Motion for Life
2020 activity report
contents
GROUP PRESENTATION P.20 TO 30 AND STRATEGY FOUR AREAS OF GROWTH 20 Tires P. 2 24 Mobility experiences COMPANY PROFILE 26 Services & solutions 28 High-Tech materials P.4 HERITAGE: PIONEERING, SUSTAINABLE, INNOVATIVE, P.32 TO 39 RESILIENT FOR 132 YEARS GOVERNANCE 32 The Michelin partnership P.6 limited by shares 33 The managing Chairman INTERVIEW WITH FLORENT and the Executive Committee MENEGAUX, MANAGING CHAIRMAN 34 A customer-centric organization 35 The Supervisory Board P.1 0 37 Ethics, integrity and compliance COVID-19 CRISIS: 38 Risk management PEOPLE HELPING PEOPLE P.40 TO 45 P.1 2 PERFORMANCE TRENDS & ISSUES 40 Financial performance 41 Non-financial performance P.1 4 42 Ambitions 2020 outcomes AN “ALL SUSTAINABLE” 44 Michelin's investor relations FUTURE 45 The Michelin share
P.1 8 P.4 6 OUR GROWTH & VALUE OUTLOOK CREATION MODEL COMPANY PROFILE
MOTION FOR LIFE
The technology leader in tires for all forms of mobility, Michelin Motion is the very essence of life. offers services that At Michelin, we believe that nothing can improve transportation stop us from moving. Offering everyone performance and a better way forward is our corporate solutions that enable mission. Our “All Sustainable” approach is customers to enjoy constantly driving us to find solutions that outstanding experiences foster an optimal balance between personal fulfillment, economic development, and unique moments during protection of the planet and its inhabitants. their journeys and Leveraging our unrivaled capabilities, we travels. In addition to innovate to help humanity conquer new mobility, Michelin is frontiers for a better life in motion. leveraging its exceptional know-how and expertise in high-tech materials in emerging markets.
2 MICHELIN 2020 ACTIVITY REPORT COMPANY PROFILE
A GLOBAL FOOTPRINT 124,000 people in 170 countries €20.5 billion in sales
europe
NORTH AMERICA
2 R&D centers 46 production facilities 3,000 dealerships 1 R&D center 67,000 employees 39 production facilities 2,300 dealerships 23,000 employees
asiA
AFRICA INDIA SOUTH MIDDLE EAST 4 R&D centers AMERICA 32 production facilities 2,000 dealerships 19,000 employees
1 R&D center 4 production facilities 250 dealerships 1 R&D center 7,000 employees 6 production facilities 50 dealerships 8,000 employees
2020 sales r&d Production Dealerships 28% Other % regions 35 6,000 117 7,600 North people facilities proprietary or America(1) in 9 countries in 26 countries franchised centers in 30 countries 37% Europe (1) Including Mexico.
MICHELIN 2020 ACTIVITY REPORT 3 HERITAGE
pioneering, sustainable, innovative, resilient for 132 years
In 132 years, Michelin has lived through two world wars, three stock market crashes and four major economic crises. Inspired by this heritage, the Group and its teams are focusing all their energy and talent on overcoming the Covid-19 crisis and preparing for the post-pandemic world.
Pioneering
1889 André and Édouard 2012 A pioneer in connected Michelin take over a factory tires, Michelin broadens its making farm machinery digital services to fleet and rubber balls in Clermont- operators with the acquisitions Ferrand. They develop the of Sascar (2014), NexTraq, world’s first removable bicycle (2017) and Masternaut (2019). tires that can be repaired 2014 Building on its in just 15 minutes (1891). investments in hydrogen fuel- 1895 Foreseeing the future cell R&D over the preceding of road transportation and the 15 years, Michelin strengthens benefits of rubber technology, its position in hydrogen the Michelin brothers build mobility with Symbio, which the first automobile to ride will become a joint venture on pneumatic tires. with Faurecia in 2019. The idea will soon catch on. 2016 Leading the way 1906 Michelin begins to in 3D printing, Michelin expand internationally: Italy creates AddUp with Fives and the United Kingdom to market the expertise (1927), Germany (1931), acquired in its core business Spain (1934), Canada (1971), to other industries. the United States (1975), 2020 Michelin steps up Brazil (1981), China (1985), its innovation in sustainable Thailand (1988), Eastern materials research, with Europe (1995), India (2013) a focus on recycling and Indonesia (2019). technologies, by investing in 1960 To widen its market strategic partnerships with access, the Group expands into Enviro, Carbios and Pyrowave. dealer networks and services, acquiring ATS, Euromaster (1991) and Black Circles (2015) in Europe, TBC in North America in partnership with Sumitomo (2018) and Tyreplus in other regions (2002).
4 MICHELIN 2020 ACTIVITY REPORT HERITAGE
pioneering, sustainable, Sustainable innovative, resilient 1990 SIDE (since renamed 2002 Michelin launches its economy through its “4R Strategy” Michelin Development) is formed Performance and Responsibility to Reduce, Reuse, Recycle and to support business start-ups and approach in a commitment Renew. for 132 years job creation in the Group’s host to improving its performance 2016 A Corporate Stakeholders communities. in fulfilling all of its financial, Committee is created to structure environmental and social 1992 The MICHELIN Energy line stakeholder dialogue with responsibilities. is introduced, offering the first low the Group Executive Committee. rolling resistance tires that reduce 2014 The Michelin Foundation 2020 The Supervisory fuel consumption. is set up to support innovative Board forms a Corporate Social projects aligned with Michelin’s 1998 Michelin creates Challenge Responsibility Committee (CSRC) humanist culture and values Bibendum (renamed Movin’On to assess the Group’s policies of respect. in 2017), the leading innovation and performance in addressing ecosystem dedicated to sustainable 2014 To address the challenges this issue. mobility for everyone, and its of resource depletion and end-of- Movin’On Summit, the worldwide life product management, Michelin sustainable mobility summit. actively engages in the circular
Innovative
1899 Fitted with Michelin tires, 2003 Michelin launches AxioBib, the all-electric “Jamais Contente” a variable pressure tire for farm breaks the 100 km/h speed barrier. machinery that protects crop soil. 1900 Michelin publishes 2017 Michelin unveils its the Red Guide, the first reference Vision concept, a fully connected guidebook for motorists. airless tire made from recycled and biosourced materials. Its tread 1946 Michelin files a patent can be replenished by a 3D printer for the radial tire, which delivers as needed or to adjust to changing revolutionary robustness and long- road conditions. lasting tread life. Over the years, it is engineered for use on trucks 2019 Michelin presents Uptis, (1952), earthmovers (1959), aircraft a robust airless, puncture-proof car (1981) and motorcycles (1987). tire developed with General Motors. 1995 The space shuttle lands on Michelin tires.
Resilient
1914 During World War I, 2000 Bibendum, created 2018 Michelin broadens its Michelin converts to aircraft in 1898, is voted the “best business base with Camso, a production. logo of the 20th century” leader in tracks and solid tires, by the Financial Times. and Fenner, a specialist in 1945 Bombed in 1944, reinforced polymer products. the Cataroux plant 2009 Michelin responds very in Clermont-Ferrand is quickly to the steep collapse 2020 Michelin demonstrates rebuilt and modernized. in demand to conserve cash, its agility in responding to the while continuing to expand Covid-19 crisis by deploying its 1974 The booming popularity and specialize its plants. expertise to support people, of radial tires drives a 20% while maintaining its solid increase in annual sales. financial position.
MICHELIN 2020 ACTIVITY REPORT 5 INTERVIEW WITH THE MANAGING CHAIRMAN
“Thanks to its innovation capabilities, Michelin is and always will be a source of solutions.”
INTERVIEW WITH FLORENT MENEGAUX MANAGING CHAIRMAN
6 MICHELIN 2020 ACTIVITY REPORT INTERVIEW WITH THE MANAGING CHAIRMAN
How did Michelin respond to the Covid-19 crisis? florent menegaux We responded promptly in a spirit of solidarity. Our “By 2030, tires will production plants in China, our experience during account for around the 2008 financial crisis and our crisis management training all prepared us to respond very quickly to 70% of the Group’s protect our employees and our business operations. revenue stream, which All over the world, our teams have demonstrated a remarkable commitment to helping everyone fight will have become much the pandemic, by assisting emergency services, for example, or maintaining essential activities. I would larger in the meantime.” like to commend them all once again. Lastly, thanks to our investments in the cloud and collaborative applications, we shifted to working Gearing stood at 28%, reflecting the Group’s from home without any major technical difficulties. financial strength and enabling us to recommend Overall, we’re weathering this unprecedented global the payment of a dividend of €2.30 per share crisis as well as possible. compared with €2.00 for 2019.
What has been the impact on the Michelin’s All Sustainable approach Group’s operations and performance? seeks a balance between economic f.M. The health crisis and the lockdowns development, personal fulfillment, imposed in most countries sharply curtailed economic and safeguarding the planet. activity in the first half, causing a steep drop in How did you respond to people tire demand. However, demand rebounded quickly and the planet in 2020? in the second half, almost to 2019 levels in certain f.M. People’s health and safety are absolute segments. The Group has demonstrated a great priorities, as we once again demonstrated in 2020 deal of resilience in this unprecedented situation. by taking care to protect all our employees, support Our global footprint and diversified business base our most vulnerable suppliers and customers, and helped to cushion the shock. Our cost-cutting help all our communities around the world. As a and financial management measures successfully result, we saw an improvement in social cohesion, maintained margin integrity in our operations and with everyone feeling like they had a role to play in strengthened our balance sheet. overcoming this together. The employee engagement Sales ended the year at €20 billion, down 15% due rate even hit 83%, a two-point increase on 2019. to the 14% decline in volumes and the negative Among the year’s advances was the creation of 2.6% impact from exchange rate movements. the Michelin Global Works Council, which will act Segment operating income amounted to €1.9 billion as a new worldwide forum for social dialogue to or 9.2% of sales, versus 12.5% in 2019. This resilience pro-actively plan for transformations and support reflects the successful positioning of our products and their implementation. Michelin is a living organism services, and demonstrates our ability to defend our that is constantly adapting to its environment. prices in the more aggressive business environment As a company, our responsibility is to improve our created by plunging markets. We also pursued our performance and develop businesses that can survive commitment to becoming more competitive with and thrive far into the future. That comes with a the launch of a simplification and competitiveness heavy social responsibility, to work together to find plan in France. consensus solutions and to support the people and Structural free cash flow exceeded €2 billion, a communities impacted by plant closures and job cuts. €400 million year-on-year increase attributable In 2020, we stepped up employee support initiatives not only to our diligent cash management but also and deployed revitalization programs in Dundee (UK), to the exceptionally low year-end inventory levels, in Bamberg (Germany), and in La Roche-sur-Yon which are serving temporarily to ensure that our and Clermont-Ferrand (France), all of which are customers receive good service. focused on innovation and green growth.
MICHELIN 2020 ACTIVITY REPORT 7 INTERVIEW WITH THE MANAGING CHAIRMAN
The La Roche-sur-Yon plant, for example, will be Our objectives transformed into a sustainable energy innovation for 2030 are cluster.We’ve also announced the Parc Cataroux ambitious project, which will comprise a Talent Factory that will enable everyone, whether a Michelin employee or not, to continuously develop their skills and Exceed an prepare for the jobs of tomorrow, while fostering closer ties between the private sector and academia. 85% employee engagement Concerning the planet, our 2020 objective was rate and set the to reduce the environmental footprint of our industry standard manufacturing operations by 50% compared with for diversity 2005. That goal was met, despite the production shutdowns and restarts caused by the health crisis. We also launched MICHELIN e.PRIMACY, the first tire that is carbon neutral at the time of purchase. In-use, it is also the most cost-efficient and environmentally friendly tire in its category Michelin completed its latest and the first for which an Environmental Product (1) five-year plan in 2020. Declaration (EPD) has been issued. We pursued How would you describe the outcomes? our commitment to the circular economy and formed two new partnerships, one with Enviro to recycle f.M. We met most of our social responsibility end-of-life tires using pyrolysis technology and and environmental objectives. Our progress is the other with Pyrowave to produce styrene(2) reflected in our ratings from the leading ESG rating from plastic waste. Michelin was also appointed agencies. The Group reported a profit every year coordinator of the European public-private from 2016 to 2020 and, as promised, an average partnership BlackCycle, a major research project 35% of consolidated net income was returned to to recover resources from scrap tires to make new shareholders over the period. ones. These projects are helping us to meet our We innovated and enhanced our offering, with ambitious goal of manufacturing our tires entirely 18-inch and larger tires increasing from 25% to from sustainable materials by 2050. 47% of MICHELIN-brand unit sales between 2015 and 2020. We have realigned and adjusted our manufacturing footprint in response to changing demand and markets. We are now producing closer to our customers following acquisition of Multistrada “For 2050, we’re in Indonesia and ramp-up of the new León plant in aiming to make all Mexico. We are building more resilient local supply chains. We have expanded our dealership presence our manufacturing, in every geography, while fostering synergies between brick & mortar stores and online retailers. supply and logistics Digitalization has been deployed across the value operations carbon chain, where it is driving improvements in agility, efficiency and customer service. neutral and to use Our competitiveness plans delivered the expected only sustainable materials gains, with nearly €900 million in savings before inflation over the 2017-2019 period. In 2020, the in our tires.” health crisis weighed on manufacturing productivity, but we were able to significantly reduce corporate overheads. And we’re not finished yet. In January 2021, we launched a three-year simplification and competitiveness plan that concerns all our manufacturing, corporate and administrative operations in France.
8 MICHELIN 2020 ACTIVITY REPORT INTERVIEW WITH THE MANAGING CHAIRMAN
“Michelin is a living organism that is constantly adapting to its environment.”
Lastly, we led an assertive strategy of partnerships portfolio of services and solutions, capitalizing on and acquisitions to broaden our range of specialties, connected mobility technology and our collected develop our services and solutions for corporate data. We’re going to drive faster growth in high- customers and leverage, in new applications, the tech materials with major potential, such as high-tech materials expertise we’ve acquired in our high-performance polymers, medical applications, core business. In this way, we’re opening up new sustainable bio-sourced and recycled materials, avenues of growth for the Group, while enhancing metal 3D printing and hydrogen mobility systems. the impact of the MICHELIN brand. By 2030, tires should account for around 75% In April 2021, you presented of the Group’s revenue stream, which will have the Group’s roadmap to 2030(3). become much larger in the meantime, with a better What are its driving forces? balanced geographic and segment mix in a portfolio of businesses in, around and beyond tires. f.M. We want to generate stronger sustainable The Covid-19 crisis is going to accelerate the growth and create value that is evenly distributed transition towards a greener, more virtuous among profit, people and the planet. Our ambitions economy. Our Michelin All-Sustainable approach are strong: has emerged from it stronger than ever. Michelin • increase our sales by an average 5% a year as stands to benefit from the economic stimulus plans from 2023, once the crisis is over, and deliver a deployed in Europe, the Americas and Asia, whose more than 10.5% return on capital employed; ultimate goals – zero-emission manufacturing, • exceed an 85% employee engagement rate and sustainable mobility, the energy transition, hydrogen set the industry standard for diversity; power, the circular economy and biomaterials – are • demonstrate outcomes on track to meet our 2050 resonant with our own. Thanks to its innovation objectives of making all our manufacturing, supply capabilities, Michelin is and always will be a source and logistics operations carbon neutral and using of solutions. only sustainable materials in our tires.
To fulfill this vision, we’re expanding our business base in, around and beyond tires. We’re going (1) An EPD quantifies a product’s environmental impacts to continue focusing on premium and specialty throughout its life cycle. It is verified by a third party. (2) Styrene is used in particular in the production tires where our technologies make a difference of synthetic rubber for tires. and are highly valued. We’re going to expand our (3) www.michelin.com I Finance I Investor Presentations.
MICHELIN 2020 ACTIVITY REPORT 9 COVID-19
COVID-19 CRISIS PEOPLE HELPING PEOPLE With its operations in China, where it has been present for more than 30 years, Michelin found itself on the front lines of the Covid-19 crisis. As soon as the pandemic showed signs of spreading, two priorities were defined: safeguard the health and safety of employees and ensure business continuity by any means necessary. In this way, the Group hoped to safely resume operations as soon as possible to limit the financial and jobs impact of the crisis.
In Europe, the lack of To quickly restart production, commercially available robust health protocols were Protecting protective equipment for its introduced, and several plants the health employees prompted Michelin produced hand sanitizer and of employees on March 15 to close its plants especially surgical masks for the in Spain, France and Italy, the Group and its host communities. countries hardest hit by the Initially manual, mask production epidemic. In all, 21 facilities was automated from June for In China, production was shut and 20,000 employees were Europe and the Americas. Thanks down on January 24, 2020, but furloughed, while in the corporate to this dedication and hard work, was able to resume on February and administrative operations, the plants gradually resumed 10 thanks to the deployment of a working from home became the operations in Europe in April and disciplined health protocol audited norm. In the succeeding weeks, all Michelin plants worldwide were and approved by the authorities. other plants were shut down, one back online by the end of June. This experience was immediately after the other, as the virus spread shared with the other regional across Eastern Europe, North organizations to help them prepare. America and South America.
10 MICHELIN 2020 ACTIVITY REPORT COVID-19
Safeguarding under control; (iv) maintaining fixed compensation during the a disciplined pricing policy; months when employees were the Group’s (v) reducing corporate overheads; furloughed. The Managers also viability and (vi) above a certain waived all of their variable compensation level, deferring raises compensation payable in 2020 in countries where this was possible. in respect of 2019. These salary waivers helped to finance a The Group also maintained Covid-19-related research project To attenuate the impact of its commitments to all its and a fund to support the families the economic slowdown and partners, taking care to protect of employees particularly hard conserve cash, the Group deployed its most vulnerable customers hit by the crisis. The Chairman a full range of measures, including and suppliers, such as small and independent members of the (i) reducing capital expenditure by rubber producers. It has also tried Supervisory Board donated a 30% (€600 million) and cutting to limit the use of furloughing, quarter of their compensation. the dividend in half (€330 million); so as to ease its impact both on (ii) suspending the share buyback Michelin strengthened its wages and on public finances. program, except for the firm financial resources by raising commitments outstanding for 2020; The Managers, Executive its confirmed line of credit to (iii) tracking supply and demand Committee members and certain €2.5 billion and successfully on a weekly basis to keep inventory willing managers reduced their issuing €1.5 billion in bonds.
Supporting communities, first responders and healthcare workers In every host country, Michelin In response to appeals from supported communities, first several hospital departments, responders and healthcare Michelin mobilized its materials workers by donating masks, specialists and 3D printing hand sanitizer and personal expertise to design and protective equipment, donating produce ventilator components, tires and free servicing for sterilizable polycarbonate face emergency vehicles(1), and shields and variable pressure providing financial support. air cushion kits to assist patients in intensive care.
(1) Michelin donated more than three million masks, more than 12,000 liters of hand sanitizer, thousands of sterilizable polycarbonate face shields, ventilator components, patient positioning cushions and 4,600 ambulance tires with free mounting.
MICHELIN 2020 ACTIVITY REPORT 11 Tire trends & issues In a fast-changing environment, innovation plays a critical role in devising solutions to meet the challenges of sustainable mobility and accelerate the transition to greener, more competitive, more inclusive growth.
As they invest unprecedented amounts of capital to address the challenges of road safety, public health, climate change, stricter emission standards, electromobility, connected, shared, on-demand vehicles, last-mile delivery logistics and 01 a host of other issues, automakers are turning to equipment providers for the technological solutions they need. Partnerships are being forged and innovation ecosystems The changing are being formed to bring new solutions to market faster. face of They are exploring a myriad of pathways to making mobility mobility safer, more efficient, greener and more accessible, including low rolling resistance tires, tires capable of meeting the stringent demands of EVs and shared vehicles, zero-emission hydrogen mobility, connected mobility, and the use of data to deliver personalized services.
12 MICHELIN 2020 ACTIVITY REPORT TIRE TRENDS & ISSUES
02 03 Preserving the planet As needs continue to grow along with the world’s population and as loss of biodiversity accelerates, doing more and better with less Tire demand: has taken on new urgency. Highly innovative solid technologies are emerging in such areas as fundamentals biomaterials, plastics and tire recycling, and start-ups are partnering with large corporations Three quarters of all tires are sold to industrialize them. These recovered materials in replacement markets. Demand is could be used in a large number of industries. being driven by growth in the world’s population, which is projected to rise by 9% through 2030(1), economic development, and the mobility of people and goods, with kilometers traveled expected to increase by one third from 2020 until 2030(2). Over the medium term, it is estimated that demand for Restoring social trust tires by volume will grow by 0% to 04 2% per year in mature markets and Social dissatisfaction stems from a wide variety by 2% to 4% in emerging markets(3). of sources, including inequality, transformations, the digital revolution, the continuous shifts CAR AND TRUCK TIRES: in skill demand and the search for meaning. HIGHLY COMPETITIVE MARKETS The challenge for companies is to transform Markets in Europe and North America themselves into people-driven enterprises, are facing highly aggressive competition capable of attracting and developing from low-cost tires imported from the best talent and of making everyone’s Asia. The most effective way to work and engagement meaningful. escape this pressure is to move up the value chain by offering premium tires and marketing services that enable customers to improve their mobility or operating performance.
SPECIALTY TIRES: Supporting sustainable PERFORMANCE AND PROFITABILITY prosperity Markets for tires used in mining, 05 farming, construction, logistics The Covid-19 crisis has caused the worst hubs and air transportation are recession since World War II while throwing both demanding and profitable, but millions out of work and into poverty. they are facing complex challenges It has also demonstrated how effective in complex environments. Farmers, companies can be in protecting people, keeping for example, are being asked to essential activities going, fast-tracking produce more to feed the planet while vaccines and adjusting their organizations to protecting cropland and biodiversity. health restrictions. What will the post-Covid-19 Michelin offers solutions built around world look like? The questions are endless, but high-tech materials and the real-time everyone seems sure of one thing: tomorrow’s management of connected tires. prosperity has no choice but to be sustainable.
(1) Source: the United Nations, from 7.8 billion to 8.5 billion people. (2) Source: IHS Markit, more than 21 billion kilometers for cars alone. (3) Source: IHS Markit.
MICHELIN 2020 ACTIVITY REPORT 13 AN “ALL SUSTAINABLE FUTURE”
AN “ALL SUSTAINABLE“ FUTURE “Our vision of the future is based on the belief that tomorrow, everything at Michelin will be sustainable.” Florent Menegaux This vision is constantly driving us to achieve an optimal balance between personal fulfillment, economic development, and protection of the planet and its inhabitants. • It is built on Michelin's Purpose: to offer everyone a better way forward. • It inspires a shared dream: to be recognized by 2050 as a leader in innovations that will have contributed to the conquest of new frontiers for humanity. • It guides the Group’s strategic plan and ambitions for 2030.
14 MICHELIN 2020 ACTIVITY REPORT AN ALL SUSTAINABLE FUTURE
PEOPLE DRIVING PERFORMANCE
Michelin’s corporate performance Michelin ranks among the world leaders is closely linked to its employees’ in workplace safety and employee fulfillment. Michelin offers diversified, engagement. In 2020, more than open-ended career paths that give 100,000 people replied to the annual everyone the opportunities and resources "Moving Forward Together: Your Voice they need to grow. for Action" survey. The engagement rate rose by two points, to 83%, despite the To attract the finest talent, the Group Covid-19 crisis. Workplace safety also encourages diversity and ensures fair and improved, with a steady decline in the equal treatment. 74% of managers have accident rate. been promoted or transferred from within. 79% of top managers in the growth regions Empowerment, which is practiced were born there. Women account for one- across the Group, unleashes the spirit third of all new hires, excluding production of initiative, brings collective intelligence operators, and even shopfloor jobs are to bear on issues and helps to create being held by more women as workstation more value for customers by making them ergonomics are steadily upgraded. the focus of every decision.
ICARE : helping everyone to succeed Michelin’s new leadership model is improve the Group’s agility as an known as I CARE, which stands for organization. The manager’s role is “Inspiring, Create trust, Awareness, to explain the meaning of tasks and Results, Empowerment.” It promotes set priorities, then let the teams empowerment and decision- manage them as well as possible, making as close to operations and ensuring that they have the resources customers as possible, to support and skills they need to succeed. everyone’s individual success and
Michelin’s transformation of customer relations wins 2020 Grand Prix de l’accélération digitale(1) The award honors the Engage program, which was launched in 2017 to deepen intimacy between the sales teams and their customers. In 2020, it brought together more than 10,000 employees and 100,000 customers around the slogan “Make it better to work at and with Michelin.” Sales, marketing and service teams are working collaboratively with the same data accessible in real time. Customers are pleased with the more efficient, personalized relationship, which encourages cross-selling.
(1) Awarded by BFM Business (this prize is awarded by a French media, but it rewards the global Engage program).
MICHELIN 2020 ACTIVITY REPORT 15 AN ALL SUSTAINABLE FUTURE
PROFIT SECURING OUR LONG-TERM VIABILITY
Michelin endeavors to drive New sources of growth in Sustained improvement in faster growth, strengthen future-facing markets where its competitiveness in every aspect its resilience and improve expertise generates synergies, such of the business, led by the its operating and financial as mobility services, hydrogen quickening pace of digitization. performance, so that it can solutions, 3D printing, flexible Optimized financial continue to invest, innovate, composites and biosourced management over the short, expand and share the resulting and recycled materials. medium and long term that value it creates. This deep-rooted A diversified, multi-segment, maintains a very good liquidity commitment is supported by: global footprint with a broad profile and a robust balance A premium, innovation- array of products and solutions sheet, with diversified sources driven strategy, with recognized serving millions of retail of funds and a well-balanced technological leadership in and business customers in a repayment schedule. mobility and long-lasting variety of industries in every performance, expressed by geography around the world. a powerful global brand.
Motion for life : €646 from mobility to motion million Michelin is broadening its brand message invested in R&D to express the diversity of its activities more effectively. Launched in 2020 in seven countries, the new international advertising campaign will be rolled out in the Group’s leading markets around the world in 2021, helping to raise the brand’s visibility and nurture its vitality.
16 MICHELIN 2020 ACTIVITY REPORT AN ALL SUSTAINABLE FUTURE
THE PLANET THE SOURCE OF LIFE
Michelin is taking action both upstream and downstream from its operations to fight climate change, conserve natural resources and protect biodiversity. Main objectives for 2050: to make all the production plants, supply chain operations and raw material and component inputs carbon neutral(1) and ensure that Michelin tires are made entirely of sustainable materials. Responsible rubber farming. As the world’s leading buyer of natural rubber, Michelin encourages and practices sustainable rubber tree farming. In one example, it is restoring(2) nearly 90,000 hectares of forest in Indonesia, replanting half of the land with subsistence crops and the other half with rubber trees(3), which will secure around 10% of the Group’s worldwide natural rubber needs. Carbon neutrality: Circular economy. With its 4R strategy(4), targets validated Michelin uses only what it needs. That’s because by the SBTi it is “doing more with less” by designing lighter, In 2020, Michelin’s CO reduction safer tires that deliver higher, longer lasting 2 targets were approved by the Science performance; maintaining, repairing and retreading Based Targets initiative (SBTi)(5). tires; recycling and recovering end-of-life tires; In 2019, the plant in Gravanches, and focusing on renewables with biosourced France was the first Michelin facility or recycled materials. to achieve carbon neutrality. Sustainable mobility. As the world leader in energy-efficient tires, Michelin is helping to Movin’On, improve the performance of battery and hydrogen- the world's leading powered electric vehicles. The Group also offers co-innovation digital services and solutions that improve the ecosystem focused on safety and efficiency of transportation while reducing its environmental footprint. sustainable mobility Michelin created and inspired Valuing our environmental impacts. Movin’On, which is driving the In 2020, as part of its All Sustainable strategy, emergence of new sustainable Michelin launched an initiative to translate its mobility solutions. It has been joined environmental impacts into euros. The initiative by more than 250 organizations is designed to facilitate the representation of and companies since its founding in environmental issues, enhance transparency and 2017 and in June 2020, 5,000 people provide a valuation method for use in assessing the attended its first Digital Meetings. performance of Group units or during acquisitions. These impacts, selected according to the method described in section 4, have been valued at an aggregate €327 million based on 2019 volumes.
(1) In scopes 1 and 2 (production operations and energy use). (2) With Barito Pacific Group.
(3) One hectare of rubber trees captures 250 tonnes of CO2 over 30 years. (4) Reduce, Reuse, Recycle and Renew. (5) SBTi is a joint partnership between the United Nations Global Compact, the World Wide Fund for Nature (WWF), the World Resources Institute (WRI) and CDP. It is dedicated to helping companies set greenhouse gas emissions reduction targets in line with the 2°C pathway that are grounded in science and specific to their business.
MICHELIN 2020 ACTIVITY REPORT 17 OUR GROWTH & VALUE CREATION MODEL
OUR STRENGTHS
PEOPLE
EMPLOYEES Engaged people, strong values An assertive commitment to diversity and talent development
CUSTOMERS Broad, structured market access Intimacy enhanced by digitization
COMMUNITIES Deep local roots An engaged, caring company Our growth & value creation PROFIT A powerful premium brand, model with a vast capital of trust and loyalty 130 years of radical and incremental innovation A global footprint, with diversified customers and markets New high-potential businesses.
PLANet
A vibrant source of innovation and leadership in sustainable mobility World-class expertise in high-tech materials Solutions focused on delivering long-lasting performance The 4R(1) circular economy strategy
18 MICHELIN 2020 ACTIVITY REPORT OUR GROWTH & VALUE CREATION MODEL
OUR AMBITIONS EVERYTHING WILL BE SUSTAINABLE FOR 2030 AT MICHELIN
OFFERING EVERYONE A BETTER WAY PEOPLE FORWARD EMPLOYEES Employee engagement rate: > 85% Workplace health and safety: TCIR(2) < 0.5 Diversity: IMDI(3) 80/100 PROFIT PEOPLE ROCE FOR & SALES Employee & THROUGH CUSTOMERS Relations Partner satisfaction: +10 pts Model End-customer satisfaction: +5 pts Customer satisfaction
Experiences Services & solutions
Customer satisfaction Tires
5 values PROFIT of respect Brand vitality(4):+ 5 pts vs. 2021 High-tech Product offering vitality (5):> 30% materials Customer satisfactionPassion Sales: 5% CAGR between 2023 for innovation and 2030 ROCE(6) > 10.5%
PLANET CARBON planet NEUTRALITY & CIRCULAR CO2 emissions from production plants ECONOMY (operations, energy): -50% vs. 2010 Energy efficiency of our tires in use: + 10% vs. 2020 NB: the size of the triangles is not representative of sales. Environmental footprint of Michelin production plants (i-MEP)(7) -1/3 vs. 2020 (1) Reduce, Repair-retread, Recycle and Renew. Percentage of sustainable materials (2) Total Case Incident Rate: the number of accidents and cases of occupational in our tires: 40% in 2030 illness recorded per 200,000 hours worked. (3) Div ersity index IMDI : Inclusion and Diversities Management Index (Diversity Index). (4) Single score composite indicator which summarises the current vitality of the brand. It is based on 5 key indicators: brand purpose, innovation, communication, brand experience, love. (5) Share of products and services launched over the last three years in annual sales. (6) Return on capital employed. (7) Weighted environmental footprint of Michelin production plants (see components on p.151).
MICHELIN 2020 ACTIVITY REPORT 19 TIRES 01
The technological leader in tires, tracks and conveyor belts, the Michelin Group works closely with manufacturers to bring innovations to every A MULTI-BRAND market. The world's leading brand of premium tires PORTFOLIO for retail and business customers, the Group is also the world’s largest manufacturer of sustainable 4 AREAS tires, connected tires, and radial tires for farm OF GROWTH machinery, civil engineering applications and aircraft, as well as the world leader in off-the-road solutions.
01 OBJECTIVES TIRES (p.20) Offer products that deliver long-lasting performance, and which are increasingly aligned with end-user expectations and conditions of use. Help to drive the development 02 of sustainable mobility. MOBILITY EXPERIENCES (p.24) STRATEGY PROPRIETARY AND FRANCHISED Increase our market share in high value- DEALERSHIP added growth segments where our technologies NETWORKS make a difference. 03 Operate competitive, flexible, right-sized SERVICES production facilities in every geography and & SOLUTIONS (p.26) currency zone. Expand our presence in Asia to meet growing demand. Leverage synergies between online 04 influencers, franchised retail dealerships and HIGH-TECH wholesale dealers to deliver quality service MATERIALS to retail customers and expand the services (p.28) base for business customers, including design, installation, maintenance and audits.
20 MICHELIN 2020 ACTIVITY REPORT BUSINESSES
TARGETED SEGMENTS
TIRES OUR MOST ACTIVE CUSTOMERS over the long term, by enhancing intimacy and leveraging data to improve customer insight and intelligence.
OEM s FITTING MICHELIN BRAND TIRES AUTO as original equipment, which encourages brand MOTIVE loyalty in replacement purchases. FAST GROWING SEGMENTS, with the best products and related services, such as 18'' and larger tires, EV tires, Super Sport tires and specialty tires (quiet, self-repairing).
internal combustion SUVs, the new MICHELIN e.Primacy tire PROGRESS is packed with technologies MADE and offers the lowest rolling IN 2020 resistance in its category, with an estimated gain of 7%. It is also more environmentally friendly and economical in use, the first MICHELIN Pilot Sport CUP2 tire that is carbon neutral when CONNECT: 100% connect-ready purchased. That’s because its
Designed for sporty high- production-related CO2 emissions, performance cars, like the BMW from raw materials extraction to M2 CS – the first in its class customer delivery, are offset by to mount them as original reforestation and other projects led equipment – the MICHELIN by the Livelihoods Carbon Fund. Pilot Sport CUP2 CONNECT tires The Tire Tech Awards 2020: are connectible in every size to Michelin elected manufacturer the MICHELIN Track Connect is now shared by the industry and of the year application, enabling amateurs the European legislator, which will Michelin won the prestigious and pros to optimize their on- make the tests mandatory in 2024. title for the second year in a row, track driving experience. Offered representing a first for the award. Since 1989, Michelin’s original subscription-free to everyone in The 2020 award recognized both equipment tires have won 97 of the Leisure mode, MICHELIN Track the steady improvement in the 119 customer satisfaction awards Connect is also available in Expert performance of the Group’s tires presented over the period. mode for sports car owners and in over their useful lives and the Source: JD Power US 2021 Motorsport mode for rally drivers. Group’s advocacy for the testing A 23rd consecutive victory for MICHELIN e.Primacy: 100% of worn tires. Such tests would Michelin at Le Mans 24 Hours Auto. eco-responsible help to improve road safety and Designed for city cars, sedans protect the planet by attenuating Michelin supplier of Formula and compact electric and planned obsolescence. This view E since the first season.
MICHELIN 2020 ACTIVITY REPORT 21 BUSINESSES
TARGETED SEGMENTS
TIRES PREMIUM OEMs, most of whose customers remain loyal to the MICHELIN brand.
TRUCKING COMPANIES AND FLEET MANAGERS whose demanding standards of efficiency and sustainability are particularly well met ROAD by MICHELIN solutions. TRANSPOR‑ LAST KILOMETER DELIVERY and shared mobility fleets that require energy-efficient, robust tires TATION that offer long-lasting performance.
logged on to discover the new materials used to make spare MICHELIN Agilis 3 light truck tire. or replacement tires. The winner PROGRESS In less than thirty minutes, all of of the Tire Tech 2020 Innovation MADE the 10,000 tires on offer had been Award, Uptis was developed IN 2020 sold. with General Motors and tested on a fleet of Chevrolet Bolt EVs. Uptis, designed for the C.A.S.E. mobility of tomorrow Michelin joins the Coalition Increasingly, urban mobility will for the Energy of the Future New performance benefits be supported by fleet-based Eleven international companies(1) for regional transport services carrying passengers or have joined forces to work on MICHELIN X® MULTI™ regional last-kilometer deliveries in vehicles nine projects, including hydrogen truck tires are known for their that are connected, autonomous, mobility, that will accelerate the versatility, robustness and shared and electric (C.A.S.E.). energy transition in transportation durability. In 2020, the range was The world’s first airless car tire, and logistics. expanded with new sizes and new Uptis is robust, maintenance-free models with higher load capacity and puncture-proof, which means and delivering up to 30% more that it also saves on the raw mileage. Like all Michelin truck tires, they can be regrooved and retreaded twice, a feature that triples their service lives, lowers their cost per kilometer by around 40% and saves 70% of the natural resources used to make a new tire. A 100% digital product launch The Covid-19 crisis has considerably accelerated the push to digitize. In marketing, for example, Michelin teams in China led the way with the Group’s first 100% digital product launch one Saturday evening, when 19,000 people
(1) AWS, Carrefour, CMA CGM, Cluster Maritime Français, Crédit Agricole Corporate and Investment Bank, Engie, Faurecia, Michelin, Schneider Electric, Total and Wärtsilä.
22 MICHELIN 2020 ACTIVITY REPORT BUSINESSES
TARGETED SEGMENTS
TIRES MINING, AGRICULTURAL, CONSTRUCTION AND AIRCRAFT TIRES: operators demanding high productivity, machinery uptime, safety and durability, by providing them with advanced product/service solutions.
TWO-WHEEL TIRES: everyday users and demanding SPECIALTIES enthusiasts and racers, by offering tires seamlessly aligned with their usage patterns to capture the market’s growth and rising value.
PROGRESS MADE IN 2020
ZEN@TERRA, the right pressure at the right Business solutions designed around connected tires. ZEN@TERRA equips MICHELIN Ultraflex tires with a remote inflating system that allows farm machinery tire pressures to be adjusted even while driving, with pressure control in two the materials handling segment Available in 40 sizes, the new clicks from the tractor dashboard. with the acquisition of two range can stop 1.7 meters shorter Configuration is facilitated service and distribution centers on wet surfaces, while still offering by a dedicated app offering in the greater Chicago area, one the long tread life that made its 30 different customizable options. of the largest materials handling predecessor so successful, with The benefits include better soil markets in the United States. nearly 10 million tires sold in protection and therefore improved ten years. A refreshed line-up yields, higher productivity, fuel of motorcycle, scooter Air France has renewed savings and safer operation. and bicycle tires its exclusive contract with Camso broadens its presence In motorcycle tires, the MICHELIN Michelin until 2030. The tires in the United States Power tire line-up has been will be produced in France. Camso, the world leader in off- completely renewed with four Cirrus Aircraft, the world’s leading the-road mobility solutions, families ranging from street-only manufacturer of piston aircraft, with more than 10% of the to 100% track. The line-up has has selected the MICHELIN materials handling, construction, also been reinvented in the road Pilot tire for its entire range. agriculture and recreational bicycle segment, with five premium products market, has opened its ranges designed in response to the Michelin is participating in seventh North American production riding practices of today’s cyclists. the MotoE championship for all- facility, which will manufacture For scooters, Michelin intends to electric motorcycles by supplying agricultural tracks. Camso has consolidate its market leadership tires made from biosourced also strengthened its position in in Europe with the City Grip 2 tire. and recycled materials.
MICHELIN 2020 ACTIVITY REPORT 23 MOBILITY EXPERIENCES 02
4 AREAS OF GROWTH
Michelin offers guides, maps, digital services and exclusive deals that make travel and everyday A powerful journeys easier, more enjoyable and more fulfilling. source of brand 01 awareness TIRES (p.20) 25 million visitors to OBJECTIVES Michelin Experiences websites every month. Offer carefully curated selections and increasingly personalized hospitality and fine 02 dining experiences. MOBILITY Nurture close, trustworthy relationships EXPERIENCES with consumers that strengthen the MICHELIN brand (p.24) and benefit the entire Group. A UNIQUE POSITION STRATEGY 03 Maintain top-of-mind awareness The Group owns the two restaurant SERVICES of the MICHELIN brand among consumers. & SOLUTIONS and wine guides that (p.26) Enhance the brand experience and underpin its set the standard for premium positioning. the rest of the world. Leverage the influence of the MICHELIN brand by digitizing its solutions and forging 04 partnerships with leading platforms. HIGH-TECH Raise the MICHELIN brand’s profile in MATERIALS new markets and its appeal to new consumer (p.28) demographics.
24 MICHELIN 2020 ACTIVITY REPORT BUSINESSES
$ 7. 5 billion MICHELIN is one of the 300 most valuable global brands, and one of the 20 highest valued French brands. Source : Brand Finance 3.4, 2020.
PROGRESS MADE IN 2020
The MICHELIN Guide supports sustainable gastronomy In 2020, for the first time, the MICHELIN Guide showcased chefs demonstrating a commitment to sustainable fine dining. The French edition already honors an initial selection, indicated by a green star, with other countries to follow. The chefs are encouraged to share their sustainable cuisine practices, such as preferring responsibly grown food, sourcing locally and fighting against food waste, on the MICHELIN Guide website. Robert Parker Wine Advocate discovery feature called “Take Me launches its Top 100 Wine Away” that finds hotels nearby Discoveries of the year or farther afield depending on the The RPWA team of critics selected type of experience users would the inaugural Top 100 from among like to have. Search filters include the 30,000 wines reviewed in 2020. the surrounding environment, It revealed the next big icons and activities, hotel style and Every month, trends, focusing on lesser-known atmosphere, so that users find grape varieties, non-traditional just what they are looking for. 460 growing regions and innovative million people visit approaches in vineyards, wineries In February 2021, the print MICHELIN Guide partner and aging. Eight vintages, maps and guides business was TripAdvisor-The Fork. 18 countries and 76 regions were consolidated into Michelin covered, in a compelling invitation Editions, a new joint venture to explore new territories and between Michelin (40%) learn about the passionate and Media-Participations work of the winemakers. (60%), France’s fourth largest publishing company that Tablet Hotels enhances already handled distribution and and personalizes its selection circulation for the products. Tablet, the boutique and luxury hotel curation specialist, has Michelin has acquired added 2,000 properties to its Le Fooding, a print and online platform, selected from among restaurant guide that takes the hotels listed in the MICHELIN a playful, quirky approach to Guide. It has also launched a new fine dining and hospitality.
MICHELIN 2020 ACTIVITY REPORT 25 SERVICES & SOLUTIONS 03
As the market leader in connected tires and a major A fast-growing 4 AREAS OF GROWTH partner in digital fleet management, the Michelin market Group offers its corporate customers services and up 15% per solutions that improve their performance, simplify year in the case of their maintenance, increase asset uptime, enhance telematics in Europe. their safety performance, reduce their costs Source: Berg Insight and attenuate their environmental impact. 01 36% more TIRES commercial vehicles in (p.20) city-centers by 2025 OBJECTIVES Source : Michelin
Broaden and deepen our portfolio of offers 02 that improve fleet efficiency and sustainability. Support their transition to zero-emission MOBILITY A MAJOR EXPERIENCES operations. PROVIDER (p.24)
STRATEGY The world’s fifth Tire as a service: increase pay-per-use largest operator: tire sales and develop tire-related services. 1.2 million vehicles 03 under contract Fleet management: develop services SERVICES in 30 countries, for truck, van and car fleets supported by mobile & SOLUTIONS an RFID(2) chip (p.26) data capture and analytics. embedded in every Digital service platform: MICHELIN-brand develop a service ecosystem that facilitates business truck tire since 2019. contacts between fleet customers and maintenance, 04 repair and overhaul service providers. HIGH-TECH MATERIALS Data and IOT (1): leverage our collected mobility (p.28) data in new segments, like insurance, and our expertise in connected mobility for new objects, like containers.
(1) Radio-frequency identification. (2) Internet of Things.
26 MICHELIN 2020 ACTIVITY REPORT BUSINESSES
PROGRESS MADE IN 2020
Fleet Diag 24 automates truck tire inspections Michelin and Total subsidiary AS 24, Europe’s largest chain of dedicated truck service stations, have joined forces to launch the innovative Fleet Diag 24 service. Each time a truck stops at an AS 24 station equipped with MICHELIN QuickScan technology, the wear and pressure of its tires are automatically measured. Drivers are alerted by text message in the event of an issue that needs an urgent response, while fleets. Driving data are collected managers receive diagnostic reports from vehicles equipped with a for the entire fleet, enabling connected box, processed and then them to optimize maintenance. returned to the driver and the fleet manager. This helps to raise Masternaut teams up awareness of the impact of driving with Ford in fleet management behavior on the claims rate, as well As a specialist in fleet as identify risky driving practices management telematics solutions, and provide fleet owners with Masternaut translates vehicle data the resources needed to inform – safety, on-time performance, and train drivers. The first company environmental impact, costs, to work with the alliance was compliance, etc. – into insights Euromaster France. and pathways to improvement. In 2020, Ford selected Masternaut BNP Paribas Cardif, CGI and to process data transmitted in Colas join the Better Driving real-time from its models fitted Community, which was initiated with FordPass Connect modems. and is being led by Michelin DDI Fleet managers operating Ford The Better Driving Community uses vehicles with these modems will driving data to support smarter, 1.2m be able to access Masternaut’s vehicles under safer road mobility. Applications services and management solutions contract through include driver training, predictive the world in 20 European countries. maintenance, road infrastructure Source Site Internet diagnostics and improvements Masternaut CP 30/9/2020 in automotive equipment.
Michelin and HDI innovate for road safety Michelin DDI (Driving Data to Intelligence) and corporate risk insurance company HDI Global SE have formed a partnership to prevent road risks for corporate
MICHELIN 2020 ACTIVITY REPORT 27 HIGH-TECH MATERIALS 04
Michelin has extraordinary expertise in the design Future-facing and production of high-tech materials. Already a markets core factor in the performance of the Group’s tires, • Sustainable these capabilities are being enhanced by R&D flexible composites 4 AREAS • Medical applications OF GROWTH programs, incubators and targeted acquisitions. They are also being marketed to customers in other • Metal 3D printing industries through specialized subsidiaries and • Hydrogen-powered joint ventures. mobility
01 SUSTAINABLE TIRES OBJECTIVES FLEXIBLE COMPOSITES (p.20) Improve the performance and sustainability Lehigh Technologies, of our products with new technologies, biosourced Butterfly, Enviro, and recycled materials, and zero-emission solutions. Pyrowave, Carbios Build positions in profitable new, high-potential Resicare, Fenner, 02 growth markets. Fabricote, AraNea MOBILITY Composite EXPERIENCES (p.24) STRATEGY MEDICAL APPLICATIONS Sustainable flexible composites: develop, from the upstream to the downstream, technologies, materials and semi-finished and finished Solesis, CharterMedical, 03 products delivering long-lasting high performance. Secant Group, SERVICES These include biosourced and recycled raw materials Sanavitamedical & SOLUTIONS for tires and rubber products, adhesives and custom (p.26) 3D PRINTING polymers, and high-performance polymer products for targeted technical segments. AddUp Medical applications: develop the range of bioresorbable and non-bioresorbable HYDROGEN MOBILITY 04 products, particularly for use in regenerative medicine HIGH-TECH and cell therapy. MATERIALS Symbio (p.28) Metal 3D printing: make the AddUp joint venture with Fives a world leader in metal 3D printing. Hydrogen mobility: make the Symbio joint venture with Faurecia a world leader in hydrogen mobility systems.
28 MICHELIN 2020 ACTIVITY REPORT BUSINESSES
PROGRESS MADE IN 2020
SUSTAINABLE FLEXIBLE COMPOSITES Two new partnerships in sustainable raw materials To ensure that its tires are Fenner innovates manufactured exclusively from for roller conveyors sustainable materials by 2050, Fenner Drives designs, Michelin is helping to develop manufactures and distributes innovative technologies, such as an unrivaled portfolio of biosourced butadiene (Bio-Butterfly), reinforced or deformable polymer micronized powders from recycled products for power transmission, Products successfully tires (Lehigh Technologies) and motion transfer and automated nurtured by the bio-recycled plastics (Carbios). conveying applications. Its Michelin incubation In 2020, the Group joined new Eagle Poly-V line of roller program forces(3) with Swedish start- conveyor belts is made from a up Enviro to process engineer combination of high-performance AraNea Composite, a a new pyrolysis technology polyurethane and an elastic lightweight, attractive fiber that enables high-quality raw reinforcement. Compared with that reinforces the mechanical materials to be recovered from their conventional alternatives, properties of concrete while end-of-life tires. Michelin has the Eagle Poly-V belts offer less reducing its carbon footprint(1). also formed a partnership downtime, added efficiency, a ResiCare, a high-performance with Canada's Pyrowave longer belt life and cost savings. adhesive resin for industrial to shorten time-to-market for applications that contains no formaldehyde, isocyanate a technology that produces (4) or resorcinol. styrene from waste plastic. Moving up in aerospace applications with Fabri Cote, a specialty manufacturer of custom rubber-coated fabrics, primarily BlackCycle for aerospace applications, has is a major European public-private been acquired by Fenner Precision partnership, with the support of Polymers. A provider of polymeric, the European Union(2), coordinated metal, and textile-based industrial by Michelin and dedicated to making new tires from resources solutions, Fenner Precision recovered from end-of-life tires. Polymers is actively building a complete coated fabric and technical textile portfolio targeted at numerous end-use markets.
(1) The partnership involved the acquisition of a 20% shareholding. (2) This European project funded by Horizon 2020, project number: 820687. (3) Styrene is used in particular in the production of synthetic rubber for tires. (4) Initially developed for NASA's lunar rover tires, then adapted to the Michelin Uptis airless tire.
MICHELIN 2020 ACTIVITY REPORT 29 BUSINESSES
PROGRESS MADE IN 2020
HYDROGEN MOBILITY Symbio, the zero-emission equipment manufacturer Owned equally by Michelin and Faurecia since November 2019, Symbio is dedicated to designing, Green hydrogen: manufacturing and marketing a priority for EU member states hydrogen fuel cell systems for all to revive their economies types of light and heavy electric after Covid-19. vehicles. Together, Michelin’s technological capabilities and Faurecia's systems integration expertise should help to speed METAL 3D PRINTING the deployment of this zero- AddUp expands its portfolio emission solution(1), which is Metal additive manufacturing highly compatible with makes it possible to produce battery-powered systems. complex parts, using a highly To support their commitment flexible process and a minimum to building global leadership amount of material and energy. in hydrogen mobility, Michelin Michelin originally developed and Faurecia have initially this capability to manufacture invested €140 million to drive €13 molds for high-performance faster development of next- tires requiring very specific tread billion generation fuel cells and launch patterns. It is now being marketed the projected value mass production. In France, through AddUp, a joint venture of the worldwide a new plant is expected to metal 3D printing created in 2016 with industrial come on stream in Saint-Fons market in 2030 engineering group Fives. (in the Rhône region) by 2023. AddUp serves a wide range of Symbio’s 2030 objective: produce markets in the energy, automotive, 200,000 hydrogen systems a year. aeronautics, luxury goods, machine tools and medical device industries. Its new compact FormUp 200 machine could also appeal to research centers. Suitable for small and medium- size parts, it also stands out for its modularity, with three different spreading devices (roller, scraper or brushes) enabling it to adapt to all metal powder sizes, from the finest to the largest.
(1) A hydrogen fuel cell generates electricity from the chemical reaction between hydrogen (supplied from an onboard tank) and oxygen (from the air). The only by-product is water. Fuel cells can act as a primary or supplementary power source for all types of electric powertrains. Refueling time and range are comparable to those of an internal combustion vehicle.
30 MICHELIN 2020 ACTIVITY REPORT CUSTOMER CENTRICITY INNOVATION Put Customer experience ACCELERATION at the heart of any decision, Broaden the scope in line with the MICHELIN of application for our brand promise. innovations and leverage open ecosystems to I AM MICHELIN accelerate the innovation Make each employee a cycle. player in the development of the company. A DATA-DRIVEN COMPANY AGILE MICHELIN Capitalize on the wealth Foster operational excellence of our data to optimize by being more agile our operations and enrich and more competitive. our offers.
ALL IN ACTION PATHWAYS FOR THE ENVIRONMENT 6 Fulfill our vision of being TO SUCCESS carbon neutral and making our tires entirely from sustainable To successfully lead its strategy materials by 2050. and meet its ambitions, the Michelin Group is activating six drivers. Protect biodiversity.
MICHELIN 2020 ACTIVITY REPORT 31 GOVERNANCE
SOLID, BALANCED GOVERNANCE
Michelin’s governance is a solid, stable process focused on the long-term responsibility of its executives, with a clear separation of management and supervisory powers.
THE MICHELIN The Supervisory Board PARTNERSHIP exercises permanent oversight LIMITED BY SHARES of Michelin's management and assesses its quality every year on behalf of the shareholders. Throughout its history, Compagnie It issues opinions on the Group’s Générale des Établissements strategy, capital expenditure, acquisitions and disposals, as Michelin (CGEM), the Group's well as the election or dismissal parent company, has been of Managing Partners and their organized as a partnership limited compensation. Its members by shares (SCA). This form of are elected by shareholders corporate organization ensures at the Annual Meeting for that the deployment of a long- renewable four-year terms. term strategy is fully aligned with shareholder interests. It also fosters Société Auxiliaire direct ties with each shareholder, de Gestion (SAGES), as all shares must be registered. It is committed to driving continuous As a general partner, SAGES improvement in the Group’s participates, with the Supervisory 80% Board, in the Manager succession share of the profits governance and practices, in the and compensation process. received by SAGES set best interests of the company aside to guarantee the However, it is not involved in and its shareholders(1). unlimited liability of management except in the the General Partners. event the position of Manager the Managers falls vacant, and then only for The company is administered a period of up to one year. It is and managed by the Managers, entitled to a share of the income who are elected by shareholders distributed among the General at the Annual Meeting for Partners in accordance with the renewable four-year terms. provisions of the Bylaws. At As a General Partner, the least 80% of this share is set Managing Chairman has aside to underwrite the unlimited unlimited personal liability liability that SAGES shares with for Michelin's debts. the Managing General Partner.
(1) On December 7, 2020, Michelin met with investors to offer an in-depth look at its corporate governance. The presentation and a transcript of the comments and the question-and-answer session, may be found on the Michelin.com website.
32 MICHELIN 2020 ACTIVITY REPORT GOVERNANCE
SOLID, BALANCED GOVERNANCE
THE MANAGING From left to right: Jean-Claude Pats, Executive Vice President, CHAIRMAN Personnel / Éric Philippe Vinesse, Executive Vice President, AND THE Research & Development / Bénédicte de Bonnechose, Executive Vice President, Urban and Long-Distance Transportation and EXECUTIVE European Regions / Lorraine Frega, Executive Vice President, COMMITTEE Distribution, Services & Solutions, Strategy, Innovation & Partnerships / at January 1, 2021 Florent Menegaux Managing Chairman / Sonia Artinian-Fredou Executive Vice President, High Tech Materials, H2 Mobility and the Symbio The Managers are assisted and AddUp joint ventures / Yves Chapot, General Manager by a nine-member and Chief Financial Officer / Scott Clark, Executive Vice President, Executive Committee. Automotive, Motorsports, Experiences and Americas Regions / Serge Lafon, Executive Vice President, Specialties and Africa/India/Middle East, China, East Asia & Australia Regions / Adeline Challon-Kemoun, Executive Vice President, Engagement and Brands / Jean-Christophe Guérin, Executive Vice President, Manufacturing.
MICHELIN 2020 ACTIVITY REPORT 33 GOVERNANCE
A CUSTOMER-CENTRIC ORGANIZATION
Focused on identifying and meeting customer needs, the organization introduced in 2018 is supported by an employee empowerment process embraced at every level and in every aspect of the business.
19 10 6 1 Global Business Lines Regions are responsible Operating Units Lean Corporate design solutions to meet for managing customer provide their expertise Unit comprising the expectations of relationships and and support. departments focused customers with similar increasing sales. on their strategic characteristics. missions.
THE GROUP MANAGEMENT Constructive COMMITTEE stakeholder dialogue A core component of good which meets with the The Group Management governance, stakeholder Executive Committee Committee brings together dialogue improves for a full day at least members of the Group Executive our understanding of once a year to discuss Committee and the following stakeholder expectations the Group’s sustainable units: Purchasing, Audit, Internal and how they are development strategy. Control and Risk Management, changing, thereby Among the advances providing a more reliable Corporate & Business Services in 2020 was the creation basis for decisions. (CBS), Finance, Legal Affairs, of a global social Michelin actively Quality, Supply Chain, Digital dialogue council with encourages and practices the IndustriALL Global Transformation & Information such dialogue locally, Union(1). Inspired by Systems, and the China and nationally and globally. the European Works North America Regions. At the corporate Council, it will enhance It cross-functionally manages executive level, a Michelin’s ability to transformation, competitiveness Stakeholders Committee support change, improve has been in place since working conditions and and diversity programs and the 2016. It brings together uphold employee rights. integration of acquisitions. It 12 people representative also manages the development of the Group's leading of the CBS unit and the internal stakeholders, including control, quality and risk suppliers, investors, unions, management processes. As well, customers and NGOs. Four it supports the development of continents are represented senior high potential employees. on the Committee,
(1) The IndustriALL Global Union represents more than 50 million employees in 140 countries.
34 MICHELIN 2020 ACTIVITY REPORT GOVERNANCE
THE SUPERVISORY BOARD
The Supervisory Board has 11 members, including seven independent members, two employee representatives, five women and two non-French people. It met 9 times in 2020 with an attendance rate of 100%.
Left to right and top to bottom
Michel Rollier, Patrick Chairman, non- de La Chevardière, independent member Chairman of the Audit Committee, Anne-Sophie independent member de la Bigne, Member of the Thierry Le Hénaff, Compensation and Senior Independent Appointments Committee Member of the and the Corporate Social Audit Committee Responsibility Committee, Jean-Christophe 11 members independent member of which Laourde, Barbara Dalibard, Member representing % Member of the Audit employees Committee, non- 1 45 Monique F. Leroux, * independent member Senior Independent are women Chair of the Corporate Member Jean-Pierre Duprieu, Social Responsibility % Chair of the Committee, member of % 22 Compensation the Audit Committee, 78 are not French* and Appointments independent member of members Committee, * Delphine Roussy, are independent independent member Member representing Aruna Jayanthi, employees Member of the Jean-Michel Severino(1), Compensation Member of the and Appointments Corporate Social Committee, Responsibility Committee, independent member independent member (1) November 12, 2002 cooptation subject to ratification by the Ordinary General Meeting on May 21, 2021. * Excluding the employee representatives.
MICHELIN 2020 ACTIVITY REPORT 35 GOVERNANCE
CONTINUOUS IMPROVEMENTS IN GOVERNANCE
In 2020, the Supervisory The Supervisory Board Board set up a Corporate Social actively prepared the succession Responsibility Committee of Michel Rollier, its Chairman (CSRC), tasked with assessing the since 2013, when his term ends CSR policies and performance that after the Annual Shareholders inform Michelin’s All-Sustainable Meeting on May 21, 2021. Based on strategic vision. Other Board the findings of an in-depth review committees include the Audit of potential in-house and outside Committee and the Compensation candidates, the recommendation and Appointments Committee. of the Compensation and All three Committees are chaired Appointments Committee and the by independent members. succession plan, the Supervisory Board unanimously elected Barbara During the year, in compliance Dalibard on December 7, 2020. with the PACTE Act and the amendments to the bylaws of Compagnie Générale des Établissements Michelin approved by shareholders at the Annual Meeting on June 23, 2020, the Barbara Supervisory Board welcomed Dalibard two new members representing employees, who replaced the one representative previously elected.
A member of the Supervisory Board since 2008, Barbara Dalibard, 62, served as the independent Chair of the Compensation and Appointments Committee from 2015 to 2020, as Senior Independent Member from 2017 to 2020 and as an external member of the Group Innovation Council from 2013 to 2020. Since 2016, she has also been Chief Executive Officer of Société Internationale de Télécommunication Aéronautique (SITA), the world's leading specialist in air transport communications and information technology.
36 MICHELIN 2020 ACTIVITY REPORT GOVERNANCE
ETHICS, INTEGRITY AND COMPLIANCE: SHARED RULES AND PRACTICES GOVERNING Michelin has pledged to uphold the United Nations Global Compact and ensures that its employees act in accordance with the standards of integrity and ethical behavior that form the bedrock of its corporate culture.
These values and standards have been assembled into a robust collection of easily accessible, widely promoted reference documents. The Code of Ethics and the Anti-Corruption Code of Conduct were updated in 2020. Ethics Committees have been Michelin advocates set up in each of the regions and for issues in the public interest in certain countries. A database Around the world, emissions in transport by allows everyone to access best Michelin is committed to 2050 and a level playing practices. Compliance with the improving tire standards field in international rules of conduct is regularly and regulations to make competition. Michelin audited and whistle-blowing tires safer, facilitate their lobbies responsibly and procedures are in place to enable recycling and combat their complies with the highest employees to anonymously and planned obsolescence. standards of transparency securely report possible violations. More broadly, the Group applicable to relations advocates for hydrogen between companies and mobility, zero net public authorities. Respecting people and the environment
Every aspect of the Group’s strategic vision is informed by All of the plants have deployed As one of the world’s leading the All Sustainable approach. an environment, health and safety users of natural rubber, Michelin The Sustainable Development (EHS) management system. pursues a sustainable sourcing and Mobility Department is part 94% of them, accounting for strategy, defined with the support of the Corporate Engagement 98% of total tire output, have of the WWF and built on the and Brands Department. been certified to ISO 14001 principles of zero deforestation, Michelin guidelines are derived (environmental management) the preservation of threatened from the ISO 26000 (Social standards. The Environment and lands and ecosystems, and Responsibility) and ISO 20400 Prevention Management System respect for supplier communities. (Sustainable Procurement) is also based on ISO 50001 More broadly, the Group has standards. Supplier performance (energy management systems) defined a Biodiversity Roadmap is assessed by EcoVadis, an and OHSAS 18001 (occupational for the 2020-2030 period independent company. health and safety) specifications. with measurable targets.
MICHELIN 2020 ACTIVITY REPORT 37 GOVERNANCE
A ROBUST RISK MANAGEMENT SYSTEM Michelin has deployed an enterprise risk management (ERM) system that complies with the reference framework of the French securities regulator (AMF) and the international professional standards of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
A single corporate department An efficient crisis management Global insurance programs overseeing Internal Audit, system. Led by the Internal Audit, covering every majority- Risk Management and Internal Risk Management, Internal Control owned Group subsidiary have Control activities. and Quality Department, the crisis been arranged for the most While facilitating a shared management system is deployed significant risks, including vision of the primary risks and among the executive teams through property & casualty/business challenges, this organization full-scale simulation exercises and interruption, liability, accidental also encourages cooperation training seminars. The Computer pollution and cyber risks. among teams across the entire Emergency Response Team (CERT) Group over every time horizon. tracks cyber intrusions and stands ready to respond quickly at all times across all continents.
THE ELEVEN HIGHEST-IMPACT RISK FACTORS SPECIFIC TO THE MICHELIN GROUP
NET IMPACT
1- Environmental policy misaligned with High stakeholder expectations 2- Cyber-attack
3- Business 4- Mergers, acquisitions non continuity and alliances Medium 5- Supply rupture 8- Image and brands 7- Major projects
9- Pension and other defined benefit plans 6- Property security
Low 10- Loss of knowledge 11- Product safety and know-how
Days Weeks Months Years
IMPACT TIMELINE ON THE GROUP’S VALUE
38 MICHELIN 2020 ACTIVITY REPORT A ROBUST RISK MANAGEMENT SYSTEM
For more information about risks and how they are managed: See section 2 Risk Management and section 4 Non-Financial Performance, below
MICHELIN 2020 ACTIVITY REPORT 39 PERFORMANCE
FINANCIAL €1,2 bn PERFORMANCE invested in 2020 In € millions and %.
3,009 12.5% 1,730 24,135 2,775 1,660 22,028 12.6% 20,469
1,878 9.2%
625
2018 2019 2020 2018 2019 2020 2018 2019 2020
Sales Operating Net income income(1)
14 2,010 13.7 39
1,615 31
28 8.6 1,274
2018 2019 2020 2018 2019 2020 2018 2019 2020
Return on capital Net debt Structural employed (ROCE)(2) As a % of equity free cash flow
CREDIT RATINGS
Standard & Poor’s Fitch
Short term A-2 F2 Long term A- A
Outlook Stable Stable
(1) Segment. (2) The "2016-2020 plan" ROCE is calculated after tax and excluding goodwill, acquired intangible assets and equity-accounted companies. As from 2021, goodwill, acquired intangible assets and investments in equity-accounted companies will be added back to economic assets; amortization of acquired intangible assets and the Group’s share of profit from equity-accounted companies will be added back to after- tax earnings calculation (see section 3.6 of the 2020 Annual Results Guide, available on the Group’s website www.michelin.com). The Group will use this new indicator as from 2021 to measure the return on capital employed.
40 MICHELIN 2020 ACTIVITY REPORT PERFORMANCE
NON-FINANCIAL PERFORMANCE
828 84% Customer satisfaction 76% of targeted customer groups delivering NPSs in line 715 with the Group's objective 84%
654 83% 28.2% 78% of employees women in management 2018 2019 2020 engaged and supervisory roles
Assessed suppliers 74% 13,180 % confirmed as compliant of managers paid working days with Michelin standards promoted from dedicated to local within communities
1.9
% 1.4 28 1.2 renewable
or recycled 2018 2019 2020 materials used in making a tire Workplace safety Total Case Incident Rate(1)
Michelin Environmental Footprint(2)
100 NON-FINANCIAL 2005 48.9 RATINGS 2020 CDP 2020 leadership 57 52.7 2016 49.3 48.8 ECOVADIS 2019 GOLD 2017 2018 2019 ISS-OEKOM 2020 PRIME MSCI 2020 AA VIGEO EIRIS 2020 A1+ SUSTAINALYTICS LOW RISK 2020 (risk rating)
(1) Number of accidents and cases of occupational illness recorded per 200,000 hours worked.
(2) Weighted indicator measuring water withdrawals, energy use, CO2 and VOC emissions, the amount of waste produced and amount of waste landfilled, all per tonne of tires produced.
MICHELIN 2020 ACTIVITY REPORT 41 PERFORMANCE
AMBITIONS 2020 OUTCOMES Defined and deployed in 2013, our six Ambitions for 2020 were designed to make Michelin one of the world's most innovative, responsible and top-performing companies in fulfilling its financial, environmental and social responsibility commitments.
2020 Objectives 2020 2019 2018 2017 2013
1. customers: Continuously improve customer satisfaction
70% dof targeted customers reach 76% 67.4% 67.7%(2) 72% the intended NPS1(1).
2. Move forward together in personal well-being and development
Health & Safety: TCIR(3) < 2 1.2 1.4 1.49 2.1 85% of employees engaged(4) 83 % 81% 80% 80% 72% 75% of managers promoted from within 74% 74% 76% 76% 30% women in management 28.2% 27.4% 26.9% 25.7% and supervisory roles(5) 80% of top managers in the growth 79% 75% 75% 74% regions were born there
3. Deliver a robust financial performance(6)
€1,400M in structural free cash €2,010 M €1,615M €1,274M €1,509M €1,154M flow(6) per year >15% ROCE(7) 8.6 % 13.7% 14.0% 11.9% 11.9%
(1) Net Promoter Score: the net difference between a brand’s promoters and detractors. (2) Broader scope and more demanding criteria. (3) Total Case Incident Rate: the number of accidents and cases of occupational illness recorded per 200,000 hours worked. (4) Employee engagement rate as measured by the annual "Moving Forward Together: Your Voice for Action" survey. (5) Level of individual responsibility of A to N, according to the Hay method used by the Group. (6) Cash flows from operating activities less cash flows used in investing activities, adjusted for the impact of raw materials and end-of-year inventory on working capital requirement and for non-recurring items. (7) Return on capital employed.
42 MICHELIN 2020 ACTIVITY REPORT PERFORMANCE
2020 Objectives 2020 2019 2018 2017 2013
4. Innovate to widen our lead in product and service performance Improve the overall performance of +11.6% +9.9% +9.7% +7.6% nd our products by at least 10% compared with 2010, while using less raw material in their production Save 3 billion liters of fuel over the 2.7Bn liters 2.9Bn liters 3.3Bn liters nd nd lifespan of our tires, representing eight Mt 7.3Mt 8.4Mt nd (8) 6.9 million tonnes of CO2 avoided Use 30% renewable or recycled 28% 26% 29% 29% materials in making our tires
5. Set the industry standard for responsible manufacturing Reduce the environmental impact(9) -51.1% -51.2% -50.7% -47.3% of our sites by 50%, notably by -28.9% -31.5% -30.7% -30.4% improving our energy efficiency(10) by 38% in relation to 2005
% Reduce CO2 emissions across the supply -10.3 -10.3% -9.6% -7.6% chain by 10% compared with 2010(11) Ensure that 70% of the 400 leading 828 715 654 547 suppliers assessed by EcoVadis 84% 84% 78% 77% are confirmed as compliant with Michelin standards
6. Contribute to the development of our host communities and support sustainable mobility 100% of Michelin sites are deploying 110(13) 110 110 110 a community involvement program, in line with the guidelines Dedicate 30,000 working days 13,180 32,850 34,800 33,800 per year to local communities Create 2,000 local jobs per year with 1,245(14) 1,702 1,822 1,918 the support of Michelin Development
Reinforce our advocacy In 2020, due to sanitary restrictions, the Group digitized its global of road safety, with a strong focus on actions on safe mobility (simulation game of driving, online awareness driver education in emerging countries(15) campaigns, etc.), which have already concerned more than 16 million people.
(8) Measured by the improvement in the rolling resistance of car, van and truck tires sold in the year in question.
(9) Measured by the Michelin Environmental Footprint, which tracks, on a weighted basis, water withdrawals, energy use, CO2 and VOC emissions, the amount of waste produced and amount of waste landfilled, all per tonne of tires produced. (10) Energy consumption per tonne of tires produced.
(11) CO2 emissions per tonne of tires sold outside the Group: After this target was met in 2019, a new objective was set for 2030. See section 4.1.4.3 i) Sustainable supply chain operations. (12) In the overland supply chain operations. (13) Number of plants and offices that have moved their programs into compliance with the guidelines. (14) Due to the enforcement of health restrictions, social engagement and outreach were largely redirected towards financial support and donations of products and services. (15) Number of people directly reached by the worldwide partnerships and local programs deployed by Michelin through its employees and its Foundation.
MICHELIN 2020 ACTIVITY REPORT 43 PERFORMANCE
MICHELIN INVESTOR RELATIONS By investing in Michelin, our shareholders not only become part of an extraordinary human, technological and industrial saga that has been improving mobility for more than 130 years, they are also contributing to the well-being of humanity.
They are also supporting a project Michelin has more than The Group is committed to giving whose success is being driven by 210,000 shareholders, including employees a personal stake in its an extraordinary capacity for nearly 137,000 private investors, performance, with seven worldwide innovation, widely recognized 69,000 employees through the employee share issues carried out technological leadership, engaged employee share ownership plan since 2002 and the latest in 2020. employees, a world-renowned and more than 3,900 institutional brand, and global expansion in investors. All of them hold From 2021,Michelin is committed buoyant, diversified end-markets their shares in registered form, to paying out at least 50% around the world. And lastly, they which supports effective, high- of consolidated net income before are sharing the All-Sustainable quality shareholder dialogue. non-recurring items. A shareholder vision in a commitment to creating Through its recommendations, who invested €1,000 in a share more value for everyone. the Shareholder Consultative of Michelin stock in 2011 and Committee has been steadily reinvested all of his or her dividends enhancing communication with would have an investment worth private shareholders since 2003. €3,081 as of end-2020.
61.8
2 7.1 57.1 29.3 OWNERSHIP STRUCTURE AND VOTING RIGHTS (in %) at December 31, 2020 Shares held in the same name for at least 11.4 four years carry double voting rights. 2.0 2.3 9.1
Number Voting rights of shares outstanding 178,340,086 243,584,598 Share capital Voting rights structure French institutional investors Non-resident institutional investors Individual shareholders Employee shareholder plan
44 MICHELIN 2020 ACTIVITY REPORT PERFORMANCE
THE MICHELIN SHARE
Traded on Market Stock index the Euronext Paris capitalization weighting stock exchange €18.7 billion CAC 40: 1.48% at December 31, 2020 of the index at December 31, 2020 Compartiment A Average daily Euronext 100: 0.59% Eligible for the SRD deferred trading volume of the index at December 31, 2020 settlement system 548,883 ISIN : FR 0000121261 shares in 2020 SRI indices Ethibel Excellence Europe and Global, Par value: €2 Euronext Vigeo Eiris France 20, Europe 120, Eurozone 120, World 120, FTSE4Good Traded in units of: 1
200 €87.90 €104.95 Dec. 31, 2015 Dec. 31, 2020 SHARE 150 PERFORMANCE Michelin share 100 December 2015 – December 2020. 50
0 Dec. June Dec. June Dec. June Dec. June Dec. June Dec. 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020
SHARE PRICE (in €) 2020 2019 2018 2017 2016 High 112.80 119.50 130.85 128.40 106.80 SHARE INFORMATION Low 68.00 83.74 82.68 98.93 77.40 Closing price, 104.95 109.10 86.70 119.55 105.70 end of period Change over the period -3.80% 25.84% -27.48% +13.10% +20.25% Change in the -7.14% 26.37% -10.95% +9.26% +4.86% CAC 40 index
(in € per share, except ratios) 2020 2019 2018 2017 2016 Net assets per share 70.8 74.1 67.8 62.7 59.1 PER SHARE Basic earnings per share 3.52 9.69 9.30 9.39 9.21 DATA Diluted earnings 3.51 9.66 9.25 9.34 9.03 per share(1) Price-earnings ratio 29.8 11.3 9.4 12.7 11.5 Dividend for the year* €2.30 2.00 3.70 3.55 3.25 Payout ratio 47% 19.5% 36.4% 36.0% 36.5% Yield(2) 2.2% 1.8% 4.3% 3.0% 3.1%
* Subject to approval by the Annual Meeting of May 21, 2021. (1) Earnings per share adjusted for any impact on net income and average shares outstanding of the exercise of any dilutive instruments. (2) Dividend/share price at December 31.
MICHELIN 2020 ACTIVITY REPORT 45 OUTLOOK
OVER THE LONGER TERM…
In 2021, continues to unfold, rates and structural free cash For 2023, and barring any new Michelin expects Passenger car and flow(2) of around €1 billion. systemic crisis, Michelin is aiming Light truck tire markets to expand Based on the trends observed to to report sales of €24.5 billion, by 6% to 10% over the year, Truck date, business may return to 2019 segment operating income tire markets by between 4% and levels in the second half of 2022(3). of €3.3 billion at constant 8%, and the Specialty markets exchange rates, a €1.5bn average On April 8, 2021, the Group held by 8% to 12%. In this market structural free cash flow per a Capital Market Day event to scenario, and barring any new year over 2021-2023, a return present its 2030 roadmap and systemic impact from Covid-19(1), on capital employed of at least its 2023 objectives. The major the Group’s objectives are to 10.5% and a payout of 50% objectives for 2030 are described in deliver full-year segment operating of consolidated net income the business model on page 18-19. income in excess of €2.5 billion at before non-recurring items(4). constant exchange
1. Be a partner to the world leader in sustainable mobility, i.e., mobility that is safer, more efficient, more accessible and more environmentally friendly. 2. Help to fund the growth of a Group whose driving force is innovation for the benefit of everyone. 3. Join in the history of MICHELIN, a world-renowned brand with 6 an extraordinary capital of trust and affinity. 4. Embrace Michelin’s reasons TO INVEST All-Sustainable corporate vision. IN MICHELIN 5. Be a part of a company whose governance system is sustainably robust, engaged and responsible. 6. Share in the fair balanced value created by combining financial, employee, environmental and social responsibility performance.
(1) Serious supply chain disruptions or restrictions on freedom of movement that would result in a significant drop in the tire markets. (2) Free cash flow before acquisitions, adjusted for the impact of changes in raw materials costs on trade payables, trade receivables and inventories. (3) See chap 3.7.1, Outlook of the Annual Report available on the corporate website www.michelin.com. (4) Cf. detail of the 2023 scenario in the presentation of the capital markets day of April 8, 2021 available on www.michelin.com.
46 MICHELIN 2020 ACTIVITY REPORT This document was printed in France by an Imprim’Vert -certifi ed printing company on PEFC certifi ed paper from controlled and sustainably managed resources.
Design and production: Editorial advice and copywriting: Michelin, Information et Conseil. Photos: Andrius Aleksandravicius/EyeEm; Aydinmutlu/iStock; C. Berger; Sandi Bertoncelj; Jérôme Cambier; Éric Carrière; Richard Clark/iStock; Dkart/iStock; Arthur De Tassigny; Vanina de Turckheim/Studio Raymond Velin; freemixer/iStock; Geneviève Giguère; Gibson Pictures/iStock; Omar Jabri/EyeEm; Kittisun Kittayacharoenpong; Kzenon; Françoise Lanoe; Frédéric Le Floc’h/DPPI; Paulo MARIA/DPPI; Rafal Matomisz; Bruno Mazodier; Daniel Milchev; ndpictures.de(Westend61); photothèque Michelin; Vlad Simitch/REA; shapecharge. Any printed copy of this document is not managed. EN ATTENTE TAILLE FINALE TRANCHE
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SUSTAINABLE DEVELOPMENT AND MOBILITY NICOLAS BEAUMONT + 33 (0)4 73 32 20 00 23, place des Carmes-Déchaux – 63000 Clermont-Ferrand – France
COMMUNICATION AND BRANDS DEPARTMENT MEDIA RELATIONS: PAUL-ALEXIS ROUQUET + 33 (0) 1 45 66 22 22 27, cours de l’Île Seguin – 92100 Boulogne-Billancourt – France 2020 UNIVERSAL REGISTRATION DOCUMENT 2020 UNIVERSAL REGISTRATION