Michelin Group achieved $30.3 billion in total sales during 2023, a 2% increase over prior-year results.
The year-over-year change reflects “the combined impact of the following factors,” according to Michelin officials:
- A 4.7% drop in tire volume, “stemming from extensive destocking across every segment and value chain as the uncertain economic environment and soaring interest rates prompted dealers and business customers alike to drastically draw down inventory and reduce their standard stock levels. The volume decline was partially off-set by an increase in sales in the group’s proprietary dealership networks, reflecting more resilient sellout demand;”
- A 5.7% increase from “positive price/mix effect;”
- A 2.9% decrease from “the negative currency effect, due in particular to the decline of the U.S. dollar, as well as the Chinese yuan and Turkish lira, against the dollar,” and;
- A .5% increase “from changes in the scope of consolidation.”
Michelin officials also report that the company’s full-year net income “was stable” at $2.1 billion, while its segment operating income “reached an all-time high” of around $3.8 billion.
“Michelin delivered a high segment operating income in 2023 despite adverse market conditions and currencies, demonstrating once again the quality of its business model,” says Michelin officials. “This performance illustrates the group’s strategy to capture the full value of its differentiated solutions, designed to meet increasingly demanding customer requirements.”
Replacement/OE demand
“The North American sell-in market was unchanged” during 2023, according to Michelin officials, “with demand dampened, as in Europe, by dealer inventory drawdowns. In the second half, however, demand continued to trend upwards by 9% in a resilient economy, with favorable prior-year comparatives emerging in September.”
By the end of 2023, inventory levels “had returned to normal.”
In Europe, replacement sell-in demand contracted by 4% in 2023, mainly due to “sustained dealer destocking,” with a “particularly negative impact on winter tire sales. Sellout demand, which is shaped by the number of kilometers traveled by motorists, was more resilient. By year-end, inventory across the value chain had returned to normal levels.”
In China, the replacement market grew by 13% year-over-year “as domestic mobility rebounded from the sharp restrictions on motorists’ freedoms imposed during resurgent health crises in the second and fourth quarters of 2022,” say Michelin officials.
The OE channel in North America “expanded by 9% in 2023, led by sustained new car demand throughout the year. Automaker strikes called in late-third quarter and early-fourth quarter weighed somewhat on second half growth, although they did not prevent automakers from rebuilding their vehicle inventories.”
In Europe, the OE channel “rose by 11% over the year, buoyed by favorable prior-year comparatives. This was particularly the case in the first half, when demand climbed 14% compared with the 2022 period, which was adversely impacted by automaker supply shortages and the outbreak of war in Ukraine.”
Meanwhile, the OE channel in China grew 9% year-over-year, “with wide swings from one quarter to the next.”
Commercial performance
Michelin officials report that the replacement commercial truck tire market was down 15% in 2023, “reflecting both particularly high comparatives and extensive dealer and fleet destocking that brought inventory levels back to normal by year-end.”
Demand contracted less sharply in Europe by 7% year-over-year, “where an economic slowdown, particularly in northern Europe, has led to a glut of overland freight capacity,” amplified by a steep drop in truck tire inventories, which eventually corrected “to normal levels” by the end of the year.
In South America, commercial truck tire demand climbed 6% year-over-year “and remains robust, supported, in particular, by opportunistic dealer buying of low-cost imports.”
On the OE side, demand for commercial truck tires in North and Central America was down 4% versus 2022 levels. However, truck tire demand rose by 5% in Europe. South America suffered the largest OE truck tire demand decline – a drop of 25% - during 2023, the result of “extensive new truck buying in 2022” to beat new emissions standards that were introduced in January 2023.
Specialty tires
Demand for mining tires is growing “at a relatively stable rate year after year, led by ever-increasing ore mining needs,” say Michelin officials. “Sell-in demand was somewhat volatile over the year, due to temporary inventory reductions or rebuilding by mine operators, but remains robust.”
Demand for ag tires at the OE level “rose overall during the year,” supported by strong farm commodity prices.”
Meanwhile, demand for construction tires held steady, buoyed by “the wide array of infrastructure projects that are raising demand for equipment.”
In the replacement channel, however, demand “fell sharply” in 2023, “dragged down by massive destocking in every dealer channel.”
