(Reuters) – Michelin raised its full-year free cash flow forecast on Tuesday thanks to a technical impact in volumes and inventories, but currencies and the strike in the United States affected the third quarter of tire manufacturer.
The Clermont-based group is now targeting free cash flow before acquisitions of more than 2.3 billion euros in 2023, compared to 2.0 billion euros so far.
“We have raised our free cash flow forecast, mainly on the basis of lower than expected volumes, which should improve the construction of the working capital requirement, as well as on the basis of a lower unit cost in the valuation of our stocks,” said financial director Yves Chapot during a conference call.
Analysts were targeting free cash flow for the whole year at 2.28 billion euros, according to a consensus compiled by the company.
The group also reported sales for the first nine months of the year up 2% to 21.2 billion euros despite the drop in volumes, attributable to market destocking, and an unfavorable exchange rate effect, ” thanks to the improved mix, non-tire activities and brand leadership,” he explained in a press release.
On the other hand, in the third quarter alone, turnover fell by 5%, the positive effect of the price mix being erased by the drop in volumes, while the exchange rate effect weighed -5%. .5%.
Michelin, which makes tires used in automobiles, aviation, and other equipment, confirmed it is targeting sector operating profit at constant currencies of 3.4 billion euros for the year.
Sales excluding tires, which are expected to represent 20 to 30% of Michelin’s total sales by 2030, increased by 12.6% during the period, driven by the conveyors, belts and seals activities, as well as growth service offerings to fleets. In North and Central America, “demand for tires remained strong in July and August, with manufacturers continuing to replenish their stocks,” Michelin continued.
“The strike movement observed at several automobile manufacturers from September, however, weighed heavily on demand for the month, with a drop of 10% compared to the previous year,” he added. The social conflict in the automobile sector, led by the American union United Auto Workers, has led more than 34,000 employees at Ford, General Motors and Stellantis to the strike lines.
(Report by Pierre John Felcenloben and Olivier Cherfan, by Nathan Vifflin, with Gilles Guillaume, edited by Kate Entringer and Jean-Stéphane Brosse)
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