Michelin (ML) H2 2025 earnings summary

Executive summary

• 2025 results demonstrated resilience with segment operating income of €2.9B at constant FX and strong free cash flow before M&A of €2.1B, despite lower volumes and adverse currency effects.

• The group advanced its 2030 strategy, focusing on core tire business, expanding Polymer Composite Solutions (PCS), and leveraging brand strength and innovation through acquisitions and R&D.

• Non-tire businesses, including Connected Fleet and Lifestyle, contributed positively to sales and operating income.

• High employee engagement, safety improvements, and significant CO2 emissions reduction aligned with 2030 ambitions.

• The group strengthened its financial position and accelerated its product plan, focusing on high value-added activities.

Financial highlights

• 2025 sales reached €25,992M, down 4.4% year-over-year, mainly due to a 4.7% drop in volumes and €800M negative currency effect, partially offset by a positive price-mix.

• Segment operating income was €2,719M (10.5% margin), down from €3,378M (12.4%) in 2024.

• Net income was €1,664M, with basic EPS at €2.36 and a higher effective tax rate (26%).

• Free cash flow before M&A reached €2,126M, supported by working capital discipline and asset disposals.

• Dividend per share maintained at €1.38, with a 57% payout ratio and a new €2B share buyback program planned for 2026–2028.

Outlook and guidance

• 2026 guidance targets segment operating income above 2025 at constant scope and FX, and free cash flow before M&A above €1.6B.

• Tire volumes expected flat in H1 2026, improving in H2 as OE and B2B markets recover; PCS growth to continue.

• Raw material tailwind of €400M anticipated in 2026, partially offset by €220M in wage and logistics inflation; raw material costs and FX assumed stable.

• Share buyback of €750M planned for 2026, with further buybacks dependent on cash generation and acquisitions.

• Polymer Composite Solutions to become a new reporting segment from Q1 2026.