French tire-maker Michelin sees no let up in cost inflation and supply snarls in 2022

Michelin said this year will be just as much of a struggle as 2021 as severe bottlenecks in supply chains and transportation routes drive up costs.

“We anticipate 2022 will be as disrupted as 2021,” Chief Executive Officer Florent Menegaux said Monday during an earnings presentation. The company faced acute transport problems last year, and sometimes had to deal with dozens of supply-chain crises daily, he said. 

The French tire maker “more than offset” 1.2 billion euros ($1.36 billion) in extra costs in 2021 with three price increases, according to the presentation. It offered a muted outlook for passenger cars and light-trucks, expecting the market to stay stable or grow as much as 4% compared with last year, when shortages in semiconductors crippled vehicle production lines and hurt tire sales to automakers. 

Global manufacturers have been facing higher costs and labor shortages in many countries, which has hindered their ability to fill growing demand for goods as economies emerge from the worst of the pandemic.

Michelin is expecting demand from automakers for tires to equip new vehicles to improve in the second half, and take off in the last quarter, Chief Financial Officer Yves Chapot said. 

Acquisitions remain part of Michelin’s longer-term strategy to grow, Menegaux said.