In the first half of this year, net sales of Michelin reached 10.159 billion euros, compared with 10.706 billion euros in the same period of last year. Sales in the weak market in the first quarter fell by 1.5% and showed signs of improvement in the second quarter. Changes in the price mix have caused net sales to drop by 242 million euros or 2.3%. This reflects the adverse effect of the 281 million euros brought about by the contract price reductions under the terms of the raw material price index and the targeted price repositioning of certain tire sizes. This also includes the favorable impact of the €39 million generated by the improved sales mix from the high-end strategy of 17-inch and larger tires.
In the first six months of 2013, Michelin's consolidated operating profit before deduction of non-recurring income and expenditure items was 1.153 billion euros or 11.3% of net sales, compared to 1.32 billion euros and 12.3% in the first half of 2012. During the same period, non-recurring expenditures amounted to 250 million euros, involving restructuring costs arising from ongoing projects to improve the competitiveness of manufacturing operations.
As expected, the negative effect of the 242 million euros generated by the price mix was almost completely offset by the drop in raw material costs of 206 million euros. The EUR 127 million gain from the Competitiveness Plan meets the annual target and absorbs the vast majority of EUR 146 million in production and other cost increases. Operating profit also reflects the adverse impact of the 59 million euros from the decline in sales volume, 37 million euros in capital expenditures (startup costs, new business process management plans and new market spending) to drive growth, and an unfavorable currency effect of 49 million euros. . Overall, the current net profit was 507 million euros.
Michelin said that the mature market rebounded due to the low base of comparison in the previous year, and emerging markets continued to expand. Under this market environment, Michelin expects that sales volume will show modest growth in the second half of the year. As a result, thanks to comprehensive products and services and a balanced global presence, the Michelin Group reiterates its goal of achieving stable sales throughout the year.
In the second half of the year, the impact of lower raw material prices will be expected to bring about 350 million euros of operating income for the year. At the same time, the prices of products in the second half of the year are likely to remain at the level of the first half of the year. Therefore, the profit of the combined operations in the second half of the year should be able to benefit from the lower prices of raw materials. It is expected that this impact will offset changes in the price mix.
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