This article first appeared on GuruFocus .
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Revenue:EUR12.7 billion in the first half, a decline of 2.6% due to currency headwinds; up 0.5% at constant exchange rates.
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Segment Operating Income:EUR1.45 billion, representing an operating margin of 11.4%, an improvement of 0.3 points versus last year.
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Free Cash Flow:Positive EUR282 million, a strong improvement compared with the first half of 2025.
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Net Debt:Gearing increased to 26% at the end of June 2026, reflecting recent acquisitions.
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Polymer Composite Solutions Revenue:Expected to increase by 35% on a full-year basis due to acquisitions.
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CO2 Emissions:Declined by 9% in Scope 1 and 2 compared with the first half of 2025.
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Water Withdrawal:Decreased by 8% compared with the first half of 2025.
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Shareholder Returns:Around EUR1.7 billion to be returned to shareholders, including EUR944 million in dividends and EUR750 million in share buybacks.
Release Date: July 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Michelin ( MGDDF ) reported a solid first half performance with significant segment operating income progression of over EUR100 million at constant ForEx and scope.
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The Michelin brand posted material growth and gained market share in most replacement markets, reflecting strong customer trust and a robust distribution network.
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The company successfully integrated three acquisitions, which are expected to increase polymer composite solutions revenue by 35% on a full-year basis.
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Michelin achieved positive free cash flow of EUR282 million, a strong improvement compared to the first half of 2025.
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The company continued to reduce its environmental footprint, with an 8% decrease in water withdrawal and a 9% decline in CO2 emissions on Scope 1 and 2.
Negative Points
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Operating in an uncertain and chaotic environment has become the new normal, with uncertainties in demand, global trade, exchange rates, and raw material costs.
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The conflict in the Middle East has created additional risks around energy, logistics, raw materials, and demand.
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Reported revenue declined by 2.6% due to currency headwinds, with a significant negative impact of more than EUR400 million from currency fluctuations.
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Volumes were down 0.9%, mainly reflecting lower original equipment demand and lower sales of Tier 3 brands.
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The North American replacement market fell sharply by 13% due to lower imports, difficult weather conditions, and soft freight demand.
Q & A Highlights
Q: Could you quantify the restructuring costs for 2026 and 2027, and explain the capacity utilization changes in the first half? A: Restructuring costs for 2026 are estimated at around EUR400 million, and for 2027, around EUR150 million. The capacity utilization is slightly below 80% and improving, which should enhance drop-through rates.
Q: Can you provide details on the free cash flow and volume growth by segment and quarter? A: Free cash flow was positive at EUR282 million. In SR4, revenue increased by 14%, mainly due to M&A. Q2 saw growth in SR2, especially in replacement, but SR3 faced challenges, particularly in agriculture. We expect slight growth in the second half, especially in mining and aviation.
Q: Why was the raw material tailwind lower than expected in H1, and what are the expectations for H2? A: Initially, a EUR400 million tailwind was expected for the year, but due to the Middle East crisis, this was revised to EUR100 million. The inflation on oil derivatives was higher than anticipated, affecting the tailwind.
Q: How is the US market expected to perform in the second half, and what is the impact of the Tuscaloosa plant closure? A: The US market is not expected to see a sharp rebound due to economic conditions. The Tuscaloosa plant closure is part of a strategy to improve efficiency, with production being transferred to Fort Wayne and other global plants.
Q: Can you provide insights into the capacity expansion in China and its impact on SR1? A: We are expanding our Shanghai plant, doubling its size to reduce imports and support local sales. China represents about 6% of group revenue, mainly in passenger cars, with expansion in two-wheel and agriculture sectors.
Q: What is the impact of anti-dumping measures in Europe on Michelin? A: The anti-dumping measures have led to a decline in import volumes, but high inventory levels remain. Michelin, operating at the top of the Tier 1 market, is less affected by these measures.
Q: How is Michelin managing raw material volatility, particularly with natural rubber? A: Michelin maintains long-term supplier relationships and balances sourcing risks. Natural rubber prices are influenced by inventory movements rather than El Nino, and we continue to monitor geopolitical impacts.
Q: What are the expectations for SG&A and manufacturing costs for the full year? A: Manufacturing costs are expected to improve due to restructuring, while SG&A will follow a normal trend. The initial headwind of EUR300 million for manufacturing and logistics is now estimated at EUR230 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
