2010 Annual and Sustainable Development Report Michelin Performance and Responsibility

2010 ANNUAL AND SUSTAINABLE DEVELOPMENT REPORT MICHELIN PERFORMANCE AND RESPONSIBILITY A NEW PHASE OF DYNAMIC GROWTH Contents_ — 1 — 5 Corporate profi le and Natural resources governance and the environment Reducing the environmental footprint, at every stage Corporate profi le, performance and management. in tire lifecycle. Focus: A new phase of dynamic growth Focus: Innovating better and faster P. 01_17 P. 8 0 _ 9 5 — 2 — 6 Challenges Financial, social and strategic vision and environmental Supporting new types of demand, leveraging our strengths. performance Focus: Michelin development The foundations for a new phase of dynamic growth. Focus: Risk management P. 1 8 _ 3 5 P. 9 6 _112 — 3 Customers and markets Trends and performance on our major tire markets. Focus: China, India and Brazil: The Michelin 2010 Registration Document, new growth markets including the Annual Financial Report, was fi led with Autorité des Marchés Financiers (AMF) on March 2011. It is available in French and English, P. 3 6 _ 5 9 for download from michelin.com/corporate (Finance section))p or upon request q from the InvestorInvestor RelationsRelations Department.Department. — 4 People, partners and shareholders Fulfi llment and dedication. Focus: Reciprocal commitments P. 6 0 _ 79 MICHELIN 01 A NEW PHASE OF DYNAMIC GROWTH — With its high-quality products and services, attractive brands, outstanding operating performance and robust balance sheet, Michelin has emerged from the recent recession stronger than ever, thanks to the dedication of its employees, the loyalty of its customers, and the lasting trust of its shareholders. By 2030, the number of vehicles worldwide will increase very significantly and road mobility will have to substantially reduce its energy consumption and its environmental impact. Both of these trends represent powerful growth drivers for Michelin. A pioneer and active promoter of sustainable mobility and one of the few global tiremakers, Michelin has embarked on a new phase of dynamic growth. To meet the challenges that lie ahead, it can leverage such core strengths as its technological leadership, its capacity for innovation and the power of the Michelin Performance and Responsibility process. Throughout, it will remain sharply focused on enhancing mobility and creating value, while respecting the needs of its customers, employees, shareholders and society as a whole. MICHELIN A better way forward CORPORATE PROFILE AND GOVERNANCE 111,090 EMPLOYEES IN 2010 9.5% 0 OPERATING MARGIN BEFORE LOST-TIME INCIDENTS IN 34 GROUP NON-RECURRING ITEMS PLANTS OR OFFICES. 202 ing a profound transformation to spend less our company does, and the principles expressed INTERVIEW but more effectively, reduce costs and lessen in the Michelin Performance and Responsibility WITH MICHEL ROLLIER environmental impacts. These new demands Charter are applied around the world, in every will enable the best in the industry, like us, to culture. That’s why we decided in 2010 to pledge make a difference. to support the United Nations Global Compact, And lastly, we are seeing customer needs grow so as to further highlight our commitment to increasingly diverse, as economic situations human rights, rights at work, environmental diverge and a new generation emerges, who stewardship and anti-corruption, all in a respon- grew up on the Internet and mobile phones. sible and sustainable way. With its new phase of dynamic How is Michelin positioned with regard Raw materials costs are rising sharply. to these changes? Will you be able to pass them on in your MICHEL ROLLIER — The growth in the global prices? growth, Michelin is embarking tire market and the transportation industry’s MICHEL ROLLIER — That’s what we did ongoing response to the challenges of sustain- throughout 2010, for all of our products and on its most ambitious project in able development present historic opportunities in every market. We are absolutely determined for Michelin. to protect our margins and we’re in a good Geographically, we have begun to re-align the position to do so. Why? Because the superior 30 years.” business base with the shift in demand. The advantages that we offer both to carmakers, extensive, highly efficient capacity scheduled to in terms of environmental performance, and come on stream in Brazil, China and India will to users, in terms of safety, longevity and fuel enable us to capture all of the growth in these efficiency, are clearly recognized and appreciated. markets starting in 2012. As regulations become stricter and raw materials Technologically, we have proactively responded and energy become more expensive, the quality How was business in 2010? while at the same time spectacularly improving to these changes by structuring our Research of our products and services will become more MICHEL ROLLIER — Thanks to the remarkable workplace safety. The frequency rate declined & Development to address the emerging chal- valuable. As proof, just look at 2010, when we dedication of our teams across the organization, to a record 1.19, and 34 plants or units did lenges. We’re bringing to market lighter, higher- sold more MICHELIN brand passenger car and Michelin amply benefited from the upturn in not report a single lost-time incident in 2010. performance tires that use less raw material light truck tires than ever before, in both mature demand. All of the tire markets rebounded Michelin has emerged from the crisis stronger while still delivering greater safety, longer tread and fast growing markets. faster than early-year expectations, in both the than ever and ready to capture all of its markets’ life and better fuel efficiency. This balanced original equipment and replacement segments. extraordinary growth potential. The success performance and the ability to simultaneously In October, you presented your new Demand in Europe and North America turned of the €1.2 billion rights issue carried out last improve all of the different performance factors phase of dynamic growth for the 2011- steeply upwards, but we have not yet returned October has given us the resources to do so. are the hallmarks of the MICHELIN brand, whose 2015 period. What are your objectives in to pre-recession volumes. In emerging markets “A Better Way Forward” signature clearly says this phase? in Asia, South America and Russia, growth was How are your markets doing? that our Group wants to improve not only the MICHEL ROLLIER — Our strategy for the next and remains very strong. MICHEL ROLLIER — Today, there are 800 performance of its products, but also their ability five years hinges on three main objectives. In this favorable environment, our net sales rose million vehicles on the road around the world, to address sustainable development concerns. The first is strong, diversified growth. We’re aim- by over 20%, with a more than 13% increase in and there’ll probably be 1.6 billion by 2030. We are also pioneers in the sale of performance ing to increase sales volumes by 25% by 2015 volumes. Our operating margin came to 9.5%, This means that tire demand is going to enjoy solutions and services, which have proven very and by 50% by 2020, by capturing share in the based on record-high operating income of nearly strong growth, with particularly fast expansion popular with our large corporate customers. We new markets and adding value to our products €1.7 billion. Our net income exceeded €1 billion. in China, South America, India, Russia and the believe that they will contribute more extensively and services in mature markets. These results clearly attest to the structural Middle East. These markets could grow by close to sustainable mobility in coming years, particu- The second objective is to become more competi- progress we’ve made over the past five years. to 10% a year, with China probably becoming larly in major cities where electric powertrains tive. We now have increasingly efficient plants Our Horizon 2010 plan has improved efficiency as large a market as Europe or North America have a promising future. in the mature economies. We intend to build and made us more competitive in every aspect by the 2020s. This represents a major shift. Every day, our Michelin Performance and on these gains, by further improving flexibility of our business. At the same time, in response to rising raw Responsibility process is demonstrating its and productivity and pursuing our continuous In five years we’ve reduced costs by more than €1 materials and energy costs and tightening strength and effectiveness in meeting the chal- improvement process. billion and improved plant productivity by 35%, regulations, the transportation industry is lead- lenges of tomorrow. It already informs everything We plan to invest €1.6 billion a year between 2010 – MICHELIN 03 ANNUAL AND SUSTAINABLE DEVELOPMENT REPORT 2011 and 2015 to support our growth and we will pursue our commitment to improving competitiveness targets. This is a much bigger working conditions, training, diversity, partner commitment than before. relationships and the environmental footprint The third objective is to maintain our business of our plants. performance. Our target for 2015 is operating income well in excess of €2 billion, a ROCE Lastly, and most importantly, we are counting of more than 9% and positive free cash flow on the professionalism and dedication of our generated over the entire period. In today’s employees, who have enabled Michelin to grow highly demanding environment, with aggressive and overcome obstacles to become a leader. competition and rising raw materials costs, these With its 2011-2015 strategic plan, Michelin is are ambitious objectives. embarking on its most ambitious project in 30 years. It will be supported by our Moving Forward What are your growth drivers? Together program, which embodies our mutual MICHEL ROLLIER — The first one is our ability to commitments and dedication to success. I am satisfy the real needs of our customers through quite confident that we will indeed succeed.

Load more