Michelin Reports US$3.9 Billion Operating Income in 2024

French tire manufacturer Michelin reported a segment operating income of €3.4 billion (US$3.9 billion) in 2024 and €2.2 billion in free cash flow. The company says these results reflect its ability to adapt to uncertain market conditions. 

According to Michelin, sales and operating income were supported by an improved product mix, despite lower tire volumes. At constant exchange rates, the margin remained at 12.6%. Sales reached €27.2 billion, driven by a positive 1.9% product mix effect, reflecting the company's value-based approach. Tire volumes declined by 5.1% due to reduced demand for original equipment (OE) across all segments, increased competition in mass markets, and specific challenges in the Specialties segment. Michelin improved its market position in 18in and larger passenger car tire verticals, premium truck fleets, mining, and aircraft tires.

The Automotive and Two-Wheel (SR1) division reported an operating margin of 13.1%, supported by strong growth in the product mix despite lower volumes caused by the OE market downturn. The 18in and larger passenger car tire segments represented 65% of Michelin-branded passenger vehicle tire sales. The Road Transportation (SR2) division achieved a confirmed operating margin of 9%, with operating income rising 26% despite a slowdown in OE markets in Europe and North and Central America. 

The Specialties (SR3) division faced temporary declines due to weak OE demand in agricultural and construction activities and specific challenges in mining tires, while aircraft tire sales and polymer solutions showed growth.

Currency fluctuations reduced sales by 1% and segment operating income by 2%, with most currencies weakening against the euro. Free cash flow before acquisitions totaled €2.2 billion, and EBITDA reached 19.7% of sales. Michelin also reported net income decreased slightly to €1.9 billion.

Florent Menegaux, CEO, Michelin, highlighted the company’s global team’s commitment despite economic and geopolitical challenges. He acknowledged the need for industrial restructuring decisions in Poland, China, Sri Lanka, and France to maintain competitiveness and reaffirmed Michelin's focus on the Michelin in Motion 2030 strategy. Menegaux did not specify which restructuring measures the company is planning to implement. 

Michelin expects tire markets to grow slightly in 2025, with a weaker 1H25 due to lower OE demand. The company aims to improve segment operating income at constant exchange rates and generate over €1.7 billion in free cash flow before acquisitions.

The passenger car and light truck tire market grew by 2% globally in 2024. A 4% increase in replacement tire sales offset a 2% decline in OE. OE demand fell by 2%, with Europe down 7%, North America down 2%, and China up 3%. Factors affecting European demand included high interest rates and uncertainty about the electric vehicle (EV) transition, while North America faced a shift toward lower-end vehicle models. In China, a late-year rebound driven by economic stimulus offset earlier declines.

Replacement tire demand rose 4% overall, with Europe growing by 9% and China declining by 1%. The European market accelerated in 2H24 due to increased imports ahead of the EU Deforestation Regulation, weak OE demand, and strong winter tire sales.