% at constant exchange rates, confirming their strong momentum.

A 6.2% positive currency effect, led by the US dollar.

Segment operating income totaled €3.4 billion or 11.9% of sales, driven by dynamic pricing management :

Pricing maintained unit margin integrity, offsetting a record €2.7 billion in higher costs.

Operating margin reflected a 1.2-point dilutive effect from price increases.

Each reporting segment contributed to improved segment operating income, with Specialties’ margin reaching 16.2% in H2 2022.

Reported free cash flow before acquisitions of – €104 million. Structural free cash flow1 of + €378 million:

One-off impact of inflation on working capital, reducing structural free cash flow by around €500 million

Q4 penalized by purchasing cuts and stronger December sales for c. -€300m, which will be offset in first-quarter 2023.

Return on Capital Employed (ROCE) reached 10.8% up 0.5 points vs. 2021.

Overall Group performance improved in line with the “Michelin in Motion 2030” strategic plan objectives set for each of its three People, Profit, Planet pillars:

Strong and rising employee engagement rate of 83%

CO2 emissions for scopes 1 & 2 reduced by 17% vs. 2021

Sustainable materials rate in tires reached an average of 30%

Net income reached €2.0 billion for the year. A €1.25 per share dividend will be proposed at May 2023 Annual general meeting.

Florent Menegaux, Managing Chairman, said: “In a chaotic environment impacted by a combination of systemic crises, Michelin delivered solid results in 2022. With our future in mind, we maintained all of our industrial and R&D investments. I want to recognize our associates’ engagement which contributes year after year to our Group’s successful development.”

2023 outlook: based on a soft market demand scenario, Michelin’s objective is to report segment operating income in excess of €3.2 billion at constant exchange rates and free cash flow before acquisitions of more than €1.6 billion.