MICHELIN (Compagnie Generale des Establissements Michelin S.C.A.) Business Report FY ended Dec. 2017

Financial Overview

(in million EUR)
FY ended Dec. 31, 2017 FY ended Dec. 31, 2016 Rate of change (%) Factors
Sales 21,960 20,907 5.0 1)
Operating income* 2,742 2,692 1.9 2)
Passenger car/Light truck tires & related distribution
Sales 12,479 12,105 3.1 3)
Operating income* 1,552 1,585 (2.1) -
Truck tires & related distribution
Sales 6,123 5,966 2.6 4)
Operating income* 497 580 (14.3) -

*Before non-recurring items.

1) Net Sales
-The Company’s net sales for the fiscal year ended December 31, 2017 increased by 5.0% from the previous year to EUR 21,960 million. Increases in sales volumes contributed EUR 543 million in growth, while a favorable price-mix effect added an additional EUR 668 million. Additionally, acquisitions added EUR 103 million to the Company’s sales, while negative currency effects decreased sales by EUR 261 million.

2) Operating Income
-The Company’s operating income from recurring activities totaled EUR 2,742 million for the fiscal year ended December 31, 2017, an increase of 1.9% over the previous year. The increase in operating income was caused primarily by increased sales volumes and a favorable price mix, and was partially offset by increased raw material costs, unfavorable currency exchange effects, increased production costs and overhead.

3) Passenger car and light truck tires
-Sales from the Company’s passenger car and light truck tires and distribution segment in the fiscal year ended December 31, 2017 increased 3.1% over the previous year to EUR 12,479 million. The segment saw growth in sales volumes in Asia markets overall, as well as in the OE segment in the European market. These gains offset declining sales in North America and South America, along with level sales in the Africa/India/Middle East region.

4) Truck tires
-In the fiscal year ended December 31, 2017, the Company’s truck tires and distribution segment had sales of EUR 6,123 million, an increase of 2.6% from the previous year. Despite a decrease in sales volumes in the segment across most of the Company’s operating regions, sales increased due to higher prices and improved product mix.


-The Company announced that it has reached an equity transfer agreement with Huayi Group to sell 40% of the equity it owns in Double Coin (Anhui) Warrior Tire Co. Ltd. In 2011, the Company worked with Huayi Group and Double Coin Group to establish the joint venture in Wuhu, Anhui Province. All parties agreed to the transaction in order to better focus on each of their core strengths and respective strategies. (From a press release on November 20, 2017)


-The Company announced that it will acquire NexTraq, a U.S. provider of commercial fleet telematics. With the acquisition, the Company will strengthen its telematics service, one of its strategic business areas, by expanding its fleet management and service operations in the U.S. NexTraq provides GPS fleet management solutions for fleets of light-duty commercial trucks ranging from two to 50 vehicles. (From an article in the Nikkan Jidosha Shimbun on August 25, 2017)

Recent Developments

-Siam Michelin, the Company’s subsidiary, revealed that the slowdown in the economy has caused transportation firms to switch to medium to low quality tires due to lower costs in Thailand. Thus, the market share of low quality tires rose to 20% and medium and high quality tires at 40% each. This trend suggests that the government should promote the recycling of treads on old tires as only 10% of the tires are recycled. (From an article of Post Today on July 19, 2017)

Business Partnership

-Hyundai Motor signed a technical partnership with the Company to equip next-generation tires for electric and luxury vehicles. Within the partnership, Hyundai Motor and the Company will work together to develop a new all-season tire for electric vehicles. The use of the Company’s next-generation tire material and structural technology will help Hyundai Motor optimize overall vehicle efficiency and performance. The Company will also collaborate in the development of a bespoke tire for a successor model to the Genesis G80 luxury sedan. Co-operative testing and analysis will help determine tire vibration characteristics at high speeds, both in a laboratory setting and using evaluation conditions set to match the Nurburgring circuit. (From a press release on November 15, 2017)


-The Company signed a commercial agreement with Ashok Leyland to supply MICHELIN X Guard range of radial truck tires for its Captain 3718 PLUS long and medium distance commercial vehicles in India. (From a press release on October 11, 2017)

-The Company’s subsidiary, Nihon Michelin Tire Co., Ltd., announced that its Michelin Primacy 3 tire has been selected for Toyota Motor Corporation's new Camry as original equipment. The Primacy 3 tire was developed to provide comfort and high speed stability. The Company ensured driving stability by optimizing contact area configuration, and adopted a full-silica compound to improve wet grip performance without sacrificing rolling resistance. (From an article in the Nikkan Jidosha Shimbun on September 1, 2017)

-The Company announced the availability of a co-branded Harley-Davidson range of Michelin Scorcher tires in India. The Michelin Scorcher 11 and the Michelin Scorcher 31 are fitted as original equipment on Harley-Davidson Sportster, Dyna, V-Rod and Harley-Davidson Street motorcycles. This is part of the global agreement between the Company and Harley-Davidson to allow these tires to be sold through authorized Company and Harley-Davidson dealers. The Michelin Scorcher 31 was recently type-approved as accessory fitment for the Harley-Davidson Touring range and its exclusive tread pattern was purposely designed to improve road holding and facilitate the clearance of water. The Michelin Scorcher 11 has a semi-slick tread that maximizes the contact patch with the ground, and aramid tread plies reduce weight while resisting centrifugal growth. (From a press release on April 18, 2017)


-For the fiscal year ending December 31, 2018, the Company expects that its sales volumes will match the rate of growth of the markets that the individual segments are involved with. In addition, the Company expects that its operating income will match or exceed its operating income from the fiscal year ended December 31, 2017 at constant exchange rates.

-The Company’s goal is to increase the net sales of its tire divisions by 20% during the time period starting from 2015 through 2020.

R&D Expenditure

(in million EUR)
FY ended Dec. 31, 2017 FY ended Dec. 31, 2016 FY ended Dec. 31, 2015
Overall 641* 718 689

*: 2.9% of net sales

R&D Structure

-As of December 31, 2017, the Company has approximately 6,000 employees working in research and development.

-The Company's strategy for research and development is focused around three themes:

  • The vehicle of the future, featuring concepts such as fuel-cell vehicles and autonomous vehicles.
  • Mobility of the future, focusing on integrating tire solutions into intelligent transportation systems and trends such as ride- and car-sharing
  • The reinvention of urban mobility.

R&D Facilities

  • Research Center: Ladoux (France), Ota (Japan), Greenville (U.S.), Manesar (India)
  • Testing plant: Almeria (Spain)

-In 2017, the Company continued to reorganize its engineering operations in Clermont-Ferrand, France.

-The Company inaugurated a new Research and Development Laboratory in Manesar, Haryana. The 3,800-square-meter facility will provide support to the Michelin Technology Center in Gurgaon. The technology center will focus on radial truck and bus tires and will provide technical support to the Company’s manufacturing facilities in Chennai, China and Thailand. (French Embassy in New Delhi press release from June 13, 2017)

Product Development

Michelin LTX SUV tires
-The Company announced the availability of MICHELIN LTX Force range of SUV tires in India. MICHELIN LTX Force uses compact tread technology to provide excellent durability and grip. The tread pattern inspired by endurance races is designed to provide a greater contact area thanks to higher tread blocks which favor both durability and traction. On asphalt roads, MICHELIN LTX FORCE offers maximum safety in wet conditions with a braking distance as much as two meters shorter than its average rival in the dual-purpose tire category. (From a press release on June 6, 2017)


-As of December 31, 2017, the Company has more than 2,000 active patents.

Capital Expenditure

(in million EUR)
FY ended Dec. 31, 2017 FY ended Dec. 31, 2016 FY ended Dec. 31, 2015
Passenger car and light truck tires 1,080 1,080 1,077
Truck tires 476 520 487
Specialty businesses 215 211 239
Overall 1,771 1,811 1,804

-During the fiscal year ended December 31, 2017, the Company completed or continued the following investment projects:

  • Projects to increase capacity, improve productivity or refresh product lines for the Passenger car and Light truck tire segments in facilities located in Leon, Mexico; Roanne, France; Shenyang, China; and Pirot, Serbia.
  • Projects to increase capacity, improve productivity or refresh product lines for the Truck tire segment in facilities located in Romania, Thailand, France, Poland and India.

-In 2017, three new high-capacity plants continued to ramp up tire production. The three listed plants are expected to produce a combined total of 400,000 tonnes of tires a year by 2020.

  • Itatiaia in Brazil for passenger car and light truck tires
  • Chennai in India for truck tires
  • Shenyang 2 in China, which are designed to significantly increase passenger car and truck tire production capacity.

-In 2017, the Company continued its European reorganization plan which it started in 2015 to improve the competitiveness of its production plants. The plan involved the investment of EUR 265 million to upgrade manufacturing facilities and supply chains in the UK and Italy as well as the termination of operations at the Pneu Laruent plant in Germany.

-The Company expects to increase the average production capacity of its leading tire facilities for the Passenger car and Light truck and Truck segments to 96,000 tonnes per year by 2018.

Investments in France

-The Company is investing EUR 90 million for the installation of advanced equipment and processes at its plants in Cataroux, La Combaude and Gravanches in France.

Investments outside France

-The Company inaugurated a new state-of-the-art production line for the MICHELIN X Guard range of tires in its Chennai plant to cater for the increased demand from both the replacement market and original equipment manufacturers in India. The new production line will help double the current capacity of the plant by 2018. (From a press release on October 11, 2017)

-State officials announced that the Company will start the second phase of its Guanajuato plant construction at the Leon-Bajio Industrial Park by the end of March. Operations are scheduled to begin in 2019 after a USD 510 million investment by the Company. Currently, work is focused on building the platform which will allow the rest of the structure to be constructed. (From a Mexico-Now article on March 20, 2017)