Shares Of Michelin Tank On Guidance Cut After North American Auto Market Slumps
Shares of French tiremaker Michelin plunged in Paris, marking the steepest intraday decline since the early Covid-pandemic crash, after the company slashed its 2025 outlook and warned of a bigger-than-expected sales decline in the North America market.
Michelin now expects 2025 operating income between 2.6 billion euros and 3 billion euros, down from the previous outlook of 3.4 billion euros, citing softening agriculture, construction, and truck demand. Sales in North America plunged by nearly 10% in the third quarter, with a weaker dollar and tariffs weighing on margins.
Michelin noted that competitiveness across the tire market was "impacted by tariffs" and comes as carmakers from Europe face a slowdown in Europe amid fierce competition from China, as well as the beginning innings of trouble in the U.S. following the recent collapse of subprime auto lender Tricolor Holdings. Separate, but playing into the theme, UBS warned weeks ago that consumer weakness is now spreading from low-income to middle-income.
Citi analyst Ross MacDonald called the revised guidance "worse than feared," warning that tariff headwinds, trade-down risks, and subdued end-market demand could very well linger in the first quarter of 2026.
Also, Michelin lowered its expected free cash flow before M&A to between 1.5 billion euros and 1.8 billion euros, down from 1.7 billion euros, due to the weaker dollar.
Michelin is set to publish its third-quarter results next Wednesday. Today's guidance update sent shares in Paris plunging as much as 11%, marking the worst intraday decline in more than five years. Peer Continental AG also fell in Frankfurt.
Year-to-date, shares are down 17.55%, and top Wall Street analysts have yet to mark a near-term turnaround, having cut target multiples due to North American sales woes.
Tyler Durden
Tue, 10/14/2025 - 08:10
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