Cie Generale Des Etablissements Michelin Sa · EURONEXT:ML
Cie Generale Des Etablissements Michelin Sa — Michelin — H1 2012 Earnings Presentation
41 slides from Cie Generale Des Etablissements Michelin Sa's earnings presentation, Jul 27, 2012
Slide 1: First-Half Results
FIRST-HALF RESULTS JULY 27, 2012 1 // First-Half 2012 Results – July 27, 2012
Slide 2: High Profitability Supported by the Group's Global Strategy
High Profitability Supported by the Group’s Global Strategy ■ €1,320m in operating income before non-recurring items, up 36% vs. 2011, reflecting: ● The Group’s strategy and competitive advantages - Global footprint - High margins in the Specialty businesses - Premium positioning ● Quality of manage
Slide 3: Financial Highlights
Financial Highlights 2012 & 2011 figures as reported In € millions H1 2012 H1 2011 Net Sales 10,706 10,105 Operating Income 1,320 971 before non-recurring items Operating Margin 12.3% 9.6% before non-recurring items Net Income 915 667 Investment 660 554 Net Debt-to-Equity Ratio 26% 27% Free Cash Flo
Slide 4: Outline
OUTLINE 01 Markets: an unfavorable first half 02 Structurally sound performance 03 A solid financial profile 04 An environment that plays to Michelin’s strengths 05 Outlook 4 // First-Half 2012 Results – July 27, 2012
Slide 5: Markets: an unfavorable first half
01 Markets: an unfavorable first half 5 // First-Half 2012 Results – July 27, 2012
Slide 6: Passenger Car and Light Truck Tires: Unfavorable Comparatives; Uncertainties in Europe
Passenger Car and Light Truck Tires: Unfavorable Comparatives; Uncertainties in Europe Markets at June 30, 2012 Original Equipment (% change YoY, based on number of tires) Europe Replacement +21% -4% -11% North America Total +10% -3% +17% +9% Asia +0% -5% +3% excl. India South Source: Michelin Ameri
Slide 7: Truck Tires: Demand Down in Most markets
Truck Tires: Demand Down in Most markets Radial markets at June 30, 2012 Europe Original Equipment (% change YoY, based on number of tires) Replacement -2% +18% -26% Total North America Asia -5% +33% excl. India -1% -7% -8% -7% South -1% +10% America Source: Michelin Africa India -26% Middle-East 7
Slide 8: Specialty Tires: Robust Mining Demand
Specialty Tires: Robust Mining Demand Mining Tire Market (In tonnes, base 100 = 2009) 130 122 110 100 2009 2010 2011 2012 est. Source: Michelin 8 // First-Half 2012 Results – July 27, 2012
Slide 9: Structurally sound performance
02 Structurally sound performance 9 // First-Half 2012 Results – July 27, 2012
Slide 10: Higher Net Sales: Largely Positive Price Mix Dampened by Lower Volumes
Higher Net Sales: Largely Positive Price Mix Dampened by Lower Volumes YoY Change (in € millions and as a % of net sales) +408 +1,033 o/w mix +91 -840 Currency 10,706 +4.0% 10,105 +6.0% Volumes Price-mix -8.3% +11.1% H1 2011 H1 2012 Net Sales Net Sales 10 // First-Half 2012 Results – July 27, 2012
Slide 11: Volumes: Impact of Dealers Inventory Policy; Price-mix: Impact of 2011 Increases and Clauses
Volumes: Impact of Dealers Inventory Policy Price-mix: Impact of 2011 Increases and Clauses % change YoY Volumes Price-mix Currency Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2011 2012 2011 2012 16.5 13.8 11.9 12.3 10.3 9.2 8.5 7.7 5.8 3.3 2.1 2.2 -0.2 -0.1 -4.8 -4.2 -7.0 -9.6 1
Slide 12: Growth in Operating Income Led by an Improved Unit Margin
Growth in Operating Income Led by an Improved Unit Margin YoY change (in € millions) +137 +679 -76 -391 SG&A Currency 1,320 971 +35.9% Volumes Unit Margin H1 2011 H1 2012 Operating Income Operating Income before NR items before NR items 12 // First-Half 2012 Results – July 27, 2012
Slide 13: Favorable Combination of a Strong Price Effect and a Less Negative Impact from Raw Materials
Favorable Combination of a Strong Price Effect and a Less Negative Impact from Raw Materials YoY change in unit margin components (in € millions) +1,033 +679 -292 -51 -13 -41 +43 Price-mix Raw Production Productivity Start-up Other Total o/w price: materials cost inflation costs +942 inflation 13 //
Slide 14: Outlays to Drive New Growth
Outlays to Drive New Growth YoY change in SG&A (in € millions) Cost of driving growth Inflation Other Total (New markets, R&D, communication) -30 -37 -9 -76 14 // First-Half 2012 Results – July 27, 2012
Slide 15: Operating Margin up in Every Business
Operating Margin up in Every Business Operating margin before non-recurring items (as a % of net sales ) +27.4 H1 2011 +20.2 H1 2012 +10.6 +12.3 +10.2 +9.6 +6.4 +3.5 Car and Truck Specialty Total Light truck & distribution businesses & distribution 15 // First-Half 2012 Results – July 27, 2012
Slide 16: Passenger Car and Light Truck Tires and Related Distribution: Robust Margins
Passenger Car and Light Truck Tires and Related Distribution: Robust Margins Passenger car and Light truck In € millions H1 2012 H1 2011 % Change Net Sales 5,501 5,252 +4.7% Volume Change -6.4% Operating Income 581 535 +8.6% (before non-recurring items) Operating Margin 10.6% 10.2% +0.4 pts (before
Slide 17: Truck Tires and Related Distribution: Improving Margins
Truck Tires and Related Distribution: Improving Margins Truck In € millions H1 2012 H1 2011 % Change Net Sales 3,269 3,266 +0.1% Volume Change -15.5% Operating Income 209 115 +81.7% (before non-recurring items) Operating Margin 6.4% 3.5% +2.9 pts (before non-recurring items) ■ Improving margins, par
Slide 18: Specialty Tires: Confirmed Structural Profitability; Favorable Raw Materials Price Environment
Specialty Tires: Confirmed Structural Profitability; Favorable Raw Materials Price Environment Specialty businesses In € millions H1 2012 H1 2011 % Change Net Sales 1,936 1,587 +22.0% Volume Change +3.5% Operating Income 530 321 +65.1% (before non-recurring items) Operating Margin 27.4% 20.2% +7.2 p
Slide 19: A solid financial profile
03 A solid financial profile 19 // First-Half 2012 Results – July 27, 2012
Slide 20: Free Cash Flow at Breakeven despite the Usual Seasonal Effects
Free Cash Flow at Breakeven despite the Usual Seasonal Effects In € millions H1 2012 H1 2011 EBITDA 1,823 1,440 Change in WCR (740) (1,136) Restructuring Cash Costs (45) (70) Change in Operating Provisions 29 36 Other Operating WCR 60 58 Cash Flow from Operations 1,127 328 Taxes and Interest Paid (3
Slide 21: A Robust Balance Sheet
A Robust Balance Sheet Gearing – Net debt/equity 86% 84% 80% 75% 70% 55% 53% 27% 26% 20% 22% June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 S&P and Moody’s have upgraded their ratings to respec
Slide 22: An environment that plays to Michelin's strengths
04 An environment that plays to Michelin’s strengths 22 // First-Half 2012 Results – July 27, 2012
Slide 23: MICHELIN Lines: the Best Balance of Performance Recognized by EU Gradings
MICHELIN Lines: the Best Balance of Performance Recognized by EU Gradings ■ Gradings of the summer tire lines ● A in wet grip - Energy Saver, - Primacy 3, Pilot Super Sport, - Pilot Sport 3 ● B or C in energy efficiency - Energy Saver, - Primacy 3 ■ Relevant criteria for assessing a tire’s grading ●
Slide 24: Michelin Welcomes the Regulation and Delivers more than just the Graded Performance
Michelin Welcomes the Regulation and Delivers more than just the Graded Performance ■ MICHELIN Total Performance Showcasing all of the tire’s technology MICHELIN tires deliver more than just the graded performance: dry braking, cornering grip, comfortable ride, high mileage, etc. 24 // First-Half 20
Slide 25: An Ambitious New Capacity Program
An Ambitious New Capacity Program ■ 4 new plants being built ● Brazil: Passenger car and Light truck tires ● China: Truck tires, Passenger car and Light truck tires ● India: Truck tires ● United States: Mining tires ■ Future teams now being trained in the Group ■ First tires will have rolled off all
Slide 26: Brazil: Passenger Car and Light Truck Tire Plant
Brazil: Passenger Car and Light Truck Tire Plant ■ First tire produced on schedule: February 9, 2012 ■ Training and ramp-up on schedule 26 // First-Half 2012 Results – July 27, 2012
Slide 27: China: Plants – Truck and Passenger Car & Light Truck Tires
China: 2 Plants – Truck and Passenger Car & Light Truck Tires ■ New machines being tested in the existing plant ■ First Truck tire in Q3 2012 ■ First Passenger car and Light truck tire in H1 2013 27 // First-Half 2012 Results – July 27, 2012
Slide 28: India: Truck Tire Plant
India: Truck Tire Plant ■ First tire to roll out in 2013 28 // First-Half 2012 Results – July 27, 2012
Slide 29: USA: Increasing Earthmover Tire Capacity in Line with Demand
USA: Increasing Earthmover Tire Capacity in Line with Demand ■ New capacity in the United States ● New plant in Anderson ● Marginal capacity upgrade in Lexington ● Capex: $750m ■ Good visibility ● Technological barrier to entry ● Favorable customer mix ● Multi-year contracts 29 // First-Half 2012 Re
Slide 30: Outlook
05 Outlook 30 // First-Half 2012 Results – July 27, 2012
Slide 31: 2012 Guidance
2012 Guidance ■ Clear increase in operating income ■ Positive free cash flow after capital expenditure ● Around €2,000 million in capex ■ Slight decline in volumes ● Still uncertain environment, mainly in Europe ● Annual tonnages down around 3% to 5% ■ Raw materials tailwind of around €100m in the s
Slide 32: Key Takeaways
Key Takeaways ■ Benefits from the Group’s global presence in every market segment ■ Confidence in the quality of management in 2012 ■ Sustained priority focus on investing in technology Medium-term prospects will be revised in September 32 // First-Half 2012 Results – July 27, 2012
Slide 33: Appendix
Appendix 33 // First-Half 2012 Results – July 27, 2012
Slide 34: A Balanced Business Base
A Balanced Business Base Share of operating income, by reporting segment (in € millions and as a % of H1 2012 consolidated operating income) Car and Light truck tires & distribution €581m 44% Truck tires €530m & distribution 40% Specialty businesses €209m 16% 34 // First-Half 2012 Results – July 27,
Slide 35: Net Income up Sharply
Net Income up Sharply Summary reported 2012 and 2011 income statements In € millions H1 2012 H1 2011 Net Sales 10,706 10,105 Operating Income 1,320 971 before Non-Recurring Items % of net sales 12.3% 9.6% Non-Recurring Items 97 - Operating Income 1,417 971 Cost of Net Debt (83) (88) Other Financial
Slide 36: A Comfortable Cash Position
A Comfortable Cash Position Debt maturity as of June 30, 2012 (nominal value, in € millions) 3,500 Confirmed back-up facilities Cash management financial assets 3,000 Cash and cash equivalents 2,500 Others: leases, minorities, derivatives CPs 2,000 Bonds 1,500 Securitization Loans from financial ins
Slide 37: Raw Materials Tailwind in the Second Half
Raw Materials Tailwind in the Second Half 110 Purchase cost: 105 105 P&L cost: 102 P&L cost: 103 100 Purchase cost: 100 P&L cost: 97 Purchase cost: 99 95 Purchase cost: 95 90 P&L cost: 90 85 H1 2011 H2 2011 H1 2012 H2 2012 37 // First-Half 2012 Results – July 27, 2012
Slide 38: Tire Performance Evaluation System in Europe
Tire Performance Evaluation System in Europe ■ Performance thresholds in 3 areas ● Rolling resistance ● Wet grip ● Noise ■ Classes ● A-B-C-E-F-G ● Current excellent class = C ■ Implementation in 2012 ■ Thresholds scheduled to be lowered from 2016 Label 38 // First-Half 2012 Results – July 27, 2012
Slide 39: Regulation to be Gradually Introduced
Regulation to be Gradually Introduced ■ Agenda ● Grading - Nov 1, 2012: mandatory grading on all tires ● Threshold - Nov 1, 2012: new tire lines - Nov 1, 2013: new tire lines + tires on new cars - Nov 1, 2014: all tires ■ Initial impacts ● Better education of end-user ● Marketing tool 39 // First-Ha
Slide 40: Contacts
Contacts Investor Relations Valérie Magloire Alban de Saint Martin +33 (0) 1 78 76 45 36 27, cours de l’île Seguin 92100 Boulogne-Billancourt - France investor-relations@fr.michelin.com 40 // First-Half 2012 Results – July 27, 2012
Slide 41: 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 documentation published in France by Autorité des marchés financiers available from the www.michelin.com websi