(News Bulletin 247) – The group’s title at the bibendum shows the biggest drop in the CAC 40 this Thursday, October 9 after holding a preliminary conference call to its third quarter publication. According to Bernstein, revenues are set to decline more than the market expects.

These are meetings little known to the general public but which can have a significant impact on the stock market: “pre-close calls”. These small conference calls are organized by companies with analysts just before the “quiet period” of several weeks.

As a reminder, this “quiet period” precedes a publication of results and, during this period, companies refrain from giving any information to the market.

During pre-close calls, listed companies provide the latest major trends and directions to analysts. This last minute information can lead to significant market reactions.

This happens quite often at Michelin. Already in July 2024, the stock had suffered, after a “pre-call” during which the company had delivered negative indications on its volumes.

Rebelote this Thursday, October 9. The tire manufacturer lost 4.9% on the Paris Stock Exchange, showing by far the biggest drop in the CAC 40, after holding a preliminary conference call for the publication of third quarter sales (scheduled for October 22).

All the indications given by the company on this occasion were a priori disappointing, according to a note from Bernstein.

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Fall in turnover

“Overall, the commentary indicates sales around 4% lower than the current consensus, penalized by the automobile manufacturers’ markets and a weak replacement market among consumers,” summarizes the financial intermediary.

In detail, Bernstein explains that the company expects a decline in mid-single digit volumes (between 4 and 6% roughly) in the third quarter, when the consensus (the average forecast of analysts) anticipated a drop of only 0.9%.

Production volumes among manufacturers were stable while the replacement market slowed down compared to the first half. Imports were made in anticipation of the introduction of customs duties in the first half of the year, and Michelin suffered the repercussions of this trend.

In “specialty” tires (tractors, construction vehicles, mining vehicles), “agriculture and construction remain depressed, but the mining and aerospace sectors have been strong,” Bernstein writes.

Beyond volumes, the company expects a positive “price-mix” effect (the cumulative impact of price variations and the orientation towards more expensive countries and products) but lower than that of the second quarter (+3.2% over this last period) while the consensus expected an increase of 3%, according to Bernstein.

Goals at risk at Michelin?

Based on all of these data, Michelin should suffer from the comparison with Continental, which for its part should generate slightly positive growth in the third quarter, observes the research office. The financial intermediary attributes this underperformance to the French group’s greater exposure to the American market as well as to changes in its distribution channels.

In parallel with Bernstein, Deutsche Bank for its part wrote, in a note on Michelin published this Monday, that it expected “a decline in turnover in the third quarter, as volumes and exchange rates continue to weigh on results”. “On the other hand, the price mix remains favorable,” she adds.

“Overall, we continue to see risks to the forecast for the 2025 financial year due to volume declines experienced throughout the year. Achieving profit targets appears difficult, or even just achievable at best,” the German bank continues.

Deutsche Bank judges, however, that the market has already largely factored in a lower outlook and therefore maintains its buy opinion.