On April 24th, the Michelin Group officially announced the first quarter of 2019. In the first quarter, Michelin sales reached 5.809 billion euros, a constant exchange rate, an increase of 9.3% year-on-year. Michelin said that this was mainly due to the strong price combination effect and the outstanding performance of the newly acquired business.
The financial report shows that in the harsh market environment, the Michelin Group still showed extraordinary performance, and the tire sales in the first quarter only dropped slightly by 0.5%. Among them, in the passenger and light truck tire business, Michelin has stabilized its market share despite the decline in global demand for tires and the shrinking of the European replacement tire market. Truck tire sales have grown steadily in a shrinking market, thanks in part to the development of new services and solutions. It is worth mentioning that in the special tires and related distribution business, sales in the first quarter reached 1.471 billion euros, an increase of 52.8%, of which the newly acquired businesses such as Carmospeed and Fenner contributed greatly.
According to the 2019 annual guidelines set by the Michelin Group, the passenger and light truck tire business is expected to experience moderate growth in the replacement tire market and contraction of the original tire market; the truck tire market is expected to contract slightly; and the mining, aircraft and two-wheel tire markets will continue keep active.
According to the exchange rate in April 2019, the currency effect is expected to have a relatively favorable impact on the operating profit of the business line. At present, it is estimated that the impact of raw material costs on operating profit is about 100 million euros, which will mainly affect the performance in the first half of the year.
To this end, Michelin confirmed that its 2019 sales growth target is in line with global market trends. According to the constant exchange rate, the operating profit of the business line for the whole year will exceed last year's data. The Michelin Group's structured free cash flow will exceed 1.45 billion euros, including the cash flow from the application of IFRS 16, to 150 million euros, before taking into account the expected €150 million contribution from Carmospeed and Finner.