Cie Generale Des Etablissements Michelin Sa · EURONEXT:ML
Cie Generale Des Etablissements Michelin Sa — Michelin — Non-Deal Roadshow (January 2024)
71 slides from Cie Generale Des Etablissements Michelin Sa's roadshow presentation, Jan 8, 2024
Slide 1: Roadshow US West Coast
ROAD SHOU US WEST COAST TORY SUA January 8, 2024
Slide 2: Executive Summary
2 Nine-month sales up 2% to €21.2 billion despite soft volumes and a forex headwind, supported by mix enhancement, non-tire activities and brand leadership EXECUTIVE SUMMARY ● 9-month 2023 sell-in markets shaped by inventory drawdowns in Europe and North America ‒ PC/LT tire markets stable vs. 2022
Slide 3: Tire Market
3 Sell-in YTD Oct. markets trending towards the upper part of the range in PC/LT; still in the lower part in Truck TIRE MARKET YTD 2023 YTD 2023 vs. 2022 vs. 2022 1% -5% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec FY scenario FY scenario Projecti
Slide 4: 9-month Group sales up 2.0% to €21.2bn despite weak volumes
4 9-month Group sales up 2.0% to €21.2bn despite weak volumes Non-tire sales grew by 13% or €134m RESULTS (in € millions and as a % of 9M 2022) +2.0% +134 21,697 +1,504 Non-tire businesses 21,152 (+0.6%) +79 -545 20,732 Currency Scope (1) (-2.6%) (+0.4%) Price-mix -752 (+7.2% Volumes o/w price (-3.6
Slide 5: Q3 Group sales dragged down by FX to €7.1bn
5 Q3 Group sales dragged down by FX to €7.1bn, price-mix steering remains solid Non-tire sales grew by 6% or €23m RESULTS (in € millions and as a % of Q3 2022) -5.0% +25 +250 +23 7,486 7,443 Non-tire Scope (1) businesses (+0.3%) (+0.3%) -255 Price-mix 7,073 (+3.3% Volumes (-3.4%) o/w price -413 +2.1
Slide 6: Automotive and Specialties segments delivering strong performance
6 Automotive and Specialties segments delivering strong performance, Road transportation facing low volumes on decreasing markets RESULTS (in € millions) Sales growth driven by embedded price effect and sustained product mix Sales 10,611 10,238 +3.6% enrichment, more than offsetting volume effect of
Slide 7: Strengthening leadership in high-value market segments
7 Strengthening leadership in high-value and increasingly demanding market segments RESULTS 2023 +12% Launch of the CAGR * 19’’ > 18’’ by 2025 >100m€ for the world’s largest loader >18’’ segment, share of Sustainable mix impact Market trend in > 18’’ tires MICHELIN brand sales (%) on EBIT, per year
Slide 8: Michelin tires' undisputed technological leadership
8 Michelin tires’ undisputed technological leadership, reiterated by 2023 test results RESULTS Unrivaled on snow, dry, and Leading the high-performance winter tyre segment sustainability performance with undisputed snow and dry performance levels Test winner Test winner Test winner Test winner Test
Slide 9: Electrification opportunity
9 Electrification opportunity : differentiating with premium OEM segments, ready for attractive Replacement markets RESULTS “Low tire abrasion and All Michelin tires Specific safe driving characteristics: Strong already meeting value Michelin shows how [tires loyalty rate positioning should be] done
Slide 10: FCG closing: first step towards polymer composite solutions
10 FCG closing: first step towards Michelin 2030 ambition to become a key player in polymer composite solutions RESULTS ✓ Unlocking deep-innovation synergies in composite fabrics & films ✓ Strong growth prospects through multiple dynamic end-markets Composite Fabrics €2m/year Synergies on insurance
Slide 11: pated
pated
Slide 12: 2023 FY markets scenario
12 2023 FY markets scenario: slight market improvement in PC/LT, ongoing destocking in Truck GUIDANCE excl. China Previously: -3%/+0% Previously: -4%/-1% Previously: -1%/+2% Mining tires: strong demand holds, with high comparatives along H2 23 Beyond-road tires: slight growth across OE businesses, w
Slide 13: 2023 Group scenario & guidance
13 2023 Group scenario & guidance GUIDANCE PREVIOUS Volumes c.-4% [ -4% ; -2% ] Cost inflation [neutral ; €0.2bn] c.€0.2bn raw materials, transportation, energy, labor Net price-mix vs. cost inflation Positive Positive factors Cash-out capex c.€2.2bn c.€2.2bn Segment operating income > €3.4bn > €3.4
Slide 14: MAPPED IXG
i> MAPPED IXG
Slide 15: 2024 Financial Agenda
15 2024 Financial Agenda APPENDIX FEB. 12, 2024 * APR. 24, 2024 * MAY 17, 2024 MAY 28, 2024 JULY 24, 2024 * OCT. 23, 2024 * * After close of trading RoadShow US West Coast - Morgan Stanley - January 8, 2024
Slide 16: Demonstrated ability to increase cash and margin generation across cycles
16 Demonstrated ability to increase cash and margin generation across business cycles APPENDIX (3) 3.5 3.4 >3.4 20% 3.0 3.0 2.7 2.7 2.8 13% 2.5 2.6 2.5 2.2 2.2 12% >2.3 15% 1.9 2.0 1.9 1.8 1.6 1.6 1.5 1.5 10% 7% 1.2 1.2 1.5 1.2 1.0 1.1 0.9 0.9 1.0 0.7 3% 5% 0.4 0.4 2% 3% 0.5 3% 0% 1% 1% 0% - 0.0 - 0
Slide 17: Accelerating growth on polymer composite solutions with FCG
17 Accelerating growth on polymer composite solutions with FCG acquisition closed in Q3 23 Strengthening premium positioning across tire businesses APPENDIX (% of 2022 pro-forma sales including FCG acquisition) Main drivers: GDP, public spending, commodity prices, construction Cyclicality includes V
Slide 18: Michelin's deep-innovation capabilities feed leadership
18 Michelin’s deep-innovation capabilities feed the Group’s leadership on all targeted end-markets APPENDIX TIRE Unrivaled innovation ability, from fundamental research to solutions development Extensive worldwide SERVICES TO FLEETS manufacturing expertise TaaS powered by Masternaut, Sascar, NexTraq
Slide 19: M&A active portfolio management
19 M&A active portfolio management with three major steps in 9M 2023, reflecting Michelin in Motion 2030 strategy APPENDIX (1) Tire recycling TBC sold its retail Stellantis Michelin acquired FCG activities to increase acquired 33% aside to create a leader in profitability Michelin and Faurecia Engin
Slide 20: Shareholder return policy
20 Shareholder return policy: pay-out gradually increasing towards 50% target APPENDIX (in €) Target (4) @CMD21 0.93 0.50 0.58 1.13 1.25 • Payout ratio gradually raised towards 50% in 2030 2.33 2.42 0.88 2.58 2.81 • Pay-out calculated on reported net income 40% 21% 65% 44% 44% 50% • Anti-dilutive pr
Slide 21: Tight steering in a context of weak sell-in volumes
21 Tight steering in a context of weak sell-in volumes APPENDIX (in %) VOLUMES PRICE-MIX CURRENCY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2022 2023 2022 2023 2022 2023 14.4 14.9 13.5 12.0 12.3 8.9 6.7 6.9 5.5 3.3 3.4 0.5 0.8 - 0.9 -1.0 -2.6 -2.7 -3.4 -5.5 -4.9 -6.6 RoadShow US
Slide 22: 9M PC/LT tire markets
22 9M PC/LT tire markets: sell-in demand globally flat, with OE up driven by supply chains ease vs RT slightly down on unfavorable basis of comparison and destocking APPENDIX (% change YoY in number of tires) Europe North & Central America +11% +9% -6% -4% Global market China Africa, India, +6% Midd
Slide 23: 9M Truck tire markets
23 9M Truck tire markets: dynamic OE despite a few supply chain disruptions, but RT decrease (excl. China) driven by supply chains normalization and destocking from distribution APPENDIX (% change YoY in number of tires) Europe North & Central America +8% -2% -9% China -17% Global market +20% Excl.
Slide 24: Raw materials cost breakdown
24 Raw materials cost breakdown APPENDIX RoadShow US West Coast - Morgan Stanley - January 8, 2024
Slide 25: Natural rubber price
25 Natural rubber price APPENDIX 2.5 2.3 2.3 2.2 2.1 2.1 2.1 1.9 2.1 1.9 1.8 1.9 1.8 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.8 1.6 1.5 1.7 1.5 1.7 1.7 1.7 1.7 1.7 1.5 1.5 1.5 1.5 1.5 1.4 1.4 1.5 1.5 1.3 1.5 1.5 1.4 1.4 1.4 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.2 1.1 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 26: Brent price
26 Brent price APPENDIX 112 97 98 89 86 80 82 78 75 76 73 67 68 68 69 61 64 62 63 61 55 51 51 52 51 47 47 43 45 35 33 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 2019 2020 2021 2022 2023 RoadShow US West Coast - Morgan Stanley - January
Slide 27: Butadiene price
27 Butadiene price APPENDIX 1,500 1,363 1,353 1,380 1,265 1,192 1,203 1,142 1,037 1,058 970 937 1,067 865 900 853 800 808 790 773 740 727 715 721 670 783 618 515 543 392 382 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 2019 2020 2021 202
Slide 28: Sales by currency & impact on segment operating income
28 Sales by currency & impact on segment operating income (SOI) APPENDIX 9M 2023 YTD currency ➔ 9M 2023 YTD currency ➔ 12 month rolling change vs. € 12 month rolling change vs. € USD 40% -1.6% 25% / 35% AUD 3% -7.0% 80% / 85% EUR 31% - - JPY 1% -9.1% 80% / 85% CNY 6% -7.8% 25% / 30% MXN 1% +12.0% 25
Slide 29: Capex increase in 2022-2023
29 Capex increase in 2022-2023 to catch up 2020-2021 postponements APPENDIX (€ billions) ~1.8/year ~1.8/year On track to reach c2.2bn capex cash-out in 2023 average 2016 – 2019 average 2020 – 2023e ~1.5 ~2.2 • Investing in growth segments • Optimizing routine capex average average 2020 – 2021 2022 –
Slide 30: Outstanding bond issues
30 Outstanding bond issues (As of Sep 30, 2023) APPENDIX Issuer Compagnie Générale des Établissements MICHELIN Issue Senior Note Senior Note Senior Note Senior Note Senior Note Senior Note Senior Note Senior Note Senior Note Type Convertible Bond Bond Bond Bond Bond Bond Bond Bond Principal Amount $
Slide 31: A comfortable cash position with maturities well spread
31 A comfortable cash position with maturities well spread over time APPENDIX (carrying amount in € millions) 6,000 Loans from financial institutions Securitization Bond 5,000 CP Derivatives and leases 4,000 Cash and cash equivalents Cash management Financial Assets Confirmed Back-up Facilities 3,00
Slide 32: Engineered Fabrics and Films
32 MICHELIN ACQUIRED FLEX COMPOSITE GROUP FROM IDI CREATE A LEADER IN HIGH-TECH ENGINEERED FABRICS AND FILMS
Slide 33: Transaction overview
33 Transaction overview APPENDIX FLEX COMPOSITE GROUP AT A GLANCE A European leader in high-tech Engineered Fabrics & Films EUR 202 million revenue in 2022, +11% organic revenue CAGR 2015-2022 [25-30%] EBITDA margin TRANSACTION METRICS EUR 700 million Enterprise Value EUR 21 million annual run-rate
Slide 34: Flex Composite Group – FCG, a European leader in engineered fabrics & films
34 Flex Composite Group – FCG, a European leader in engineered fabrics & films APPENDIX FCG KEY FIGURES 3 PRODUCTS 2022 REVENUE SPLIT 6 PLANTS IN EUROPE CATEGORIES € 202m Resin impregnated revenue in 2022 fabrics 50% Mouscron €101m 11% Lesmo Fregona organic revenue Castano Primo CAGR 15-22A Flexible
Slide 35: Strong growth prospects through multiple dynamic end-markets
35 Strong growth prospects through multiple dynamic end-markets APPENDIX Main end- Market Growth(1) Main end-markets markets Activities Fundamental growth drivers 2022-27E Flexible coated Marine fabrics High-single ⚫ Continued growth of recreational boats and penetration gains for RIBs(2) (leisure &
Slide 36: Unlocking deep-innovation synergies
36 Unlocking deep-innovation synergies in engineered fabrics & films APPENDIX DEEP-INNOVATION CAPABILITIES MICHELIN'S HIGH-TECH MATERIALS ACTIVITIES Engineered Sealing Belting Engineered Unrivaled innovation ability, fabrics technologies solutions polymers from fundamental research to & films soluti
Slide 37: Run-rate EBIT synergies of €21 million
37 Run-rate EBIT Synergies of €21 million unlocked by year 5, driven by product mix enrichment and geographic expansion APPENDIX REVENUE SYNERGIES Deep-innovation in materials and processes, leading to increased performance and more sustainable products Leverage Michelin’s footprint to grow in North
Slide 38: Create a leader in engineered fabrics & films
38 Create a leader in engineered fabrics & films, with superior financial profile APPENDIX MICHELIN’S HIGH-TECH MATERIALS OPPORTUNITY TO EXPAND FCG SUPERIOR FINANCIAL REVENUES UP BY c.20% IN NORTH AMERICA PROFILE (in € bn) (2022 revenue by geography) +0.2 1.3 Run-rate EBIT synergies of EMEA 1.1 18%
Slide 39: Enhanced People, Profit and Planet performance
39 Enhanced People, Profit and Planet performance at the heart of future success APPENDIX PEOPLE PROFIT PLANET Access to more career opportunities Increase High-Tech Materials revenue by Accelerating R&D related to the next c.20%, with high single digit organic growth generation of materials A leade
Slide 40: Key takeaways
40 Key takeaways APPENDIX High-Tech Materials revenue up c.20%, creating a leader in high-tech Engineered Fabrics & Films Important step to develop Michelin beyond mobility, in line with 2030 ambition to position the Group as a key player in polymer composite solutions Unlocking deep-innovation syne
Slide 41: Tire businesses
41 Tire businesses
Slide 42: Michelin uniquely positioned to leverage vehicle electrification
42 Michelin uniquely positioned to leverage vehicle electrification APPENDIX Low rolling resistance Particle per vehicle 131 136 Silent architecture ( g/1,000 km ) 122 115 107 average Low abrasion rate 95 High rim capacity Premium competitors High load capacity * source: ADAC, March 2022 - Download
Slide 43: Wear particles: considerable competitive advantage
43 Wear particles: considerable competitive advantage, without any compromise on safety APPENDIX Particle per vehicle unit: g/1,000 km 131 136 e.Primacy CrossClimate 2 Pilot Sport 5 122 115 107 average 95 Premium competitors The environmental impact of tire abrasion is up to Vs vs Vs 50% higher for
Slide 44: Tire and road wear particles (TRWP)
44 Tire and road wear particles (TRWP): definition and state of knowledge APPENDIX Studies confirm that TRWP account Studies suggest that most TRWP 5 x 10-2 mm for only a very small proportion never reach estuaries. (<1%) of particulate matter pollution • Composition: mixture of rubber and road surf
Slide 45: Services & Solutions
45 Services & Solutions
Slide 46: Services to fleets
46 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 47: Watèa by Michelin
47 Watèa by Michelin: a unique solution to decarbonize urban LCV fleets APPENDIX LCVs ~ 3-4% of Tailored solution How to transition ? EV, charging solution, maintenance global CO2 emissions Switch to EV ➔ - 60% emissions How to operate? Digital services productivity increase and service continuity M
Slide 48: High Tech Materials
APPENDIX High Tech Materials
Slide 49: High-tech materials: expanding beyond tires
49 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 50: Symbio: fast expansion towards worldwide leadership
50 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 51: Non-financial performance
51 Non-financial performance
Slide 52: Recognized leadership in non-financial performance
52 Recognized leadership in non-financial performance APPENDIX (as of September 30, 2023) A- A- Low Risk B- 78 / 100 AAA 71 / 100 12.3 CLIMATE WATER Prime Platinum CHANGE SECURITY « LEADERSHIP » « MANAGEMENT » 55% Rubber products 45% manufacturing 19%19%19% 19% Climate Water change security 13% Euro
Slide 53: Natural resources and decarbonation
53 Natural resources and decarbonation: driving up industry standards on product performance APPENDIX (3) Illustration: Michelin 2022 CO2 emissions (1) (2) 87% scope 3 - thousand tons million tons usage of of materials CO2 emissions (scope 3 - usage) or or 2 years of 2,500 Statues New York City’s 2%
Slide 54: Michelin has been leading all major innovations
54 Michelin has been leading all major innovations in the tire industry APPENDIX 1946 (low rolling resistance) 1992 RoadShow US West Coast - Morgan Stanley - January 8, 2024
Slide 55: On the path to full product circularity
55 On the path to full product circularity with 40% sustainable raw 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 West Coast - Morgan Stanley - January 8, 2
Slide 56: First road-homologated tire with 58% sustainable materials
56 Michelin 1st manufacturer to design a road-homologated tire with 58% sustainable materials APPENDIX Steel incorporating Sustainable recycled scrap metal textile fibers Carbon black Bio-based recycled from silica from Carbon black end-of-life tires rice husks recycled from Bio-based oils end-of-li
Slide 57: Commitment to reduce impact on biodiversity and ecosystems
57 Strong commitment to reduce impact of operations on biodiversity and ecosystems APPENDIX + To know more * Accounts for ~4.5% of the Group’s supply ** Other than natural rubber *** Based on the results of the Science Based Targets for Nature (SBTN) method and the life cycle analyses of raw materia
Slide 58: Sustainable natural rubber by Michelin
58 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 m
Slide 59: Reduction of CO2, VOC emissions and water withdrawals
59 Reduction of CO2 emissions, VOC(1) emissions and water withdrawals: 2022 achievements exceeded 2023 ambitions APPENDIX (€ millions) +260 (3) CO2, Scopes CO2, Water Volatile 1&2 Scope 3(2) organic compounds Increase in the CO2 cost per ton from €58 to €120 (1) Volatil Organic Compounds (2) Inbound
Slide 60: Michelin applies TCFD recommendations
60 Michelin applies the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) APPENDIX 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, the CSR Committe
Slide 61: Climate strategy towards Net-Zero emissions by 2050
61 Climate strategy structured around transition and adaptation plans, towards Net-Zero emissions by 2050 APPENDIX ● 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 low-carbon economy ● An AD
Slide 62: 2030 environmental ambition
62 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) -41%(1) -50% Manufac- Reduce energy Shift towards CO2 emissions turing consumption renewable energy vs. 2010 Transport less, better and differently -15%
Slide 63: Sharp reduction in environmental footprint of operations
63 Sharp reduction in the environmental footprint of our operations APPENDIX ISO14001- certified 100 Water withdrawal x water stress Generated waste MEF(1) i-MEP(2) Organic solvent use // 33 Energy use 2022 2005 2019 2030 CO2 emissions (1) MEF: Michelin Environmental Footprint; (2) i-MEP: industrial
Slide 64: Universal social protection: Michelin One Care Program
64 Universal social protection: since March 2022, deployment of the Michelin One Care Program APPENDIX Compensated at 100% Payment of a death benefit (for employees with at least one • Maternity and adoption leave: year of base salary) 14 weeks minimum • Paternity leave: 4 weeks minimum Including at
Slide 65: Diversity and inclusion
65 Diversity and inclusion: Progress in every dimension in 2022, 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 among Group executives
Slide 66: Michelin governance pillars
66 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 67: ESG awareness and oversight in governance structure
67 ESG awareness and oversight are fully embodied in Michelin’s governance structure APPENDIX RoadShow US West Coast - Morgan Stanley - January 8, 2024
Slide 68: ESG criteria are included in Managers' compensation
68 ESG criteria are included in the Managers’ compensation and shared with all employees via performance share plans Fixed compensation Performance share grants Annual variable compensation Subject to performance conditions over 3 years €1,100,000 Capped at 150% of fixed compensation Allocation li
Slide 69: Glossary
69 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
Slide 70: Disclaimer
70 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 th
Slide 71: Investor relations contacts
71 BUSINESS CENTER PARIS TROCADERO Guillaume JULLIENNE 112 avenue Kléber 75116 Paris – France Pierre HASSAÏRI 23 place des Carmes Dechaux 63040 Clermont-Ferrand – France Flavien HUET investor-relations@michelin.com RoadShow US West Coast - Morgan Stanley - January 8, 2024