Cie Generale Des Etablissements Michelin Sa · EURONEXT:ML
Cie Generale Des Etablissements Michelin Sa — Michelin — Non-Deal Roadshow (June 2024)
56 slides from Cie Generale Des Etablissements Michelin Sa's roadshow presentation, Jun 24, 2024
Slide 1: Roadshow USA - Canada, June 24-27, 2024
ROADSHOVY USA.- CANADA GIG MM NAKTES SOLDTTOLIS June 24-27, 2024
Slide 2: Increasing cash and margin generation across business cycles
2 Increasing cash and margin generation across business cycles FCF (1) and SOI (2) evolution vs. change in volumes > 3,5 20% 3.5 3,0 15% 2.5 13% 2,0 12% > 1,5 10% 7% 1.5 3% 3% 5% 1,0 2% 1% 1% -1% 0.5 0% 0% -2% - 0 .5 -3% -5% -5% -6% -10% - 1 .5 - 2 .5 -15% -14% -15% - 3 .5 -20% 2008 2009 2010 2011 2
Slide 3: Wide range of destination markets ensuring resilience, ambitious growth in non-tire activities
3 Wide range of destination markets ensuring resilience, ambitious growth in non-tire activities 2030 Non-tire activities directionally above 20% of total revenue, supported by value-accretive M&A ambition 2023 sales breakdown reference (% of revenue) Reference scope Businesses other than tire manuf
Slide 4: 2026 targets: Driving higher profitability
4 2026 targets: Driving higher profitability Segment Operating Income Segment Operating Margin Segment Operating Margin - by SR * (bn €, excl. substantial (1) M&A, @2023 FX) (% of sales) (% of sales) 4.2 14.0% 13.7% SR1 3.6 >14% 3.3 12.5% 12.3% 3.0 2.8 6.5% SR2 >10% 16.5% 2017- 2021 2022 2023 2026 S
Slide 5: 2026 targets: Stronger cash generation, ROCE floor and shareholder return confirmed
5 2026 targets: Stronger cash generation, ROCE floor and shareholder return confirmed FCF before M&A Return on Capital Employed Payout Ratio (bn €, cumulative over the period) (% of net result) 11.4% 49% 5.5 c.50% 44% 4.4 Cumulative 4.0 >10.5% over 10.3% 2024-26 10.1% 21% 2017-19 2021-23 2024-26 201
Slide 6: Taking Group competitiveness to the next level: Manufacturing
6 Taking Group competitiveness to the next level: Manufacturing Strategic levers Tech & Care levers o Local-to-local o IA & Digital o Value-driven production mix o Industrial process optimization o Lower environmental impact o Reduce water and energy consumption o Talent attraction & retention o Saf
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Slide 8: 2024 tire markets scenario maintained overall flat, with favorable OE/RT mix evolution
8 2024 tire markets scenario maintained overall flat, with favorable OE/RT mix evolution GUIDANCE Passenger car / Light Truck * Truck * excl. China Specialties * Mining tires: fundamental demand holds, markets impacted by stock fluctuations Beyond-road tires: slight growth across RT businesses, OE n
Slide 9: 2024 Group scenario & guidance unchanged
9 2024 Group scenario & guidance unchanged GUIDANCE Volumes [-2% ; 0%] Operating performance slightly positive net of inflation Cash-out capex [€2.2bn ; €2.4bn] Segment operating income > €3.5bn at constant FX vs 2023 Free cash flow > €1.5bn before Acquisitions Roadshow US - Canada, June 24-27, 2024
Slide 10: Roadshow US - Canada, June 24-27, 2024
10 Roadshow US - Canada, June 24-27, 2024
Slide 11: May YTD sell-in tire markets slightly above projected range
11 May YTD sell-in tire markets slightly above projected range despite PC OE slowdown in May, APPENDIX Passenger car & Light truck Truck excluding China Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2024 2023 Projection presented during the Q1 release Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov
Slide 12: A wide diversity of destination markets ensuring Group resilience
12 A wide diversity of destination markets ensuring Group resilience Accelerating growth on polymer composite solutions with FCG acquisition APPENDIX (% of 2023 sales) Main drivers: GDP, PMI, R&D & public spending Main drivers: GDP, public spending, commodity prices, construction Main drivers: miles
Slide 13: Shareholder return: further development of dividend and pay-out
13 Shareholder return: further development of dividend and pay-out APPENDIX Per share data (in €) Target @CMD21 DIVIDEND POLICY 0.50 0.58 1.13 1.25 1.35 • Gradually raise payout ratio towards 50% in 2030 2.42 0.88 2.58 2.81 2.77 • Pay-out calculated on reported net income SHARE BUY-BACK POLICY 21% 6
Slide 14: Leveraging unique and differentiating assets across enlarged playground
14 Leveraging unique and differentiating assets across enlarged playground APPENDIX Tires Services and Experiences Highly engaged and A powerful and widely talented teams recognized brand Connected E-Retail Solutions Distribution Lifestyle & Retail Polymer Composite Solutions Conveyors, Sealing Inno
Slide 15: M&A: A proven track record of successful integration
15 M&A: A proven track record of successful integration APPENDIX Active portfolio management Multistrada & Camso Fenner 2018-2019 : • Multistrada EBIT from negative territory €4.5bn net acquisitions in 2019 to SR1 accretive in 2023 FCG • Camso accelerating in AG Tracks 2021-2023 : €1.0bn acquisition
Slide 16: M&A as a growth & value accelerator
16 M&A as a growth & value accelerator: Accessing new markets and leveraging Group innovation power APPENDIX Clear fundamentals Strict financial criteria Strategic fit EPS-accretive Accelerating from year 1 growth Parental advantage brought by Michelin Group ROCE sustained Value-accretive above 10.5
Slide 17: 2030 ambitions confirmed on People, Profit and Planet dimensions
17 2030 ambitions confirmed on People, Profit and Planet dimensions APPENDIX Be world-class in employee engagement Engagement rate 79.8% 83.5% >85% Be world-class in employee safety TCIR (1) 1.43 1.01 <0.5 People Be a reference in diversities and inclusion of teams IMDI (1) - 72 80 pts (over 100) Be
Slide 18: Raw materials cost breakdown
18 Raw materials cost breakdown APPENDIX FY 2023 Roadshow US - Canada, June 24-27, 2024
Slide 19: Natural rubber price
19 Natural rubber price APPENDIX TSR20 and RSS3 in $/kg 4.8 3.7 4.5 3.4 3.4 2.8 2.6 3.2 2.3 1.9 2.0 2.0 2.1 2.1 2.5 2.5 1.8 1.8 1.6 1.6 1.6 1.6 1.6 1.5 1.5 1.7 2.2 1.8 1.7 1.7 1.7 1.8 1.5 1.6 1.4 1.4 1.4 1.4 1.3 1.4 1.3 1.3 Q1 Q2 Q3 Q4 Q1 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 11 2 0 1 2 2 0 1 3 2 0 1
Slide 20: Brent price
20 Brent price APPENDIX Brent in $/bbl 112 112 109 98 100 99 82 86 83 80 82 77 73 72 71 62 64 54 55 45 43 Q1 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Roadshow US - Canada, June 24-27, 2024
Slide 21: Butadiene price
21 Butadiene price APPENDIX Butadiene EUROPE in €/t 1952 1773 1258 1113 1112 1011 1006 970 944 1108 798 824 1086 772 812 644 937 722 634 511 656 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Roadshow US - Canada, June 24-27, 2024
Slide 22: Sales by currency & impact on segment operating income (SOI)
22 Sales by currency & impact on segment operating income (SOI) APPENDIX Q1 2024 currency change vs. € ➔ Q1 2024 currency change vs. € ➔ 12 rolling months 12 rolling months USD 40% -1.2% 20% / 30% AUD 3% -5.0% 60% / 70% EUR 31% - - JPY 1% -11.8% 80% / 85% CNY 6% -6.0% 20% / 30% MXN 1% +8.7% 25% / 30
Slide 23: Outstanding bond issues
23 Outstanding bond issues (As of December 31, 2023) APPENDIX Compagnie Générale Compagnie Générale Compagnie Générale Compagnie Générale Compagnie Générale Compagnie Générale Compagnie Générale Compagnie Générale Issuer des Etablissements des Etablissements des Etablissements des Etablissements des
Slide 24: An adequate cash position with maturities well spread over time
24 An adequate cash position with maturities well spread over time APPENDIX Debt maturities at December 31, 2023 (carrying amount in € millions) 6,000 2030 - 2045 Bond maturities: 2030 (3/sept.) = 1’000 MEUR Loans from financial institutions 2032 (2/nov.) = 500 MEUR 5,000 2033 (1/juin) = 1.5 MEUR Se
Slide 25: Tire businesses
25 Tire businesses
Slide 26: Strengthening leadership in high-value and increasingly demanding market segments
26 Strengthening leadership in high-value and increasingly demanding market segments APPENDIX Acceleration of >18’’ segment fostered by electrification, Specialities: driving substantial mix enhancement Winning where it matters 2023 +12% Launch of the CAGR * 19’’ > 18’’ by 2025 >100m€ for the world’
Slide 27: Wear particles: considerable competitive advantage, without any compromise on safety
27 Wear particles: considerable competitive advantage, without any compromise on safety APPENDIX Particle emissions: Particle emissions get reduced with each new Michelin vs. other premium tiremakers (1) range (2) Particle per vehicle unit: g/1,000 km 131 136 e.Primacy CrossClimate 2 Pilot Sport 5 1
Slide 28: Tire and road wear particles (TRWP): definition and state of knowledge
28 Tire and road wear particles (TRWP): definition and state of knowledge APPENDIX Scientific studies have started to measure the environmental impact of TRWP (1) : Studies confirm that TRWP account Studies suggest that most TRWP 5 x 10-2 mm for only a very small proportion never reach estuaries. (<
Slide 29: Services & Solutions
29 Services & Solutions
Slide 30: Services to fleets: a suite of innovative solutions
30 Services to fleets: a suite of innovative solutions that empower mobility players to race towards zero-accident, zero-downtime, zero-emission APPENDIX Unique customer intimacy and usage expertise Actionable insight provider for fleets leading towards Decision levers provider for public and privat
Slide 31: Watèa by Michelin: a unique solution to decarbonize urban LCV fleets
31 Watèa by Michelin: a unique solution to decarbonize urban LCV fleets APPENDIX Stakes of transition to E-LCV Fleets pain points Value proposition LCVs ~ 3-4% of Tailored solution How to transition ? EV, charging solution, maintenance global CO2 emissions Switch to EV ➔ - 60% emissions How to opera
Slide 32: Polymer Composite Solutions
32 Polymer Composite Solutions
Slide 33: Polymer Composite Solutions: Delivering sustainable growth and value
33 Polymer Composite Solutions: Delivering sustainable growth and value APPENDIX Dynamic growth Increasingly EBIT-accretive Low capital intensity PCS sales (€ bn, excl. Solesis) PCS operating margin as a % of sales Capex as a % of sales, 2023 14% CAGR +4.5 pts 9% 8% CAGR ~ SR3 0.20 1.35 level 1.15 5
Slide 34: High-tech materials: expanding beyond tires
34 High-tech materials: expanding beyond tires by leveraging our expertise and our innovations, from materials to solutions, for highly demanding applications APPENDIX R&D Manufacturing Growth strategy ● Unique expertise ● Ability to scale up and ● Organic growth acquired in tire design & reproduce
Slide 35: FCG: Strong financial profile confirmed, on track to deliver synergies
35 FCG: Strong financial profile confirmed, on track to deliver synergies APPENDIX Strong financial profile Targeted EBIT synergies confirmed 2023 FY data (1) Dynamic growth ✓ €21m run-rate EBIT synergies by 2028 +9% ✓ Accelerated innovation pipeline leveraging Group’s R&D assets ~€200m organic reve
Slide 36: Symbio: fast expansion towards worldwide leadership in light and heavy commercial vehicles
36 Symbio: fast expansion towards worldwide leadership in light and heavy commercial vehicles APPENDIX Major grants awarded in Europe (IPCEI *) and in the USA (California) Fuel cell development leveraging expertise in materials and industrial processes 2014 to join Michelin and Michelin stake: Faure
Slide 37: Non-financial performance
37 Non-financial performance
Slide 38: Recognized leadership in non-financial performance
38 Recognized leadership in non-financial performance APPENDIX Major ratings (as of December 31, 2023) A- B Low Risk B- 78 / 100 AAA 71 / 100 11.52 CLIMATE WATER Prime Platinum CHANGE SECURITY « LEADERSHIP » « MANAGEMENT » Roadshow US - Canada, June 24-27, 2024
Slide 39: Natural resources and decarbonation: driving up industry standards on product performance
39 Natural resources and decarbonation: driving up industry standards on product performance APPENDIX If the world was driving on michelin PC/LT tires, it would save every year… Tire industry CO2 emissions are mostly related to scope 3 (3) Illustration: Michelin 2023 CO2 emissions (1) (2) 89% scope
Slide 40: Michelin has been leading all major innovations in the tire industry
40 Michelin has been leading all major innovations in the tire industry APPENDIX 1946 Tire Connected Mobility Solutions Polymer Composite Solutions (low rolling resistance) 1992 Roadshow US - Canada, June 24-27, 2024
Slide 41: On the path to full product circularity with 40% renewable or recycled materials by 2030
41 On the path to full product circularity with 40% renewable or recycled materials by 2030, up to 100% by 2050 APPENDIX (2) (1) (2) (1) … (1) European project sponsored by Horizon 2020; project number: 82068 (2) Carried out with the support of ADEME Roadshow US - Canada, June 24-27, 2024
Slide 42: Michelin 1st manufacturer to design a road-homologated tire with 58% renewable or recycled materials
42 Michelin 1st manufacturer to design a road-homologated tire with 58% renewable or recycled materials APPENDIX On the way to our “100% Renewable or Recycled materials by 2050” goal: new tires with breakthrough technologies Steel incorporating Sustainable recycled scrap metal textile fibers Carbon
Slide 43: Strong commitment to reduce impact of operations on biodiversity and ecosystems
43 Strong commitment to reduce impact of operations on biodiversity and ecosystems APPENDIX 2023 results, 2030 commitments + To know more (1) Criteria in accordance with the European Union Deforestation-free Regulation (2) Calculated on the basis of 2023 volumes by supplier (3) Per hectare (4) Other
Slide 44: Sustainable natural rubber by Michelin
44 Sustainable natural rubber by Michelin: driving progress across a fragmented value chain APPENDIX ID CARD ~90% of Group’s supply • Dedicated roadmap tracking commitments on zero deforestation, human rights, and farmer come from ~2 M farmers with empowerment an average farm size of 3 Ha Up to 7 mi
Slide 45: Reduction of CO2 emissions, VOC emissions and water withdrawals
45 Reduction of CO2 emissions, VOC(1) emissions and water withdrawals: 2023 achievements exceeded ambitions APPENDIX Externality costs evolution (€ millions) +260 590 (3) 545 -104 436 -32 -13 -5 CO2 CO2 Scopes Water Volatile Scope 3(2) 330 1&2 organic compounds Increase in the CO2 cost per ton from
Slide 46: Michelin applies the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)
46 Michelin applies the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) APPENDIX Michelin’s answer See p. 175 of 2022 Universal Registration Document for more details As part of the Supervisory Board’s role of exercising permanent oversight of the Group’s management
Slide 47: Climate strategy structured around transition and adaptation plans
47 Climate strategy structured around transition and adaptation plans, towards Net-Zero emissions by 2050 APPENDIX Structured around 2 axes: ● A TRANSITION plan including initiatives to decarbonize direct and indirect activities in the value chain (Scopes 1, 2 & 3) and a strategic plan to support a
Slide 48: 2030 environmental ambition: on the path to reach net zero emissions in 2050
48 Group’s ability to 2030 environmental ambition: on the path to reach net zero emissions in 2050 have an influence high APPENDIX limited -25%(1) -44%(1) -50% Manufac- Reduce energy Shift towards CO2 emissions turing consumption renewable energy vs. 2010 Transport less, better and differently -15%
Slide 49: Sharp reduction in the environmental footprint of our operations
49 Sharp reduction in the environmental footprint of our operations, on track to reach 2030 target APPENDIX Reduction of the environmental footprint of our sites ISO14001- certified 100 Water withdrawal x water stress Generated waste MEF(1) i-MEP(2) Organic solvent use // Energy use 2005 2019 2023 2
Slide 50: Diversity and inclusion: progress in gender balance and acceptance of diversity
50 Diversity and inclusion: progress in gender balance and acceptance of diversity, demonstrating the Group’s commitment APPENDIX Every employee can develop his/her talents within the company. Michelin pays particular attention to the internal promotion of manufacturing operators. Achieve parity amo
Slide 51: Michelin governance pillars: clear segregation of management and supervisory powers
51 Michelin governance pillars: clear segregation of management and supervisory powers APPENDIX SUPERVISORY BOARD GENERAL PARTNERS With unlimited joint and personal liability for the Company’s debts MANAGERS SAGES Barbara Dalibard Non-Managing General Partner Chair of the Board Administer and manage
Slide 52: ESG awareness and oversight are fully embodied in Michelin's governance structure
52 ESG awareness and oversight are fully embodied in Michelin’s governance structure APPENDIX Roadshow US - Canada, June 24-27, 2024
Slide 53: ESG criteria are included in the Managers' compensation
53 ESG criteria are included in the Managers’ compensation and shared with all employees via performance share plans APPENDIX Fixed compensation Performance share grants Annual variable compensation Subject to performance conditions over 3 years €1,100,000 Capped at 150% of fixed compensation Allo
Slide 54: Glossary
54 Glossary GLOSSARY Free cash-flow excluding M&A: free cash-flow, which is stated before dividend payments and financing transactions, corresponds to net cash from operating activities less net cash used in investing activities, including JV financing, adjusted for net cash-flows relating to cash m
Slide 55: Disclaimer
55 Disclaimer DISCLAIMER This presentation is not an offer to purchase or a solicitation to recommend the purchase of Michelin shares. To obtain more detailed information on Michelin, please consult the documents filed in France with Autorité des marchés financiers, which are also available from the
Slide 56: Investor relations contacts
56 BUSINESS CENTER PARIS TROCADERO Guillaume JULLIENNE 112 avenue Kléber 75116 Paris – France Flavien HUET 23 place des Carmes Dechaux 63040 Clermont-Ferrand – France Benjamin MARCUS investor-relations@michelin.com Roadshow US - Canada, June 24-27, 2024