French tyre maker Michelin sees lower 2023 profit in 'stable' market – Reuters

Feb 13 (Reuters) - French tyre maker Michelin (MICP.PA) on Monday forecast a slight decline in 2023 profit in a stabilising market after record inflation bit into its annual cash flow, even as price hikes helped it soften the impact from soaring costs.
For more than two years, the automotive industry has been grappling with a series of disruptions from the coronavirus pandemic to the war in Ukraine, along with component shortages and logistical difficulties.
Michelin expects its segment operating income to reach 3.2 billion euros ($3.4 billion) in 2023, compared to 3.4 billion euros it reported for last year. The 2022 profit was in line with analysts' expectations in a company-provided poll.
"We are expecting stable market probably with a very different seasonality, geographical mix and business mix than in 2022 - probably a lower Q1 and then reset starting from Q2," finance chief Yves Chapot said.
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Chapot said he expected original equipment sales to be more dynamic than replacement tyres in 2023, with the intensity of China's recovery still "a big question mark".
Michelin's structural free cash flow was 378 million euros in 2022, well below its 700-million-euro guidance. This included a one-off inflation hit of around 500 million on the group's working capital requirements, it said.
The company expects 2023 free cash flow before acquisitions to exceed 1.6 billion euros.
"Today our assumptions for inflation including raw material, energy, transportation and labour cost and operating cost should be something between 600 million and 1.2 billion euros," Chapot said about 2023.
Price hikes amounting to 3 billion euros helped Michelin offset a 2.7-billion-euro increase in costs of raw materials, energy and labour, as well as lower volumes due to China disruptions and the shutdown of its Russian business in March.
The group said it was still working on different divestment scenarios for its Russian operations, including a sale to third parties.
($1 = 0.9336 euros)
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