Cie Generale Des Etablissements Michelin Sa · EURONEXT:ML
Cie Generale Des Etablissements Michelin Sa — Michelin — Non-Deal Roadshow (April 2024)
66 slides from Cie Generale Des Etablissements Michelin Sa's roadshow presentation, Apr 9, 2024
Slide 1: Roadshow London, April 9, 2024
1 April 9, 2024 Roadshow London _ April 9, 2024
Slide 2: Executive Summary
2 Michelin increased segment operating income to €3.6bn in 2023 and generated a strong €3.0bn in cash, reflecting the strength of the Group’s strategy EXECUTIVE Michelin delivered a high SOI despite adverse market conditions and currencies. SUMMARY Demonstrating again the quality of its business mod
Slide 3: Reinforced ability to increase cash and margin generation across cycles
3 Reinforced ability to increase cash and margin generation across business cycles RESULTS 3,6 20% 3.5 3.4 3.0 3.0 3,0 13% 2.7 2.7 2.8 15% 2.5 2.6 12% 2.5 2.2 2.2 1.9 2.0 1.9 1.6 1.8 7% 1.6 10% 1.5 1.2 1.5 1.5 1.2 1.1 1.2 1.0 3% 1.0 0.9 0.9 0.7 2% 3% 5% 0.4 3% 0.4 0% 1% 1% 0.5 0% -3% - 0.0 -1% - 0.1
Slide 4: Solid overall Group performance in 2023
4 Solid overall Group performance in 2023 RESULTS of managers are women Segment Operating Income (1) CO2 emissions scopes 1&2 (2) vs 2022 of sales tons Total Case Incident Rate Return on Capital Employed Water withdrawal (2) vs 2022 vs 2022 m3 Employee Engagement rate Free cash flow before M&A (1)
Slide 5: Sell-in tire markets: PC positive, B2B penalized by destocking
5 Sell-in tire markets: PC markets positive pulled by OE, B2B markets penalized by destocking RESULTS 2023 2023 vs. 2022 vs. 2022 +2% -0% Mining Agriculture Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Construction 2023 vs. 2022 Material handling -4% Aircraft Two-wheel Jan Feb Mar Apr May Jun Ju
Slide 6: 2023 Group sales up 2.0% at constant parity
6 2023 Group sales up 2.0% at constant parity, price and mix offsetting soft tire volumes. Non-tire sales grew by 10% RESULTS (in € millions and as a % of 2022) +2.0% +1,623 +146 29,154 28,590 +131 28,343 Non-tire Scope* businesses -811 (+0.5%) (+0.5%) -1,336 Price-mix Currency (+5.7% (-2.9%) Volume
Slide 7: Segment operating income at all-time high
7 Segment operating income at all-time high, supported by lagged price effect from 2022, strong mix and improved operating performance offsetting inflation RESULTS (in € millions) + €176m +1,463 +115 +6 Raw -76 3,866 -108 Non-tire 3,572 3,396 +32 materials -260 SG&A Scope Manufacturing -294 Other an
Slide 8: Strong SOI performance driven by RS1 and RS3 recovery
8 Strong SOI performance driven by RS1 outstanding progress and RS3 recovering margin RESULTS (in € millions) Sales 14,339 14,138 +1.4% o/w volume change - - -1.9% Operating income 1,959 1,711 +14.5% Operating margin 13.7% 12.1% +1.6 pts Sales 6,975 7,462 -6.5% o/w volume change - - -8.5% Operating
Slide 9: Free Cash Flow before acquisitions of €3.0bn
9 Free Cash Flow before acquisitions of €3.0bn fueled by record EBITDA of €5.5bn or 19.4% of sales, and sharp reduction in working capital RESULTS +985 (in € millions) 5,489 -969 Change in WCR o/w Taxes & Inventories interests +775 +205 3,009 -2,221 -188 -292 2,343 Capex JV & Restructuring Other ass
Slide 10: Gearing improves to 18.3%
10 Gearing improves to 18.3% thanks to strong cash generation RESULTS (in € millions) Compagnie Générale des Établissements Michelin -€1,039m 4,320 (2) 386 3,281 893 25 A-2 F2 - Translation Other(1) 666 A- A- A3 adjustments Dividends 3,009 Disposals Stable FCF before & acquisitions M&A Dec 22 Dec 23
Slide 11: ROCE up to 11.4%
11 ROCE up to 11.4% lifted by SOI increase and active portfolio management RESULTS 10.8% 11.4% >10.5% 10.3% 10.0% 2023 ROCE lifted by NOPAT • NOPAT reaching 9.5% of sales in 2023, up from 8.5% in 2022 • Asset Turnover Ratio sustained above 2019 level 6.0% • Profit from equity-accounted companies fos
Slide 12: Shareholder return: dividend and pay-out
12 Shareholder return: further development of dividend and pay-out RESULTS (in €) Target @CMD21 DIVIDEND POLICY 0.50 0.58 1.13 1.25 1.35 (4) • 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% 65% 44% 44% 4
Slide 13: A wide diversity of destination markets
13 A wide diversity of destination markets ensuring Group resilience Accelerating growth on polymer composite solutions with FCG acquisition RESULTS (% of 2023 sales) Main drivers: GDP, PMI, R&D & public spending Main drivers: GDP, public spending, commodity prices, construction Main drivers: miles
Slide 14: FCG strong financial profile confirmed in 2023
14 FCG strong financial profile confirmed in 2023, on track to deliver synergies RESULTS €21m run-rate EBIT synergies confirmed by 2028 Dynamic growth First wave implemented : • Raw materials procurement • Refinancing & insurance ~€200m +9% revenue organic revenue CAGR Business line dedicated to Com
Slide 15: Guidance
GUIDANCE
Slide 16: 2024 tire markets scenario
16 2024 tire markets scenario (sell-in) overall flat, with slight increase in RT and decline in OE GUIDANCE excl. China Mining tires: strong fundamental demand holds, markets impacted by stock fluctuations Beyond-road tires: slight growth across RT businesses, while OE turns negative Jan Feb Mar Apr
Slide 17: 2024 Group scenario & guidance
17 2024 Group scenario & guidance 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 London _ April 9, 2024
Slide 18: 2024 Financial Agenda
18 2024 Financial Agenda AGENDA APR. 24, 2024 * MAY 17, 2024 MAY 28, 2024 JULY 24, 2024 * OCT. 23, 2024 * * After close of trading Roadshow London _ April 9, 2024
Slide 19: Appendix
fy ). APPENDIX
Slide 20: Michelin's deep-innovation capabilities
20 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 21: Strategic Scorecard – 2023 results vs 2030 ambitions
21 Strategic Scorecard – 2023 results in line with 2030 ambitions APPENDIX Be world-class in employee engagement Engagement rate >85% 79.8% 82.5% 83.5% Be world-class in employee safety TCIR(1) <0.5 1.29 1.07 1.01 Be a reference in diversities and inclusion 80 pts People IMDI(1) over 100 65 70 72 of
Slide 22: H1 and H2 sales bridges
22 H1 sales lifted by lagged effect of 2022 price adjustments, H2 volumes softer but mix stronger APPENDIX (in € millions and as a % of 2022) 15,301 +77 Scope* +369 +35 (+0.5%) Non-tire +1,254 +111 14,079 businesses 14,264 -839 Price-mix (+0.2%) (+2.4% -679 +54 Non-tire -132 Volumes 13,289 businesse
Slide 23: Segment operating income by half-year
23 Segment operating income increase driven by strong price-mix, inputs costs turning positive in H2 APPENDIX (in € millions) +1,177 +224 +375 -93 -14 1,866 +22 1,868 -260 +20 +286 SG&A Non-tire -191 Raw 1,704 Scope -233 Raw Other 1,530 +10 materials -300 -15 Non-tire -69 -61 materials Currency Scop
Slide 24: Reported 2023, 2022, and 2021 financial highlights
24 Reported 2023, 2022, and 2021 financial highlights APPENDIX (in € millions) Sales 28,343 28,590 23,795 Segment EBITDA 5,489 5,262 4,700 Segment EBITDA margin 19.4% 18.4% 19.8% Segment operating income 3,572 3,396 2,966 Segment operating margin 12.6% 11.9% 12.5% Other operating income and expenses
Slide 25: Quarterly volumes, price-mix and currency
25 Q4 volumes weaker on high reference basis, price-mix remains positive on tougher comparison and adjustments on indexed businesses APPENDIX (in %) VOLUMES PRICE-MIX CURRENCY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2023 2022 2023 2022 2023 14.9 13.5 14.4 12.0 12
Slide 26: PC/LT tire markets
26 PC/LT tire markets: sell-in demand grew by 2% in 2023, driven by OE and supply chains ease vs RT flat in a context of inventory reduction across the value chain APPENDIX (% change YoY in number of tires) Europe North & Central America +11% +9% -4% China 0% Global market +9% Africa, India, +9% Mid
Slide 27: Truck tire markets
27 Truck tire markets: sell-in demand down 4% (excl. China) in a context of inventory reduction across the value chain in RT, with OE lifted by backlog resorption and impact of regulations APPENDIX (% change YoY in number of tires) Europe North & Central America +5% -4% -7% China -15% Global market
Slide 28: Raw materials cost breakdown
28 Raw materials cost breakdown APPENDIX Roadshow London _ April 9, 2024
Slide 29: Natural rubber price
29 Natural rubber price APPENDIX 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 2.1 2.5 2.5 1.8 1.6 1.6 1.6 1.6 1.6 1.5 1.6 1.5 1.5 1.7 2.2 1.8 1.7 1.7 1.7 1.8 1.7 1.4 1.4 1.4 1.4 1.3 1.5 1.4 1.3 1.3 1.5 1.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 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
Slide 30: Brent price
30 Brent price APPENDIX 112 112 109 112 98 100 97 98 89 86 80 82 83 77 73 72 71 62 64 54 55 45 43 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Roadshow London _ April 9, 2024
Slide 31: Butadiene price
31 Butadiene price APPENDIX 1952 1773 1353 1258 1203 1113 1112 1011 1006 970 944 937 1108 798 824 1067 772 722 634 644 511 722 656 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Roadshow London _ April 9, 2024
Slide 32: Sales by currency & impact on SOI
32 Sales by currency & impact on segment operating income (SOI) APPENDIX 2023 currency change vs. € ➔ 2023 currency change vs. € ➔ USD 40% -2.6% 20% / 30% AUD 3% -7.3% 60% / 70% EUR 31% - - JPY 1% -10.2% 80% / 85% CNY 6% -8,1% 20% / 30% MXN 1% +9.6% 25% / 30% BRL 4% +0.6% -30% / -20% TRY 1% -44.7% 8
Slide 33: Outstanding bond issues
33 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 34: Adequate cash position with well-spread maturities
34 An adequate cash position with maturities well spread over time APPENDIX (carrying amount in € millions) 6,000 Loans from financial institutions 5,000 Securitization Bond 2030 - 2045 Bond maturities: 2030 (3/sept.) = 1’000 MEUR CP 2032 (2/nov.) = 500 MEUR 4,000 Derivatives and leases 2033 (1/juin
Slide 35: Tire businesses
35 Tire businesses
Slide 36: Strengthening leadership in high-value market segments
36 Strengthening leadership in high-value and increasingly demanding market segments APPENDIX 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 yea
Slide 37: Wear particles: competitive advantage
37 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 38: Tire and road wear particles (TRWP)
38 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 39: Services & Solutions
39 Services & Solutions
Slide 40: Services to fleets
40 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 41: Watèa by Michelin: decarbonizing urban LCV fleets
41 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 42: High Tech Materials
High Tech Materials APPENDIX
Slide 43: High-tech materials: expanding beyond tires
43 High-tech materials: expanding beyond tires by leveraging our expertise and our innovations, from materials to solutions, for highly demanding applications APPENDIX ● Unique expertise ● Ability to scale up and ● Organic growth acquired in tire design & reproduce the materials- manufacturing: base
Slide 44: M&A active portfolio management in 2023
44 M&A active portfolio management with three major steps in 2023, reflecting Michelin in Motion 2030 strategy APPENDIX 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 Engineered f
Slide 45: Symbio: fast expansion in commercial vehicles
45 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 46: Non-financial performance
46 Non-financial performance
Slide 47: Recognized leadership in non-financial performance
47 Recognized leadership in non-financial performance APPENDIX (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 London _ April 9, 2024
Slide 48: Natural resources and decarbonation
48 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 49: Michelin has led major tire innovations
49 Michelin has been leading all major innovations in the tire industry APPENDIX 1946 Tire Connected Mobility Solutions High-Tech Materials (low rolling resistance) 1992 Roadshow London _ April 9, 2024
Slide 50: Path to full product circularity
50 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 London _ April 9, 2024
Slide 51: First road-homologated tire with 58% sustainable materials
51 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 52: Reducing impact on biodiversity and ecosystems
52 Strong commitment to reduce impact of operations on biodiversity and ecosystems APPENDIX + 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 than natural rubber ; Impacts
Slide 53: Sustainable natural rubber by Michelin
53 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 54: Reduction of CO2, VOC emissions and water withdrawals
54 Reduction of CO2 emissions, VOC(1) emissions and water withdrawals: 2023 achievements exceeded ambitions APPENDIX (€ 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 €58 to €120 (1) Volatil Orga
Slide 55: Application of TCFD recommendations
55 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 56: Climate strategy towards Net-Zero by 2050
56 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 57: 2030 environmental ambition
57 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 58: Reduction of environmental footprint of operations
58 Sharp reduction in the environmental footprint of our operations, on track to reach 2030 target APPENDIX ISO14001- certified 100 Water withdrawal x water stress Generated waste MEF(1) i-MEP(2) Organic solvent use // Energy use 2005 2019 2023 2030 CO2 emissions (1) MEF: Michelin Environmental Foot
Slide 59: Michelin One Care Program
59 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 60: Diversity and inclusion
60 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 61: Michelin governance pillars
61 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 62: ESG oversight in governance structure
62 ESG awareness and oversight are fully embodied in Michelin’s governance structure APPENDIX Roadshow London _ April 9, 2024
Slide 63: ESG criteria in Managers' compensation
63 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 64: Glossary
64 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 65: Disclaimer
65 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 66: Investor relations contacts
66 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 London _ April 9, 2024