Logo_for_media_site.jpg
Posted on April 08, 2021

Michelin presents its “All Sustainable” strategy for 2030: Michelin In Motion

601
  • Concrete ambitions to drive sustainable growth
  • New non-tire growth territories
  • An initial milestone in 2023

Clermont-Ferrand, April 8, 2021: 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.

In particular, he emphasized the Group’s commitment to:

People

  • achieving an employee engagement rate of more than 85%
  • increasing the percentage of women in management positions to 35%
  • setting the global standard in workplace safety, with a TCIR of less than 0.5

Planet

  • sharply reducing its CO2 emissions, in Scopes 1 and 2 (by 50% compared with 2010) and in transportation-related Scope 3, with the goal of achieving carbon neutrality in these scopes by 2050
  • sharply increasing the sustainable raw materials content in all its products to 40% by 2030, in line with its target of 100% by 2050

Profit

  • driving sustained growth, with an average 5% increase per year in sales between 2023 and 2030, once the current Covid-19-related crisis is over
  • deriving 20% to 30% of sales from non-tire businesses
  • guaranteeing the creation of significant value, with a more than 10.5% ROCE between 2023 and 2030.

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.

  • In Services & Solutions, the Group is going to broaden and deepen its portfolio of fleet solutions, in particular by leveraging smart objects and the value of its collected data.
  • Michelin also hopes to expand significantly in the very fast growing flexible composites market (conveyors, belts, coated fabrics, seals, etc.) by pursuing its value-creating mergers and acquisitions strategy and incubating new businesses.
  • Medical devices also represent a growth opportunity in the years ahead.
  • In metal 3D printing, the Group has developed unique expertise that supports the ability of AddUp, its joint venture with Fives, to market a comprehensive range of tailor-made solutions for manufacturers.
  • In Hydrogen mobility, the Group is seeking to become a world leader in hydrogen fuel cell systems through Symbio, its joint venture with Faurecia.

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 an 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:

AMBITIONS

INDICATOR

 

2030

Set the global standard in employee engagement

Engagement rate

>85%

Set the global standard in workplace safety

TCIR(1)

<0.5

Set the standard for employee diversity and inclusion

IMDI(2)

80/100 points

Lead the industry in creating customer value

Partner NPS(3)

End customer NPS(3)

up 10 pts vs. 2020

up 5 pts vs. 2020

Drive significant growth in sales, particularly in segments other than tire manufacturing and distribution

Average growth in sales per year, 2023 to 2030

Percentage of consolidated sales from businesses other than tire manufacturing and distribution

5%

 

Between 20% and 30%

Continuously create value

ROCE(4)

>10.5%

Maintain the strength of the MICHELIN brand

Brand vitality quotient(5)

up 5 pts vs. 2021

Maintain the sustained pace of product and service innovation

Product/offers vitality index(6)

>30%

Achieve carbon neutrality in manufacturing and energy use by 2050

Scopes 1 and 2 CO2 emissions

down 50% vs. 2010

Help achieve carbon neutrality in use

Products energy efficiency (scope 3)

up 10% vs. 2020

Set the global standard for the environmental footprint of manufacturing facilities

i-MEP(7)

down one-third vs. 2020

Ensure that tires are made entirely of sustainable materials

Sustainable materials rate

40%

  1. Total Case Incident Rate: the number of accidents and cases of occupational illness recorded per 200,000 hours worked
  2. Diversities and inclusion management indicator
  3. In 2021, two composite indicators will be created: 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.
  4. In calculating consolidated ROCE, goodwill, acquired intangible assets and shares in equity-accounted companies are added back to economic assets. Net operating profit after tax (NOPAT) includes the amortization of acquired intangible assets, as well as profit from equity-accounted companies (see section 3.6 of the 2020 Annual Results Guide, available at www.michelin.com).
  5. Composite indicator used to measure the brand’s vitality.
  6. Percentage of sales from products and services introduced in the last three years.
  7. The Industrial Michelin Environmental Performance (i-MEP) indicator will be used to track the environmental impacts of the Group’s manufacturing operations over the next ten years. It will make these impacts easier to understand by focusing on five priority areas: energy use, CO2 emissions, organic solvent use, water withdrawals, and waste production. The i-MEP is described in more detail in the methodological note in section 4 of the 2020 URD.

Summary of 2023 objectives:

2023 sales

 

Around €24.5 billion at January 2021 exchange rates

2023 segment operating income

Segment operating margin

More than €3.3 billion at January 2021 exchange rates

13.5%

2023 segment operating margin, Automotive and related distribution segment

>12%

2023 segment operating margin, Road Transportation and related distribution segment

>10%

2023 segment operating margin, Specialty businesses and related distribution segment

>17%

Total structural free cash flow8, 2022-2023

 

€3.3 billion

2023 ROCE

 

>10.5%

Average growth in sales excluding tires and related distribution, 2019-2023

5%

Industrial efficiency, 2020-2023

€80 million in savings a year, net of inflation

Reduction in SG&A expenses in the tire business through 2023

€65 million in savings, net of inflation

Cost of negative externalities, 2019

Cost of negative externalities, 2023

€(330) million

€(300) million

Payout ratio as from 2021

50% before non-recurring items

 

8. Structural free cash flow corresponds to free cash flow before acquisitions, adjusted for the impact of changes in raw material prices on trade payables, trade receivables and inventories.

 

Investor Relations

 

Édouard de Peufeilhoux

+33 (0) 6 89 71 93 73

edouard.de-peufeilhoux@michelin.com

 

Humbert de Feydeau

+33 (0) 6 82 22 39 78

humbert.de-feydeau@michelin.com

 

Pierre Hassaïri

+33 (0) 6 84 32 90 81

pierre.hassairi@michelin.com

 

Media Relations

 

+33 (0)1 45 66 22 22

groupe-michelin.service.de.presse@michelin.com

 

Individual shareholders

 

Isabelle Maizaud-Aucouturier

               +33 (0) 4 73 32 23 05

isabelle.maizaud-aucouturier@michelin.com

 

Clémence Rodriguez

               +33 (0) 4 73 32 15 11

clemence.daturi-rodriguez@michelin.com

 

 

DISCLAIMER

This press release 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 www.michelin.com/en/ website.              

This press release may contain a number of forward-looking statements. Although the Company believes that these statements are based on reasonable assumptions at the time of publishing this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or inferred by these statements.

 

 

 

 

 

 

 

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.

1 Comment

Todd Hunt | April 13, 2021 @ 10:30PM
Thank you for your vision!

We can help you reduce carbon emissions by 30-40%.

And saving millions of gallons of water....... Will be contacting you!

Leave a Comment

About

About Michelin North America

Michelin, the leading mobility company, is dedicated to enhancing its customers’ mobility, and sustainably; designing and distributing the most innovative tires, services and solutions for its customers’ needs; providing digital services, maps and guides to help enrich trips and travels and make them unique experiences; and developing high-technology materials that serve a variety of industries. Headquartered in Greenville, South Carolina, Michelin North America has approximately 23,000 employees and operates 34 production facilities in the United States and Canada. (michelinman.com)