Michelin: Under control
Michelin: (BUY, Fair Value EUR146 (+47%))Under control
After reviewing the main external factors, namely the markets, raw material costs and currency effects, Michelin confirmed its guidance for 2018 yesterday. The group’s scenario for raw material costs and FX are unchanged, while market assumptions for PC segment were revised down slightly. At BG, we expect a 15% increase in group EBIT in H2 compared with last year, vs. a -4.7% for the first semester, which should lead to a 5.2% YoY increase in EBIT and 60bp operating margin increase vs. 2017 to a record 13%, with margins rising in all three segments. The strong share price deterioration observed over the past month (-11%) offers an attractive entry price, in our view. Buy
Compagnie Generale des Etablissements Michelin is active in the tire and mobility-related service markets. Co. manufactures, distributes and sells tires for all kinds of vehicles, publishes maps and guides and operates a number of services. Co.'s operates in three segments: Passenger car/Light truck tires and related distribution; Truck tires and related distribution and Specialty businesses segment including tires for specialty vehicles and maps and guides. Co. distributes its products through two tire distribution networks: Euromaster (Europe) and TCI (U.S.A.) and its brands include Michelin, BFGoodrich, Kleber, Uniroyal, Warrior, Kormoran, Riken, Taurus and Tigar.
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