(Reuters) -French tire maker Michelin on Monday cut its full-year outlook citing worse-than-expected business conditions in the North American market that have eroded sales volumes and margins.
The company
now expects 2025 segment operating income at constant exchange rates between 2.6 billion euros and 3.0 billion euros ($3.0 billion-$3.5 billion), down from an earlier forecast of income above 3.4 billion euros.
The company said that while it posted volume growth in other regions, in North America third-quarter sales volumes fell almost 10%, with "plummeting demand" from truck and agriculture segments, a weak sell-out market in truck replacement tires that reflected the soft economy, and headwinds in sales to consumers.
"On the margin front, group competitiveness has been impacted by tariffs," it said in a statement.
North America is Michelin's top market, and while it produces tires locally, avoiding a direct impact from U.S. tariffs, the company is seeing a knock-on impact from weaker car sales after automakers were forced to hike prices and customers became more cautious in the volatile environment.
The company also said that it had lowered its expected free cash flow before M&A to between 1.5 billion euros and 1.8 billion euros, down from more than 1.7 billion euros, due to the weaker dollar.
Michelin's warnings come as many carmakers face sluggish demand in Europe, fierce competition from Chinese rivals and the impact of tariffs on exports to the U.S.
Analysts had said last week that weaker-than-expected third-quarter sales volumes discussed in a pre-close call could affect the tiremaker's full-year performance.
Michelin reports third-quarter sales on October 22.
($1 = 0.8641 euros)
(Reporting by Mateusz Rabiega, Dominique Patton and Gilles GuillaumeEditing by Hugh Lawson and Tomasz Janowski)
