Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Michelin posts record annual profit, sees 'marginal' effect from Red Sea crisis

Published 12/02/2024, 16:48
Updated 12/02/2024, 18:30
© Reuters. FILE PHOTO: The logo of Michelin Group is seen ahead of a news conference to present the company's 2018 annual results in Paris, France, February 11, 2019.  REUTERS/Philippe Wojazer/File Photo

By Olivier Cherfan and Augustin Turpin

(Reuters) -Tyre maker Michelin (EPA:MICP) on Monday reported record results, citing the delayed positive impact of its 2022 price adjustments, but remained cautious for the new fiscal year citing an "uncertain" market environment.

"We are in a market context that remains complicated, a European situation that is not very bright, a China that is starting up again but not with growth as strong as it was a few years ago, and many other unknowns," Chief Financial Officer Yves Chapot said in an interview with Reuters.

The French group, which makes tyres used in cars, aircraft, bicycles and industrial equipment posted segment operating income, its main profit metric, of a record high 3.57 billion euros ($3.85 billion) for 2023, beating analysts' forecast of 3.42 billion euros in a company-compiled consensus.

Logistics issues linked to the Red Sea crisis weighed on the group's finished product flows, mainly natural rubber, Chapot said, adding the crisis will have a "reasonably marginal" effect on 2024 results.

"It will mostly impact the first quarter or the first semester of 2024," he said.

Chapot stressed that only 4% of Michelin's shipments, mainly natural rubber, transit through the Suez canal, as the company also relies on African and South American suppliers.

Many commercial shippers have diverted vessels away from the strategic Red Sea commercial route following attacks by the Iran-backed Houthis, leading Michelin to halt activity in some of its Spanish factories on two occasions.

Michelin said it now expects 2024 segment operating income above 3.5 billion euros, below analyst expectations of 3.59 billion euros.

The group also announced a share buyback programme of up to 1 billion euros over the period 2024-2026. It will propose a dividend of 1.35 euro per share at its next general meeting.

© Reuters. FILE PHOTO: The logo of Michelin Group is seen ahead of a news conference to present the company's 2018 annual results in Paris, France, February 11, 2019.  REUTERS/Philippe Wojazer/File Photo

Michelin will hold a Capital Markets day at the end of May to present its new 2026 objectives, Chapot said.

($1 = 0.9284 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.