Annual Report 2005 Michelin Energy E3A the Benchmark for Low Rolling Resistance, the Michelin Energy E3A Range of Tires Delivers 3% Fuel Savings for Passenger Cars
Total Page：16
File Type：pdf, Size：1020Kb
Annual Report 2005 Michelin Energy E3A The benchmark for low rolling resistance, the Michelin Energy E3A range of tires delivers 3% fuel savings for passenger cars. The third generation of this tire family, Michelin Energy E3A also delivers a 10% improvement on grip and 20% more mileage than the previous range. 1895 For the Paris- Bordeaux-Paris race, 2005 Michelin built and Michelin and its partners won drove the Eclair, all the World Champion titles: the first car ever fitted • Formula 1 World Champion with pneumatic tires. • Rally World Champion • 24 Hours of Le Mans Champion • MotoGP World Champion • and MBT World Champion Because, in 2005 as in 1895, Michelin placed innovation at the heart of its development. Today’s world No.1 tire manufacturer with 19.4%* market share, Michelin is at the forefront of all tire markets and travel-related services thanks to the quality of its product offering. Michelin is undisputed leader in the most demanding technical segments and designs forward-looking solutions to help the road transportation industry in its bid to improve competitive edge and to meet modern societies’ ever more pressing needs for safety, fuel efficiency and respect for the environment. To further strengthen its position and performance, Michelin pursues a global, targeted growth strategy focusing on high value-added segments and on expansion in the higher-growth markets, while improving its productivity across the board. * Accounting for 19.4% of world tire sales according to Tire Business, August 29, 2005. In a nutshell, its mission is to promote its values of Respect for Customers, People, Shareholders, the Environment and Facts in contributing to mobility enhancement of both goods and people. In short, proposing “A better way forward”. SOMMAIRE Contents 3• The Managing Partners’ Report on 2005 operations and results (p. 38) 40 • 2005 World Tire Markets 42 • Operations 62 • Analysis of Group Results 1• Michelin at a glance (p. 2) 69 • Outlook Profile 70 • 7-year Key Figures and Ratios 4 • Edouard Michelin’s message 72 • Proposed Resolutions 6 • Management 74 • Capital increase authorizations granted 8 • Control to the Managing Partners by the Shareholders 10 • Key Figures 14 • The Michelin Share • Supervisory Board Report (p. 75) 16 • 2005 Highlights • Report prepared by the Chairman of the Supervisory Board (p. 76) 2• Michelin Group and its industry (p. 20) 22 • Milestones 4• Consolidated Financial 24 • The World Tire Industry and Statements (p. 82) Michelin’s Markets 84 • Consolidated Income Statement 28 • Strategy: Michelin invests 85 • Consolidated Balance Sheet in global leadership 86 • Consolidated Statement of Changes 34 • The Michelin Performance in Equity and Responsibility Approach 87 • Consolidated Cash Flow Statement 36 • A global footprint 88 • Notes to the Consolidated Financial Statements 5• AdditionaI information (p. 138) 140 • Risk Management 143 • Michelin’s Corporate Governance 147 • Managing Partners special Report on stock option plan 148 • Fees paid to the Statutory Auditors 150 • Social and Environmental Information 162 • Corporate Financial Statements 163 • Statutory Auditors’ Reports The English language version of this Corporate Report is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However in all matters of interpretation of information, views or opinion expressed therein in the original language version of the document in French takes precedence over the translation. 2•MICHELIN AT A GLANCE SOMMAIRE CONTRIBUTING TO PROGRESS IN MOBILITY An innovative partner in the service of original equipment manufacturers (OEMs), Michelin Group is able to enrich its service offering to both individual and professional drivers through its involvement in motorsports, its presence in all distribution channels and its attention to user expectations. Skilled and motivated teams in touch with their customers • OVER 129,000 EMPLOYEES WORLDWIDE • 4,000 RESEARCH ENGINEERS IN EUROPE, THE UNITED STATES AND ASIA. An Outstanding Global Coverage • A GLOBAL SALES NETWORK COVERING 170 COUNTRIES • 71 PLANTS IN 19 COUNTRIES • 6 RUBBER TREE PLANTATIONS IN BRAZIL AND NIGERIA. Efficient Organization • 8 Product Lines with their own • 11 Group Services that support marketing, development, production the other entities; and sales resources; • A Technology Center with facilities • 2 Tire Distribution Networks: Euromaster in Europe, the United States and Asia; and TCI; • An Industrial Performance Department; • 2 Business Entities: ViaMichelin and • A Marketing and Sales Performance Michelin Lifestyle; Department. • 5 Geographic Zones: Europe, North America, South America, Asia and Pacific, Africa and the Middle-East; HIGHLY RELIABLE PRODUCTS AND SERVICES Tires for cars, trucks, Mobility Enabling Maps and guides, tractors, handling equipment, Services Michelin OnWay, ViaMichelin services and digital earthmovers, cycles, aircraft, Michelin Euro Assist; mobility enabling products. subway trains, trams… each Fleet Management and an innovative solution for Consultancy Michelin Fleet Michelin Lifestyle a wide range of applications Solutions, Michelin Business products developed in and expectations. Solutions and Tire Advisor. partnership with licensees: automotive and cycle accessories, Distribution and services Ground linkage and equipment for work, sport Euromaster in Europe and TCI pressure monitoring and leisure, and collectibles. in the United States are systems Through joint research benchmarks in their markets, with industry leaders Robert thanks to the quality of the Bosch GmbH, Toyo AVS, TRW, brands and professional service Vallourec Composants and advice offered. Automobiles, Wabco and Woco to name but a few, we develop cutting-edge solutions combining performance and safety. SOMMAIRE MICHELIN AT A GLANCE • 3 An Extensive Brand Portfolio All market segments are covered by leading national brands and well-positioned private brands, a large portfolio of strong regional brands – Uniroyal in North America, Kleber in Europe, Warrior in China – and the Group’s 2 world-class brands: Michelin and BFGoodrich. SIMPLIFIED CORPORATE ORGANIZATION CHART Compagnie Générale des Établissements Michelin (CGEM) France 100% 40% Compagnie Financière Manufacture Française Michelin (CFM)* 60% des Pneumatiques Michelin Switzerland France Non-French industrial, French industrial trading and research and trading companies companies * CFM, which is an intermediate holding company, is the Group’s financing arm: it handles the borrowing transactions with banks and on the financial markets. 4•EDOUARD MICHELIN’S MESSAGE SOMMAIRE EDOUARD MICHELIN’S MESSAGE “ Innovation and quality form the very core of our strategy. “ Dear Shareholder, A fine performance in Specialty Operations The turnaround which began some years ago in Specialty tire operations - Earthmover, Agricultural, Two-Wheel and Despite an economic environment marked by the continued Aircraft tires - continued in 2005. rise in raw material costs and the significant decline in the The segment’s operating margin is now close to those European Truck tire market, we have achieved our operating of the Passenger car and Light truck or Heavy Truck tire margin target before non-recurring items, which was up operations. slightly from 8.7% in 2004 to 8.8% in 2005. In Earthmover tires, the Group was successful in increasing Net income increased by 36% to EUR 889 million. volumes despite industrial production capacity constraints and was able to pass price increases. In addition, the success of the radial sport range in Motorcycle tires enabled Michelin to further build upon its position Firm prices, focused growth, in all the major national markets. cost control As for Aircraft tires, the radialization of the market continues. Taking full advantage of the strong growth in Raw material costs rose by more than 60% in the course air transportation and price increases, this activity posted of the last 4 years at constant currency, with a hike of substantially improved earnings. In Agricultural tires, 15% in 2005 alone. Michelin was able to restrict the although the economic environment was marked by impact on its gross profit margin through its firm pricing sharply declining markets, Michelin succeeded in gaining policy and continued growth in the higher value-added, market share in North America. technically advanced segments, reflected in significant sales growth for both the Michelin and BFGoodrich brands. Coupled with efficient control of structural costs, Innovation and quality this strategy translated into a 5% increase in operating income before non-recurring items to EUR 1,368 million. Innovation and quality form the very core of our strategy. This performance was delivered in spite of a decrease in The reason for Michelin’s growth in the more technical sales volumes mainly due to the decline in the European and more lucrative market segments is our ability to offer Truck tire market and to a drop in the number of lower our customers high-quality and innovative products and value-added tire sales in North America. services. I would like to point out that the year’s achievements are On the Truck tire segment, Michelin X One, the extra-wide the fruit of excellent work on the part of all our teams. tire designed to replace twin mounts, has met with SOMMAIRE MICHELIN AT A GLANCE • 5 Edouard Michelin and Sébastien Loeb, at the World Rally Championship event in 2005.