Michelin UK Nearly Doubles Pre-Tax Profit Amid Rising Costs

Michelin's UK division has reported a significant increase in pre-tax profit for 2023, achieving £15.7 million, up from £7.9 million in the previous year. This notable growth comes despite the rising costs of production, including raw materials, energy, and labour. The company's strategic pricing adjustments have played a crucial role in this financial performance.

Michelin UK Nearly Doubles Pre-Tax Profit Amid Rising Costs
Michelin UK Nearly Doubles Pre-Tax Profit Amid Rising Costs
July 4, 2024

The UK arm of Michelin, headquartered in Stoke-on-Trent, saw its turnover increase by 3.7% to £530 million, compared to £511 million in 2022. This growth is attributed to a disciplined pricing strategy and a positive price/mix effect. UK sales increased by 4.5%, with the original equipment market turnover rising by 10% due to higher volumes and effective pricing.

However, the replacement market experienced a 5% decline in volumes, but turnover still rose by 3.1%, reflecting a better product mix and the pricing strategy's impact. Export volumes decreased by 18.6%, primarily due to reduced production at the Stoke factory.

Despite these fluctuations, Michelin's operating profit before exceptional items stood at £13.5 million, slightly down from £14.8 million in 2022.

The previous year had seen mixed results for Michelin's UK division, with a drop in pre-tax profit from £22 million to £7.9 million, despite an increase in turnover.

On a broader scale, Michelin's parent company, headquartered in Clermont-Ferrand, France, saw a slight decline in sales to €28.3 billion (£23.9 billion) in 2023 from €28.5 billion (£24.1 billion) the previous year. Its pre-tax profit also decreased to €2.4 billion (£2 billion) from €2.6 billion (£2.2 billion) in 2022. The company attributed this to reductions in inventories across dealer channels, particularly affecting its European operations.

Michelin noted that by year-end, inventories had normalised, with sell-in demand expected to align more closely with sell-out figures moving forward. The company also reported varied demand trends globally, with decreases in North America and Europe but growth in South America.

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