At the Group’s Capital Markets Day, Florent Menegaux, Managing Chairman, and Yves Chapot, General Manager and Chief Financial Officer, accompanied by all the members of the Group Executive Committee, presented Michelin in Motion, Michelin’s “All Sustainable” strategy for 2030.
Mr. Menegaux explained the Group’s “All Sustainable” vision, which is based on the constant search for the right balance between People, Planet and Profit. He also presented the Group’s ambitions for 2030, based on twelve indicators covering its environmental, social, societal and financial performance (see details on page 4).
In particular, he emphasized the Group’s commitment to:
New non-tire growth territories
Michelin will continue to expand, invest and innovate in its tire businesses. Post-Covid mobility trends and the accelerating growth of the electric vehicle market represent genuine growth opportunities for the Group, which has developed unrivaled technological leadership in the design and manufacture of tires purpose-engineered for EVs. In the road transportation segment, the Group will selectively focus on creating value, while in Mining, Earthmover, Agricultural, Aircraft and other specialty tires, Michelin intends to remain the benchmark by capitalizing on the differentiation of its products and services.
Led by its capacity for innovation and its materials expertise, Michelin is also looking to drive strong expansion in five around and beyond tire business segments: Services & Solutions, flexible composites, medical devices, metal 3D printing and Hydrogen mobility.
An initial milestone in 2023
During the Capital Markets Day, Michelin also presented the various industrial competitiveness drivers that will deliver €80 million in savings a year, net of inflation, between 2020 and 2023. Moreover, SG&A expenses in the tire business will be reduced by €65 million, net of inflation, by 2023 and by a total of €125 million by 2025.
Yves Chapot then announced the Group’s financial objectives for 2023. That year, the Group expects to report around €24.5 billion in sales, more than €3.3 billion in segment operating income3, €3.3 billion in structural free cash flow (total over 2022 and 2023), and a ROCE of 10.5%.
In addition, the Group has begun to calculate the costs of some of its negative externalities, like carbon emissions and water and solvent use, and is committed to reducing them by around 10% by 2023.
Lastly, the Group has decided to revise its dividend policy, with the new goal of paying out 50% of earnings before non-recurring items in 2021.
During the Capital Markets Day, Mr. Menegaux noted: “With this new Michelin In Motion strategic plan, the Group is embarking on an ambitious growth dynamic for the next ten years. I am convinced that the engagement and capacity for innovation of our teams will enable us to deliver a harmonious blend of sustained business performance, continuous employee development, and a commitment to the planet and our host communities. Even as it remains true to its DNA, by 2030 the Group’s profile will have significantly changed with the ramp-up of new, high value-added businesses in both around and beyond markets. It is this ability to constantly reinvent itself that has underpinned Michelin’s strength for more than 130 years and which today gives us confidence in the future.”
Mr. Chapot added: “Despite the current crisis and the still uncertain economic environment, Michelin has demonstrated the resilience of its fundamentals and the validity of its business model. This new Michelin In Motion strategic plan will give the Group the means to drive new growth and reduce the impact of its main negative externalities. Michelin will continue to develop its tire operations while integrating new businesses, with a constant focus on maintaining a robust balance sheet and firm margins.”
Overview of the announced Ambitions for 2030:
End customer NPS(3)
up 5 pts vs. 2020
Percentage of consolidated sales from businesses other than tire manufacturing and distribution
Between 20% and 30%
The “End Customer” NPS, a weighted average of the consumers and business customers clusters;
The “Partner” NPS, a weighted average of the OEMs and business dealers clusters.
Summary of 2023 objectives:
Segment operating margin
Cost of negative externalities, 2023
Indicator described on page 3
Average growth of 5% a year projected through 2030.
At the average exchange rate for January 2021
Please refer to the Capital Markets Day presentation available on www.michelin.com/en/ for the 2023 detailed scenario.
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