Overview
French tyre manufacturer Michelin warned investors that it expects a muted start to 2026 as it prepares to report first-quarter sales figures. The company said sell-in volumes fell in the "low-to-mid single digit" percentage range in Q1 despite easier year-on-year comparatives, signaling continued weakness in demand across its principal segments.
Demand across segments
Michelin said the decline in sell-in volumes reflected sluggish conditions in passenger and light truck, commercial vehicle, and the Beyond Road agricultural business in North America. The replacement tyre market offered some relief, with consumer sales returning to "modest growth," but those gains were insufficient to offset declines elsewhere.
Pricing reversal and mix
Pricing, which had supported earnings in 2025 with a positive contribution of 3%, moved into negative territory in the quarter. The company attributed the reversal to indexation clauses that link contract prices to lower raw material costs and to a constrained ability to pass through U.S. tariff costs amid rising competition. Michelin said product mix should partially counter these pressures, helped by stronger sales of premium Michelin-branded tyres and 18-inch-plus sizes.
Currency pressures
Foreign exchange headwinds remain significant, the company said, with FX pressure "comparable to" the fourth quarter of 2025 when the currency impact reached minus c346 million, or 4.9% of net sales. Michelin reiterated that a one-cent move in the dollar-euro exchange rate affects operating income by around c30 million.
Geopolitical and input-cost watch
On the Middle East conflict, management provided limited detail, saying there are no supply shortages at this stage but that the situation is being monitored. Michelin also signaled that it will provide an update on input cost scenarios, covering raw materials, energy and freight, when it issues first-quarter sales figures on April 29.
Outlook and guidance
Despite the weak start, Michelin maintained its full-year volume guidance. The company expects a sequential recovery during 2026, forecasting sell-in volumes to turn "slightly positive" in the second quarter and to be more meaningfully positive in the second half, with the objective of slight full-year volume growth.
Analyst reaction and market move
Barclays, which has an "underweight" rating on Michelin and a price target of c25 versus a previous close of c29.22, described the update as consistent with recent communications but warned that the combination of volumes, price-mix and foreign exchange represents a triple headwind unlikely to be resolved before mid-year. Shares of the company were reported up 4.7% at 06:07 ET (10:07 GMT).
What to watch next
Investors will look to the April 29 sales update for further detail, particularly the company 's scenarios for input costs across raw materials, energy and freight and any additional commentary on regional demand trends and FX exposure.