Cie Generale Des Etablissements Michelin Sa · EURONEXT:ML
Cie Generale Des Etablissements Michelin Sa — Michelin — Kepler Cheuvreux Autos Field Trip 2024
61 slides from Cie Generale Des Etablissements Michelin Sa's conference presentation, Nov 7, 2024
Slide 1: November 7, 2024
November 7, 2024
Slide 2: In a volatile and adverse business landscape
CONTEXT In a volatile and adverse business landscape… Net farmer income contracted Demand normalization New vehicles mix softening after post-Covid boost Leisure segment normalizing Chinese domestic demand Sluggish economic Mining investments postponed context Residential construction depressed CO2
Slide 3: The Group can rely on its strategy and agility
CONTEXT … the Group can rely on its strategy and agility 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, Innovation leadership and Excellent, ma
Slide 4: Tire markets supported by replacement sell-in; strong OE downcycle
Tire markets supported by Replacement sell-in. Strong OE downcycle across every segment, gradual destocking in Mining RESULTS PASSENGER CAR TRUCK* excl. China SPECIALTIES* LIGHT TRUCK* YTD 2024 YTD 2024 Mining vs. YTD 2023 vs. YTD 2023 +2% +2% Agriculture Construction Material handling Aircraft Jan
Slide 5: Q3 sales volumes hit by deteriorating OE markets
Q3 sales volumes hit by deteriorating OE markets across segments, partially offset by strong mix improvement RESULTS Q3 sales evolution (€ millions and as a %) -4.2% 7,073 Scope (+0.2%) 6,774 6,690 Non-tire businesses Currency Price-mix (-0.2%) (-1.2%) Volumes (+2.9% (-7.1%) of which mix +2.3%) Tire
Slide 6: Value-driven approach translating into strong mix
Group’s value-driven approach translating into strong mix RESULTS 9 months sales evolution (€ millions and as a %) -3.4% 21,152 Scope 20,421 20,171 (+0.4%) -1,125 Price-mix Non-tire Currency Volumes (+1.7% businesses (-1.2%) (-5.3%) of which (-0.2%) mix +2.0%) Tire business * 2023 9M 2024 9M 2024 9M
Slide 7: Group sales penalized by OE downcycle and headwinds in Specialties
Group sales penalized by OE downcycle and contextual headwinds in Specialties. Operating margin preserved RESULTS Sales by reporting segment (€ millions) Operating 9M 24 9M 23 Δ margin variation Sales 10,356 10,611 -2.4% RS1 o/w volume change - - -2.4% RS2 Sales 4,933 5,173 -4.6% o/w volume change -
Slide 8: SR3 sales reflecting OE downcycle and headwinds
SR3 sales reflecting OE downcycle and contextual headwinds. Strengthening positions in Mining RESULTS SR3 Sales Evolution Sep-24 YTD vs previous year (in tonnage, on a 100 basis) OE = 70% of the drop -8.7% Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 9: Michelin
MICHELIN
Slide 10: 2024 markets outlook unchanged on PC/LT & Truck, softer on Specialties
2024 markets outlook unchanged on PC/LT & Truck, softer on Specialties GUIDANCE PASSENGER CAR TRUCK* excl. China SPECIALTIES* LIGHT TRUCK* -2% / +2% -2% / +2% -5% / -1% previously -4% / 0% Mining tires: fundamental demand sustained but gradual customer inventory drawdown until year-end Beyond-road t
Slide 11: 2024 full-year scenario and guidance
GUIDANCE 2024 full-year scenario and guidance PREVIOUS Volumes [-6% ; -4%] [-5% ; -2%] SCENARIO Operating performance slightly positive slightly positive net of inflation Cash-out capex [€2.2bn ; €2.4bn] [€2.2bn ; €2.4bn] Segment operating income GUIDANCE at constant FX vs 2023 c. €3.4bn > €3.5bn Fr
Slide 12: 2025 Financial Agenda
AGENDA 2025 Financial Agenda February 12, 2025 * April 24, 2025 * May 16, 2025 July 24, 2025 * October 22, 2025 * * After close of trading Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 13: Appendix
APPENDIX 8 ww MICHELIN
Slide 14: Increasing cash and margin generation across business cycles
APPENDIX Increasing cash and margin generation across business cycles FCF (1) and SOI (2) evolution vs. change in volumes 20% 3.5 c. 3,4 3,0 15% 2.5 13% 2,0 12% > 1,7 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 201
Slide 15: Widening range of destination markets ensuring resilience
APPENDIX Widening range of destination markets ensuring resilience Destination markets across diverse verticals Balanced geographies 2023 sales breakdown (% of revenue) 2023 sales breakdown (% of revenue) Polymer Composite Solutions Specialties Tires Connected Solutions, Retail & Distribution, Rest
Slide 16: On track to deliver 2030 ambitions on People, Profit and Planet
On track to deliver 2030 ambitions on People, Profit and Planet dimensions APPENDIX Be world-class in employee engagement Engagement rate >85% 79.8% 83.5% Be world-class in employee safety TCIR (1) <0.5 1.43 1.01 People Be a reference in diversities and inclusion of teams IMDI (1) 80 pts (over 100)
Slide 17: Value over volume: Winning where it matters
APPENDIX Value over volume: Winning where it matters Original equipment: Being selective to extract the right value Maximizing value creation for OEMs & for Michelin Strategic Innovation Brand power partnerships Loyalty Replacement: Accelerating on value-accretive segments Ensuring value creation Re
Slide 18: Value over volume: Winning where it matters - illustrated
Value over volume: Winning where it matters - illustrated Technological leadership & APPENDIX Long-lasting trend of mix enrichment differentiating service +5 pts 64% per year 60% 50% >100m€ +12% CAGR * 40% per year 2019 2021 9M 23 9M 24 Share of >18’’ tires in Sustainable mix impact on EBIT Market t
Slide 19: Q3 sales volumes hit by deteriorating OE markets
Q3 sales volumes hit by deteriorating OE markets across segments, partially offset by strong mix improvement APPENDIX YOY Quarterly change (as a % of sales) 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 2023 2024 2023 2024 2023 2024 12.3 6.7 3.4 2
Slide 20: Group sales penalized by OE downcycle across segments
Group sales penalized by OE downcycle across segments and contextual headwinds in Specialties APPENDIX Sales by reporting segment (€ millions) 9M 24 9M 23 Change Volumes hampered by lower OE demand. Sales 10,356 10,611 -2.4% RS1 Price effect turning slightly positive in Q3 (update of indexation clau
Slide 21: PC/LT tire: Demand driven by RT in Americas and Europe
PC/LT tire: Demand driven by RT in Americas and Europe. OE and Chinese markets decreasing in Q3 APPENDIX PC/LT tire sell-in market, 9M 2024 (YoY change in number of tires, in %) Europe North & Central America -6% -1% +7% China +3% Global market +1% -3% Africa, India, Middle East -1% +3% -2% South Am
Slide 22: Truck tire: Strong OE decline in North America & Europe
Truck tire: Strong OE decline in North America & Europe, RT market in North America pulled by massive imports from Asia in H1 APPENDIX Truck tire sell-in market, 9M 2024 (YoY change in number of tires, in %) Europe North & Central America -20% -11% -2% Global market China +11% Excl. China Incl. Chin
Slide 23: Raw materials cost breakdown
APPENDIX Raw materials cost breakdown FY 2023 Raw materials cost (€ bn) and breakdown (%) 7 TEXTILES STEEL CORD 10% 21 NATURAL RUBBER CHEMICALS 15% €5.9bn 23% SYNTHETIC RUBBER FILLERS Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 24: Natural rubber price
APPENDIX Natural rubber price TSR20 and RSS3 in $/kg 4.8 3.7 4.5 3.4 3.4 2.8 2.6 3.2 2.3 2.4 1.9 2.1 2.1 2.2 2.0 2.0 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 1.7 1.7 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 Q2 Q3 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 11 2 0
Slide 25: Butadiene price
APPENDIX Butadiene price Europe contract-market in €/t 1952 1773 1258 1113 1112 944 1011 1006 970 978 1026 1108 798 824 1086 772 812 644 937 722 634 511 656 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Autos field trip Kepler Cheuvreu
Slide 26: Brent price
APPENDIX Brent price Brent in $/BBL 112 112 109 98 100 99 86 83 85 80 82 82 77 79 73 72 71 62 64 54 55 45 43 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 27: Sales by currency & impact on segment operating income
APPENDIX Sales by currency & impact on segment operating income (SOI) % of sales 2024 Dropthrough* % of sales 2024 Dropthrough* Q3 2024 currency change vs. € Sales ➔ SOI Q3 2024 currency change vs. € Sales ➔ SOI 12 rolling months 12 rolling months USD 40% -0.3% 20% / 30% JPY 1% -9.1% 70% / 80% EUR 3
Slide 28: H1 2024 gearing improved fostered by solid cash generation
H1 2024 gearing improved fostered by solid cash generation Credit rating upgrade APPENDIX Net debt Agency ratings (€ millions) Compagnie Générale des Établissements Michelin, as of July 24, 2024 4,626 -366 +583 4,260 Long Short +965 +90 term term Outlook 3,281 Translation Other(1) adjustments S&P A-
Slide 29: Adequate cash position with maturities well spread over time
APPENDIX An adequate cash position with maturities well spread over time Debt maturities at Jun. 30, 2024 (carrying amount in € millions) 7,000 2030 - 2045 Bond maturities: Loans from financial institutions 2030 = 1’000 MEUR Securitization 2031 = 500 MEUR 6,000 Bond 2032 = 500 MEUR CP 2036 = 500 MEU
Slide 30: Tire Businesses
> / ) 1 | | z Be AY Ee ‘ TIRE BUSINESSES - ww MICHELIN
Slide 31: Michelin tire market access
Michelin tire market access: Reflecting broad product range in B2C and deep intimacy with service providers in B2B APPENDIX B2C market access B2B market access ~50% ~50% ~100% ~75% ~10% ~5% ~15% Wholesalers & Platforms Wholesalers ~95% Clubs E-retail Garages & Tire Auto Vehicle pure Tire Garages & g
Slide 32: Leveraging Michelin distribution assets and accelerating franchise
Leveraging Michelin distribution assets and accelerating franchise APPENDIX Franchised and company-owned retail networks 100% owned JVs Franchise & minority stakes Wholesale Retail Franchised points of sales evolution 2,200 (100% of network) 1,700 (>60% of network) E-retail 0 Autos field trip Kepler
Slide 33: Tires abrasion: A considerable competitive advantage
Tires abrasion: A considerable competitive advantage, without any compromise on safety APPENDIX Particle emissions: Particle emissions get reduced with each Michelin vs. other premium tiremakers (1) new range (2) Particle per vehicle unit: g/1,000 km 131 136 122 e.Primacy CrossClimate 2 Pilot Sport
Slide 34: Connected Solutions
CONNECTED SOLUTIONS Ga MICHELIN
Slide 35: Services to fleets: a suite of innovative solutions
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 CONNECTED SOLUTIONS MICHELIN MOBILITY INTELLIGENCE Actionable insight provider for fleets leading toward
Slide 36: Watèa by Michelin: decarbonize urban LCV fleets
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 operate?
Slide 37: Composite Solutions
Ce MICHELIN compos! TE SOLU TIons,
Slide 38: Polymer Composite Solutions: leveraging expertise and innovations
Polymer Composite Solutions: Leveraging our expertise and our innovations, for highly demanding applications APPENDIX R&D Manufacturing Growth strategy • Unique expertise • Ability to scale up and • Organic growth acquired in tire design reproduce the & manufacturing: materials-based 30 solutions de
Slide 39: M&A active portfolio management with three major steps in 23
M&A active portfolio management with three major steps in 2023, reflecting Michelin in Motion 2030 strategy APPENDIX 2023 main deals Zoom on 3 majors steps Tire recycling TBC sold its retail Stellantis Michelin acquired FCG activities to increase acquired 33% aside to create a leader in profitabilit
Slide 40: Symbio: fast expansion towards worldwide leadership
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 3rd shareholder Michelin stake: aside Micheli
Slide 41: Non-Financial Performance
NON-FINL PERFOR. Sw x MICHELIN ‘\ a = >! '
Slide 42: Recognized leadership in non-financial performance
APPENDIX Recognized leadership in non-financial performance Major ratings (as of September 30, 2024) Michelin Ratings Negligible A- B B- 78 / 100 Risk AAA 73 / 100 CLIMATE WATER Prime Platinum 9,6 CHANGE « LEADERSHIP » SECURITY « MANAGEMENT » Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 43: Path to full product circularity with renewable or recycled materials
On the path to full product circularity with 40% renewable or recycled materials by 2030, up to 100% by 2050 APPENDIX SYNTHETIC RUBBER NATURAL RUBBER (2) FILLERS PLASTIFIERS / RESINS (1) (2) (1) METALS TEXTILES OTHER … (1) European project sponsored by Horizon 2020; project number: 82068 (2) Carried
Slide 44: TRWP: Michelin driving innovation and advancing knowledge
TRWP: Michelin driving innovation and advancing knowledge in the tire industry APPENDIX Scientific studies to measure the environmental impact of TRWP (1) TRWP AIR WATER 5 x 10-2 mm Studies confirm that TRWP account for less Studies suggest that most TRWP do not than 1% of particulate matter polluti
Slide 45: Natural resources and decarbonation
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 (2) emissions (1) 89% scope 3
Slide 46: First tire with 58% renewable or recycled materials
Michelin: First 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 47: Strong commitment to reduce impact on biodiversity and ecosystems
Strong commitment to reduce impact of operations on biodiversity and ecosystems APPENDIX > 100% EUDR compliant (1) Criteria in accordance with the EUDR - European Union Deforestation-free Regulation (2) Calculated on the basis of 2023 volumes by supplier (3) Per hectare (4) Other than natural rubber
Slide 48: Sustainable natural rubber by Michelin
Sustainable natural rubber by Michelin: Driving progress across a fragmented value chain APPENDIX ACCELERATING SUSTAINABILITY ACROSS THE INDUSTRY BY 2025 ID CARD • Dedicated roadmap tracking commitments on zero deforestation, human rights, and farmer empowerment ~90% of Group’s supply come • Geoloca
Slide 49: Externalities: 2023 achievements exceeded ambitions
APPENDIX Externalities: 2023 achievements exceeded ambitions Externalities costs evolution: CO2 emissions, VOC(1) emissions and water withdrawals (€ 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 50: Michelin applies the TCFD recommendations
Michelin applies the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) APPENDIX MICHELIN’S ANSWER See p. 189 of 2023 Universal Registration Document for more details As part of the Supervisory Board’s role of exercising permanent oversight of the Group’s management, t
Slide 51: Climate strategy: transition and adaptation plans
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 low
Slide 52: 2030 environmental ambition: on track to net zero in 2050
2030 environmental ambition: on track to reach net zero emissions in 2050 Group’s ability to have an influence APPENDIX high 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% Logist
Slide 53: Sharp reduction in environmental footprint of operations
Sharp reduction in the environmental footprint of our operations, on track to reach 2030 target APPENDIX Environmental footprint of our sites (MEF vs. 2025 till 2019, i-MEP since 2019 - ISO14001- certified) 100 (2) Water withdrawal x water stress Generated waste MEF (1) Organic solvent use // Energy
Slide 54: Fostering social and societal cohesion
APPENDIX Fostering social and societal cohesion through ambitious initiatives ‘Living wage’ for every Michelin One Care Program, Group employee a universal social protection floor • ‘Global Living Wage Employer’ • Provide time to welcome a new child certified by Fair Wage Network • Family protection
Slide 55: Diversity and inclusion progress
Diversity and inclusion: Progress in gender balance and acceptance of diversity, demonstrating the Group’s commitment APPENDIX EQUAL OPPORTUNITY Every employee can develop his/her talents within the company. Michelin pays particular attention to the internal promotion of manufacturing operators. GEN
Slide 56: Michelin governance pillars
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 th
Slide 57: ESG awareness and oversight in governance structure
ESG awareness and oversight are fully embodied in Michelin’s governance structure APPENDIX Autos field trip Kepler Cheuvreux_November 7, 2024
Slide 58: ESG criteria in Managers' compensation
ESG criteria are included in the Managers’ compensation and shared with all employees via performance share plans APPENDIX Fixed compensation Annual variable compensation Performance share grants Subject to performance conditions over 3 years €1,100,000 Capped at 150% of fixed compensation Allocat
Slide 59: Glossary
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 mana
Slide 60: Disclaimer
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 Mi
Slide 61: Contacts
CONTACTS 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 Autos field trip Kepler Cheuvreux_November 7, 2024