Shares in French tyre maker Michelin plunged more than 9% on Tuesday after the company sharply cut its full-year profit outlook, citing deteriorating market conditions and a steep fall in North American sales.
The stock fell 9.3% to €26.01 in early European trade, heading for its biggest single-day drop since the onset of the pandemic in March 2020.
The company now expects segment operating income at constant exchange rates to come in between €2.6 billion and €3 billion ($3.01 billion–$3.47 billion), down from a previous forecast of more than €3.4 billion.
Free cash flow before mergers and acquisitions is projected to range between €1.5 billion and €1.8 billion, compared with a prior estimate of €1.7 billion.
The sharp downgrade weighed on other tyre makers as well.
Shares in Continental, Pirelli, and Nokian Tyres dropped between 1.8% and 2.8%, reflecting broader concerns about softening demand in the global auto and heavy equipment markets.
North America slowdown drives earnings cut
Michelin said the main driver of the revised guidance was a substantial decline in North America volumes, which fell around 10% in the third quarter.
The company attributed the fall to “plummeting demand” from truck and agricultural equipment manufacturers, a weak replacement market for truck tyres, and soft consumer sales amid a sluggish economy.
“On the margin front, group competitiveness has been impacted by tariffs,” Michelin said in a statement.
Although most of its tyre production in North America is local, sparing it from direct tariff exposure, the company is still feeling the knock-on effects of weaker car sales and cautious consumer spending.
Analysts are divided over recovery outlook
Analysts at Jefferies described the scale of the forecast cut as “the largest in six years”, while Deutsche Bank called the downgrade “far bigger than expected”.
“Michelin’s guidance cut was widely anticipated after 14 straight quarters of volume declines, but its severity is surprising and reinforces major doubts about its 2026 performance,” Bernstein analysts wrote, suggesting that it can only calm doubts and make the stock more appealing with a significant rise in cash returns, which, the analysts said, it is fully capable of.
The analysts said the extent of the cut raises fresh questions about Michelin’s response to ongoing market challenges, including tariffs and slowing industrial demand.
They also said the group should consider a buyback similar to Bridgestone’s, which helped address its underleveraged balance sheet.
Michelin’s shares, now trading near four-year lows, sit at the bottom of the STOXX 600 index.
The scale of Tuesday’s drop underscores investor unease over the company’s ability to steer through the current downturn — and whether the cyclical headwinds will indeed turn into tailwinds by 2026.
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