Compagnie Générale des Établissements Michelin Société en commandite par actions

Michelin reported H1 revenue of EUR 12.7 billion, down 2.6% reported due to currency headwinds but up 0.5% at constant exchange rates. Segment operating income reached EUR 1.45 billion, with operating margin of 11.4%, up 0.3 points year over year; at constant scope and FX, SOI rose EUR 103 million, or 7%, and management also cited over EUR 100 million of progression at constant FX and scope versus H1 2025. Free cash flow was positive at EUR 282 million, compared with H1 2025. For 2026, Michelin reaffirmed guidance for segment operating income at constant exchange rates and scope to exceed 2025 levels, and free cash flow before M&A to be above EUR 1.6 billion. Management also said 2026 restructuring costs would be around EUR 400 million and 2027 restructuring costs around EUR 150 million, with net manufacturing and logistics cost impact now expected at around EUR 230 million for 2026.

Florent Menegaux framed the quarter as evidence that Michelin’s strategy is working in a highly uncertain environment, pointing to brand strength, operational discipline, and a more diversified portfolio as key advantages. He said Michelin is growing in both tires and non-tire businesses, and described Q2 as a turning point with tire growth resuming. His tone was confident but cautious, emphasizing geopolitical and currency risks while stressing that the company is built to weather them.

Benedicte Bonnechose highlighted that the group generated EUR 282 million of free cash flow in H1 from EUR 2.4 billion of EBITDA, despite an inflationary backdrop and seasonal cash generation being weighted to H2. She said gearing rose from 22% to 26% at end-June, mainly because of recent acquisitions, and noted around EUR 600 million of M&A cash outflow in the period. She also said H1 segment operating income benefited from EUR 199 million of raw material tailwind and EUR 150 million of price/mix, partly offset by EUR 130 million of higher manufacturing and logistics costs and EUR 114 million of FX headwind. On capital allocation, she said Michelin expects around EUR 1.7 billion returned to shareholders in 2026, including EUR 944 million of dividends and around EUR 750 million of buybacks, with EUR 300 million already executed by end-June.

Analysts focused on free cash flow, restructuring cash outlays, raw material assumptions, price/mix, and volume trends by segment. Management said restructuring costs should be around EUR 400 million in 2026 and EUR 150 million in 2027, and explained that capacity utilization is slightly below 80% but improving, which should help volume drop-through. On raw materials, Michelin said the full-year benefit is now expected at roughly EUR 80 million to EUR 100 million, lower than initially expected because of Middle East-related inflation in oil-linked inputs. Management also said June volume momentum was helped by a small pre-buy, but mainly by better product launches and better pricing position, while U.S. demand was not expected to rebound sharply in H2.