Michelin stock slumps 9% as profit downgrade triggers concerns over 2026 targets
News Summary
Michelin significantly cut its 2025 operating income forecast from over €3.4 billion to between €2.6 billion and €3.0 billion, citing deteriorating market conditions and a sharp decline in North American sales. The company reported a nearly 10% drop in North American volumes during the third quarter, driven by plummeting demand from truck and agricultural equipment manufacturers, a weak replacement market for truck tyres, and soft consumer sales. Tariffs also impacted group competitiveness, despite most North American production being local. The news sent Michelin's stock plunging 9.3%, its worst single-day drop since March 2020, and dragged down peers like Continental and Pirelli. Analysts expressed surprise at the severity of the downgrade, raising fresh doubts about Michelin's ability to meet its 2026 targets and its response to ongoing market challenges, including tariffs and slowing industrial demand, suggesting buybacks could boost appeal.
Background
Michelin is one of the world's leading tire manufacturers, and its performance is often seen as an indicator of the health of global industrial and automotive markets. This profit warning follows 14 consecutive quarters of volume declines, indicating sustained operational pressures. The downgrade is primarily attributed to the North American market, experiencing plummeting demand in truck and agricultural equipment, alongside a weak replacement market for truck tires and soft consumer sales. The company also explicitly cited tariffs as negatively impacting its competitiveness.
In-Depth AI Insights
What are the deeper implications of this significant profit downgrade beyond just weak demand? - Michelin's