Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on MICHELIN (CGDE). We currently have 10 research reports from 1 professional analysts.
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2016 results are reasonable and not very different from our expectations
14 Feb 17
Michelin has increased tyre deliveries by 2.1% in the last year, but falling raw material prices also resulted in falling sales prices. As a result, revenue was down by 1.4% to €20.9bn. In spite of this, EBIT increased by 4.5% to €2.69bn while net income increased by more than 40% to €1.67bn. This allows management to propose a dividend of €3.25 vs. €2.85 paid for 2015. However, the group generated a one-time gain of €272m from the restructuring of the American health care plan whereas the 2015 accounts did not include such gains. Consequently, net earnings are ‘over-stated’. Revenue is slightly short of our projection while the operating result and the dividend are both higher.
We are too optimistic for 2016
20 Oct 16
Instead of a marginal revenue growth of 1% to €5.35bn, Michelin’s sales fell by another 2.4% to €5.18bn and the ytd number now stands at €15.47bn (-2.1%). To reach our full-year projection of €21.18bn, Q4 revenue needs to increase by almost 6% to €5.7bn. This is probably unrealistic.
Superb operating profits in a toughening environment
26 Jul 16
Consolidated revenue fell by 4.5% to €5.23bn in Q2 16 which brought the H1 number to €10.29bn, a decrease of 2.0%. In spite of this, H1 EBIT increased by 11% to just above €1.4bn. Michelin’s revenue number is lower than our expectation (€10.7bn) whereas the profit number is higher (€1.26bn). However, we had expected a significantly higher net profit number of €853m whereas the company’s number is only €769m. We need to see the accounts before we can make a judgment on this discrepancy.
Michelin builds its 21st North American factory in Mexico
04 Jul 16
Construction will begin in the current half year and is expected to be finalised in late 2018. First tyre deliveries will commence in Q4 18. The plant will have an initial capacity of four to five million high-end tyres for both passenger cars and light trucks. Clients will overwhelmingly be the OEMs which produce in Mexico. Michelin currently operates 68 tyre production plants around the world, i.e. North America makes up around 30% of the plants and Asia another 20%.
Cost reduction programme is increased
06 Jun 16
Management now expects being in a position to reduce annual costs by up to €1.2bn from 2017 to 2020. However, this number is not an annual cost saving number but an accumulated one, i.e. annual costs are believed to being reduced by another €300m or a good 1% of annual turnover. Management intends not to replace some of the retiring employees. In addition, lower inventories are believed to reduce costs by some €250m and lower other costs contribute another €200m. Finally, raw material costs are believed to fall by between €150m and €200m as a result of the ongoing optimisation process and the trend for lighter tyres. However, the latter will also reduce the ASP and, hence, revenue. The ongoing cost reduction programme concentrates on capacity expansion in Asia, North and South America. A growing proportion of production goes to plants that are already producing over 100,000 tyres a year. Finally, unit investment costs can be reduced by up to 30%, i.e. capex will fall in relative terms. As long as replacement tyre prices do not come under pressure, Michelin’s profit margin is expected to benefit from this. However, first indications from other market participants (i.e. Nokian Renkaat) suggest, that some price pressure has emerged during the course of 2015. For the time being, we do not see this trend intensifying as replacement tyre demand for both car and truck tyres is still good and growing. However, the situation is clearly different for truck tyres from the OEMs, except for Europe.
Price mix and currencies put pressure on revenue growth
21 Apr 16
Michelin’s Q1 16 revenue was up by a very modest 0.9% to €5.07bn although revenue growth was already moderate in Q1 15 (+5.5%), whereas it had increased by 8% or more in all subsequent quarters. Whereas volume growth contributed +3.7% to sales growth, the price mix (-1.3%) and currencies (-1.9%) both had negative impacts. Consolidation changes had a marginally positive impact of +0.4% as the group acquired more tyre retailers in both Germany and the UK. In spite of this, management maintains its vague full-year guidance of volume growth outpacing the global market’s growth and EBIT before non-recurring items and at constant exchange rates increasing.
Panmure Morning Note 20-03-2017
20 Mar 17
Today’s strong H1FY17 trading statement is encouraging on multiple levels; (1) H1FY17’s revenue growth of c.+23% to £32m indicates revenue growth running well above our forecast assumption of +15% for FY17 (August 2017); (2) the revenue growth continues to be broad-based across the two main brand groups (Focusrite and Novation) and all of TUNE’s global regions (USA, Europe, and RoW); (3) H1FY17’s constant currency revenue growth of c.+12% is a sequential acceleration from the c.+9.5% of H2FY16 and c.+5.5% of H1FY16; and (4) H1FY17’s net cash of £9.4m is well ahead of our forecast of £7.7m by August 2017, reflecting strong revenue/profit conversion combined with much improved w/c control. In short, we think there is excellent scope for our FY17 forecasts to be raised at the time of the H1FY17 results on May 3. We maintain our BUY.
20 Mar 17
Focusrite has positioned itself in a way that makes its shares a particularly attractive investment: leadership in a niche product area protected from general consumer swings; an international market structure that makes it relatively currency agnostic; a habit of profit over delivery; a strong and further strengthening balance sheet; and an undemanding valuation. This first half trading statement confirms every one of those points.
10 for 17
09 Jan 17
As always at the start of a year, there are significant uncertainties about the year ahead but I think in 2017, the level of uncertainly has decisively moved up a gear. In fact, a leading economist at the LSE, Ethan Ilzetzki, was recently quoted as saying “I view the current global economic environment as the most uncertain in modern history”. Wow.
M&A coming to a company near you?
16 Mar 17
Markets have retained their relative strength over the last fortnight. We have seen a mixed reaction to the Budget last week, the passing of the Brexit Bill earlier in the week and the first interest rate hike by the Federal Reserve in the US yesterday. Against this backdrop, we have seen some notable M&A activity across a range of sectors which may move down the market capitalisation scale. We now face an extended period of heightened speculation but “no running commentary” regarding Brexit in the UK after Article 50 is triggered at the end of the month.