Michelin H1 Revenue Misses Estimates on Currency, Operating Profit Rises

Compagnie Générale des Établissements Michelin (EPA:ML) reported first-half revenue that fell just short of analyst expectations, primarily due to adverse currency fluctuations, while underlying profitability and cash flow showed marked improvement. The company reaffirmed its full-year guidance, signaling confidence despite a mixed top-line result.

First-Half Performance

Michelin's revenue for the first half of the year was €12.69 billion, slightly below the consensus estimate of €12.74 billion, according to the company's report. On a reported basis, revenue declined by 2.6%, but it increased by 0.5% when measured at constant exchange rates, indicating a significant 3.1% negative impact from currency movements.

Net income for the period came in at €766 million, missing the analyst forecast of €977 million.

Operational Strength and Cash Flow

Despite the revenue miss, Michelin's operational performance strengthened. Segment operating income rose to €1.45 billion, pushing the operating margin up to 11.4% of sales from 11.1% in the first half of 2025. At constant scope and exchange rates, this represented a 7% increase.

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The company attributed the improved profitability to a favorable price-mix and lower raw material prices. These factors helped offset headwinds from higher manufacturing and logistics costs, including inflation and customs tariffs. Free cash flow before mergers and acquisitions saw a significant turnaround, reaching €282 million compared to a negative €102 million in the prior-year period.

Outlook Confirmed

Michelin confirmed its full-year guidance, reinforcing its operational targets for 2026. The tire maker continues to project:

• Growth in segment operating income at constant currency and scope compared with 2025.
• Over €1.6 billion in free cash flow before mergers and acquisitions.

"Michelin’s teams can be proud of their performance over the first half: our Group is showing a marked improvement in our sales momentum," stated Florent Menegaux, Managing Chairman. He credited the results to quality product offerings, enhanced brand attractiveness, and a continued focus on competitiveness.