UPDATE 2-Michelin raises free cash flow outlook on lower volume, costs
(Adds sales in paragraph 2, CFO quote in paragraph 3)
By Olivier Cherfan and PierreJohn Felcenloben
Oct 24 (Reuters) - French tyre maker Michelin raised its forecast for full-year free cash flow before acquisitions on Tuesday to 2.3 billion euros ($2.4 billion), from 2 billion euros, citing lower volume and costs.
Sales in the first nine months rose 2.0% to 21.2 billion euros, negatively impacted by a foreign currency effect of 2.6% year-to-date, including a negative impact of 5.5% in the third quarter.
In a call with investors, Chief Financial Officer Yves Chapot said the guidance upgrade on free cash flow was based on "a lower volume than expected, so that should improve the working capital construction, as well as a lower cost per unit in our inventory valorisation."
Michelin also confirmed its 2023 forecast for segment operating income at constant exchange rates.
"Tire demand remained strong in July and August, as automakers continued to replenish inventory, but fell 10% year-on-year on the month of September as strikes called at a number of auto plants weighed heavily on monthly output," the company said.
The
United Auto Workers strike
in the U.S. has resulted in more than 34,000 union members working at Ford, General Motors and Stellantis joining picket lines, impacting car production.
Non-tyre sales, which Michelin wants to account for 20-30% of its total sales by 2030, rose 12.6% in the period.
Analysts expect the group's full-year free cash flow to reach 2.28 billion euros, a company-compiled consensus showed. ($1 = 0.9445 euros) (Reporting by Pierre John Felcenloben and Olivier Cherfan; Editing by Mark Potter, Alexander Smith and Leslie Adler)
