July 24 (Reuters) - French tyre maker Michelin

reported a 4.2% drop in half-year sales on Wednesday, slightly

below analysts' expectations, citing an unstable economic

environment in Europe and a weak performance in the French

market. But the company managed to increase its segment

operating margin thanks to its pricing policy.

WHY IT'S IMPORTANT

Europe is struggling to compete internationally notably

because of the prohibitive cost of energy, large influx of tyres

produced in Asia entering the European market, and a loss in

competitiveness, Michelin's CEO Florent Menegaux said during a

media call.

KEY QUOTE(S)

"Europe is uncompetitive when it comes to exports. Until

now, we have resisted, but this is no longer possible, and this

is creating overcapacity, hence the announcements in Germany and

Poland, but other countries will also be affected," Menegaux

said, referring to the closure of some sites in Germany and some

activities at one of its Polish sites.

"Since Covid, with the very sharp inflation in energy,

transport costs and wages, exporting from Europe has become

uncompetitive, whatever the European country of origin,"

Menegaux added.

BY THE NUMBERS

Sales fell 4.2% year-on-year to 13.48 billion euros in the

first half of 2024. That slightly missed the 13.53 billion euros

expected by analysts in a company-provided consensus.

Segment operating income rose to 13.2% of sales in the first

half, compared with 12.1% last year, driven by the change in the

mix and operating expenses.

The company reiterated that it was confident in meeting its

2024 forecast for segment operating income of above 3.5 billion

euros, after it last confirmed it in April.

WHAT'S NEXT

Michelin will publish its third-quarter and nine-month sales

on October 23.

Peers Goodyear, Pirelli and Continental

are to report their half-year results on July 31st,

August 1st and 7 respectively.