Michelin

In today’s increasingly open world, freight transport is constantly on the rise, while people want to travel more often and more safely. The number of vehicles on the road could double by 2030, to more than 1.6 billion. At the same time, the automobile industry is undergoing a profound mutation to address the challenges of dwindling fossil fuels, climate change, environmental protection and urbanization (more than 60% of the projected 8.2 billion people on the planet in 2030 will live in cities). The challenge is to develop cleaner, safer, more fuel-efficient road mobility solutions that make the most of information and communication technologies (ICTs).

Every year, 1.2 million people are killed and 50 million are injured in traffic accidents, which are the leading cause of mortality among young people. The statistics are particularly dramatic in developing nations.

Road transport accounts for 18% of all fossil-based CO2 emissions caused by human activity, with tires representing 4% from the fuel used to overcome their rolling resistance. This is roughly the equivalent of one full tank out of every five for a car and one out of three for a truck. To limit the average increase in global temperatures to 2°C in 2100(1), carbon emissions must be halved by 2050(2), even though the number of vehicles on the road and total distances driven are expected to double by that time.

More than 60% of the world’s oil output is used in transportation. Increasingly rare and costly, oil is a major geo-strategic challenge, as are energy and non-renewable raw materials. In 2011, the cost of raw materials used in production represented 34% of Michelin’s net sales.

The time it takes to travel from one point to another mainly depends on traffic, the itinerary, waiting times, the availability of a parking space and the speed of inter-modal connections. With a cell phone or onboard computer, travelers can access information to help them select the best options.

Built on a foundation of growth, competitiveness and commitment, Michelin’s strategic vision is designed to deliver strong, diversified growth by capturing the full value of its products and services in mature markets and expanding more quickly in new markets. As we continue to make our organization more competitive and cost-effective, the mutual commitment of the Company and its employees will enable us to successfully move forward together.

Objectives for 2015

  • Growth in sales volumes of at least 25% over the 2011- 2015 period.
  • Operating income of around €2.5 billion in 2015.
  • A more than 9% return on capital employed each year.
  • Annual capital expenditure of around €2 billion.
  • Positive free cash flow over the 2011-2015 period.
  • A dividend payout rate of around 30% of consolidated net income, before exceptional items.

One of the main thrusts of Michelin’s strategy is to leverage technology and innovation to differentiate its products and services, so as to consolidate its leadership and effectively meet the needs of tire users. For more than twenty years, our innovation programs have focused on delivering sustainable mobility solutions. Today, we are the world’s leading manufacturer of fuel-efficient tires and are spearheading the move towards a product-service system, which consists of selling a service or the use of a product rather than the product itself. For example, trucking companies and airlines can choose to be billed based on the number of kilometers traveled, the number of tonnes transported or the number of landings carried out using tires supplied and maintained by Michelin. We are committed to maintaining our solid lead in this new services-based economy by delivering targeted solutions combining innovative products and services.

Michelin is investing more than ever in the MICHELIN brand, which expresses its commitment to quality and innovation, as evidenced by the worldwide advertising campaign deployed in 2010.

MICHELIN brand sales are driving the growth strategy across every product line (Passenger Car and Light Truck tires, Truck tires and Specialty tires) and in every market. The benchmark premium brand, MICHELIN is widely recognized for the quality of its products and services, and will be enhanced by a multi-brand portfolio. Multiple brands enable us to serve retail networks that want to offer each customer just the right tire without leaving the Michelin Group brand universe.

With €1.7 billion invested in 2011, Michelin has returned to an active capital expenditure strategy. The program will be further expanded in the years ahead, with the commitment of nearly €2 billion a year from 2012 to 2015 on projects to:

  • sharply increase production capacity in fast-growing markets;
  • continue aligning plants in mature markets to keep pace with product developments and make them more competitive;
  • develop the information systems needed to meet our operational excellence and quality of service targets.