Michelin : Michelin : Financial Information for the Year Ended December 31, 2012 PRESS RELEASE Clermont-Ferrand - February 12, 2013 COMPAGNIE GÉNÉRALE DES ETABLISSEMENTS MICHELIN Financial Information for the Year Ended December 31, 2012 Strong 2012 earnings in lackluster markets More than €1 billion in free cash flow €2,423 million in operating income before non-recurring items, up 25% Operating margin up 2 points, to 11.3% of net sales oOperating income before non-recurring items up 25% to €2,423 million, reflecting: oAn efficient pricing policy. oA global footprint. oStructurally high margins in specialty tires. oRestored profitability in the Truck tire business, despite a sharp market contraction. oVolumes down 6.4%, with demand remaining flat in the second half. oMore than €1 billion in free cash flow, demonstrating: oThe Group's ability to structurally generate cash oThe effective integration of value creation into every unit's objectives o12.8% return on capital employed. oProposed dividend of €2.40 per share, subject to approval at the Annual Shareholders Meeting of May 17, 2013. oOutlook for 2013 Given its global footprint, Michelin expects to hold volumes steady in 2013, in a market environment that is uncertain in mature markets but still expanding in the new ones. Raw materials prices are expected to remain stable in the first half, adding a further €350-400 million to operating income. This will be partly offset, however, by the impact of indexation clauses on the original equipment and earthmover businesses. The capital expenditure program totaling around €2 billion will support Michelin's growth ambitions by bringing new production capacity on stream in the growth regions, whose start-up will weigh on costs. The program is also designed to improve competitiveness in mature markets and drive technological innovation. Confident in its competitive strengths and thanks to the launch of an ambitious project to improve its management systems, Michelin confirms its 2015 objectives and for 2013 expects to report stable operating income before non-recurring items at constant exchange rates, a more than 10% return on capital employed and positive free cash flow. (in € millions) 2012 2011 Net sales 21,474 20,719 Operating income before non-recurring items 2,423 1,945 Operating margin before non-recurring items 11.3% 9.4% Passenger Car and Light Truck Tires and Related Distribution 9.3% 9.4% Truck Tires and Related Distribution 6.6% 3.5% Specialty Businesses 26.0% 21.5% Operating income after non-recurring items 2,469 1,945 Net income 1,571 1,462 Capital expenditure 1,996 1,711 Net debt 1,053 1,814 Gearing 12% 22% Free cash flow^1 1,075 (19) Return on capital employed 12.8% 10.9% Employees on payroll^2 113,400 115,000 ^ ^1 Cash flow from operating activities less cash flow used in investing activities ^2 At period-end Market Review oPassenger Car and Light Truck tires 2012 Europe* North Asia South Africa-India-Middle East Total % change America (excluding America year-on-year India) ^(in number of tires) Original -5% +16% +11% +0% -3% +6% Equipment -10% -2% +2% +2% -3% -4% Replacement Fourth-Quarter Europe* North Asia South Africa-India-Middle Total 2012 America (excluding America East % change India) year-on-year ^(in number of tires) Original -8% + 10% +5% +12% - 12% +2% Equipment -9% - 1% +4% +4% -5% -2% Replacement *Including Russia and Turkey § Original Equipment oIn Europe, tire demand contracted by 5% in 2012. The collapse in new car registrations, which fell to a 17-year low in the European Union, masked a contrast between the decline in broadline carmaker sales and the firmer resistance of specialty and export-driven brands. Markets in Eastern Europe continued to expand, increasing by 11% over the year. oThe North American tire market grew by 16% in 2012, returning to 2007 levels thanks to strong new car sales as buyers replaced aging models. oIn Asia (excluding India), demand rose by 11% overall. While still buoyant, the Chinese market cooled somewhat, ending the year up 6%. Demand in Japan (up 11%) and Southeast Asia (up 38%) rebounded off of a 2011 impacted by natural disasters. oThe South American market was stable overall, with a brisk 7% gain in the second half offsetting the 7% decline in the first. Demand in Brazil rose by 3%, lifted by the government measures introduced in the autumn. § Replacement o In Europe, replacement demand dropped 10% year-on-year in a highly uncertain economic environment. Western Europe saw a record decline, steeper even than in 2008, that was accentuated by dealer inventory drawdowns. The winter tire market dropped 16%, as expected, and the high-performance tire segment (17" and bigger) slowed to a lesser extent than the European market average, reflecting the sustained improvement in the mix. o Demand in North America retreated 2% as consumer confidence weakened, despite the relative stability of average miles traveled and fuel prices. After an upturn in 2010, the market has returned to 2009 levels, with volumes sold noticeably lower than in 2007. Impacted by the significant increase in Chinese imports after customs duties were lifted, the US market declined by 3%. o In Asia (excluding India), markets ended the year up 2% overall. Demand rose 4% in China despite slowing economic growth, but eased back 1% in Japan, where winter tire sales were stable and volumes moved back in line with recurring trends after the run-up in replacement buying in 2011 following the natural disasters. In South Korea, the market fell 6% in an export-driven economy hit hard by global economic uncertainty. o The South American market gained a slight 2% overall, but with wide variations among countries. Demand expanded by 3% in Brazil as sell-out held firm at 2011 levels. q Truck tires 2012 Europe** North Asia South Africa-India-Middle Total % change America (excluding America East year-on-year India) ^(in number of tires) Original -4% +2% -9% -30% +31% -5% Equipment* -14% -2% -6% +3% +8% -4% Replacement* Fourth-Quarter Europe** North Asia South Africa-India-Middle Total 2012 America (excluding America East % change India) year-on-year ^(in number of tires) Original - 7% -15% - 10% - 27% + 31% - 9% Equipment + 2% + 2% + 2% +6% + 6% +3% Replacement *Radial market only **Including Russia and Turkey § Original Equipment oDemand in Europe declined by 4%, to below 2007 and 2008 levels. Although the fall-off was a relatively limited 2% in the first half, it gained momentum in the second, to 5%, under the impact of the worsening economic situation in the region. oAfter surging 17% in the first half, the North American market slowed precipitously in the second half, to end the year with just a 2% gain. Economic uncertainty caused by tax issues in the United States weighed on new truck orders during the year. oIn Asia (excluding India), demand retreated by 9% overall, with a fairly steep 15% drop in China as growth in the economy (particularly exports) cooled over the year. The Southeast Asian market, which continues to shift to radials, was highly active, up 42%, while the Japanese market rebounded 12%. In both cases, growth was lifted by prior-year comparatives shaped by, respectively, flooding and the tsunami. oThe South American market plunged 30% after Brazil introduced Euro V emissions standards during the year. However, the Brazilian government's introduction of more favorable financing terms helped the market to turn around, with an upturn in the final quarter. § Replacement o Demand in Europe dropped 14%, with a 25% plunge in the first half due to inventory drawdowns and high bases of comparison. In the second half, the market continued to shrink on weak transportation activity and the lackluster economic outlook. In Eastern Europe, the market declined by 3%, primarily due to dealer destocking. o The North American market ended the year down just 2%, reflecting fleet manager caution in the face of economic uncertainty, despite relative robust freight demand. The contraction may also be explained by the sharp growth in original equipment sales and the availability of retreadable casings. o In Asia (excluding India), markets declined by 6% overall during the year. The Chinese market ended 2012 down by 7%, reflecting the slower growth in the economy and in exports. The Japanese market was down 6% off of a high prior-year comparative, which was lifted by last year's price increases and inventory rebuilding after the tsunami. Demand in South Korea also declined as the global economic slowdown weighed on exports and transportation demand. o The South American market gained 3% during the year. In Brazil, the stricter application of customs inspections reduced imports and dampened demand in general, although the first signs of a recovery appeared in the final quarter. q Specialty Tires § Earthmover tires: The mining sector is continuing to expand, led by sustained demand for ore, oil and gas, and the market for large tires remains buoyant. After rising in the first half, the original equipment market contracted in the final quarter, with a particularly steep fall-off in Europe. Demand for tires used in infrastructure and quarries is shrinking in Western Europe and, after increasing in the first half, turned downwards in the final quarter in North America. § Agricultural tires: After climbing in the first half, worldwide original equipment demand declined in the fourth quarter, particularly in Europe. The replacement market dropped significantly in mature markets during the year, dragged down by the prevailing economic uncertainty. § Two-Wheel tires: Impacted by the lackluster economy, the motorized segments declined in mature geographies, except North America, but continued to expand in emerging markets. § Aviation tires: Passenger load factors are continuing to improve in the commercial aviation segment, on both domestic and intercontinental routes, but the cargo market was down for the year. 2012 Net Sales and Results oNet sales Consolidated net sales amounted to €21,474 million for the year, up 3.6% at current exchange rates compared with €20,719 million in 2011. Of the total price mix effect, which added 6.2% to growth, €1,052 million corresponded to the net impact of the price increases introduced in 2011 and the contractual price reductions due to the raw materials indexation clauses applicable on nearly 30% of consolidated sales volumes. It also included the €157 million impact of a further improvement in the sales mix, led by the premium strategy and the expanding specialty businesses. Weak demand, particularly in European markets, dragged sales volumes down by 6.4% over the year. The positive 4.2% currency effect primarily resulted from gains in the euro against the US dollar. oEarnings Consolidated operating income before non-recurring items amounted to €2,423 million or 11.3% of net sales, compared with €1,945 million and 9.4% in 2011. This €478-million improvement mainly reflected the positive price mix (€1,209 million, of which €1,052 million from price increases), which favorably combined with the limited negative impact from raw materials costs (€76 million). It also reflected the €504-million negative impact of the decline in volumes, the €176 million in outlays to drive growth (start-up and other costs in the new markets), the €311 million increase in production costs and other expenses and the €3-million positive impact on productivity of production slowdowns. The currency effect was a positive €268 million. Lastly, the improvement also included the initial impact of the competitiveness plan launched in early 2012. In all, net income for the year came to €1,571 million. oNet financial position Free cash flow ended the year at €1,075 million, as available cash flow and the sale of a property complex in Paris helped to offset the faster deployment of growth investments. At December 31, 2012, gearing stood at 12% while net debt amounted to €1,053 million. q Segment Information € millions Net sales Operating income Operating margin before non-recurring before non-recurring items items 2012 2011 2012 2011 2012 2011 Passenger Car and 11,098 10,780 1,033 1,018 9.3% 9.4% Light Truck Tires and Related Distribution Truck Tires and 6,736 6,718 444 233 6.6% 3.5% Related Distribution Specialty Businesses 3,640 3,221 946 694 26.0% 21.5% Group 21,474 20,719 2,423 1,945 11.3% 9.4% § Passenger Car and Light Truck Tires and Related Distribution In all, net sales in the Passenger car and Light truck tires and related distribution segment stood at €11,098 million, up 2.9% on 2011. The sustained firm pricing policy and ongoing improvement in the product mix, led by the MICHELIN brand's premium positioning, helped to offset the 5.5% decline in volumes. As a result, operating income before non-recurring items stood at €1,033 million or 9.3% of net sales, compared with €1,018 million and 9.4% in 2011. § Truck Tires and Related Distribution Net sales in the Truck tires and related distribution segment amounted to €6,736 million, unchanged from 2011. In a depressed market, volumes fell 10.8% as the Group focused on turning the Truck tire business around and restoring its margins. This strategy, along with the wide array of market launches and the decline in raw materials costs, drove a sharp increase in operating income before non-recurring items, to €444 million or 6.6% of net sales from €233 million and 3.5% in 2011. § Specialty Businesses Net sales by the Specialty businesses rose by 13.0% to €3,640 million in 2012. At €946 million or 26.0% of net sales, operating income before non-recurring items confirmed these businesses' structurally high profitability. In a particularly favorable currency environment, they benefitted from the still positive impact of contractual indexation clauses based on raw materials prices, as well as from the 1.7% increase in volumes. Compagnie Générale des Etablissements Michelin Compagnie Générale des Etablissements Michelin reported a profit of €465 million in 2012. The financial statements were presented to the Supervisory Board at its meeting on February 7, 2013. The audit was completed and the auditors' report was issued on the same date. The Managing Partner will call an Annual Shareholders Meeting on Friday, May 17 at 9:00 am in Clermont-Ferrand. Shareholders will be asked to approve the payment of a dividend of €2.40 a share, with a dividend reinvestment option. 2012 Highlights oStandard & Poor's upgrades Michelin's credit rating to BBB+ (March 23) oGlobal leadership in Earthmover tires strengthened with the construction of a new plant and the extension of another in North America (April 10) oMoody's upgrades Michelin's credit rating to Baa1 (April 24) oFirst Passenger Car and Light truck tire produced at Pau-Brasil plant (February 9) oIn addition to sticker information, the MICHELIN Total Performance strategy is showcasing all of the benefits of tire technology with the slogan: "Michelin sells performance, not rubber". (June 29) oNew MICHELIN Restaurants website launched in France (May 25) oThe Group celebrates 10 years of Michelin Performance and Responsibility (June 18) oMichelin successfully places €400 million seven-year notes issue (June 19) oMichel Rollier hands over the reins to Jean-Dominique Senard at the Annual Shareholders Meeting on May 11 o2015 guidance updated (September 19) oFirst Truck tire produced at the new Shenyang 2 plant in China (September 18) oNew Truck tire lineup presented at the IAA Show in Hanover (September 20) oNew Earthmover product lineup for 2012 unveiled at the MINExpo Trade Show in Las Vegas (September 24) oFIA World Rally Championship: a 20^th Drivers' Title and a 22^nd Manufacturers Crown for Michelin (October 9) oInvestor Day organized at the Technology Center in Ladoux, France (November 5) A full description of 2012 highlights may be found on the Michelin website: www.michelin.com/corporate/finance Presentation and Conference call Full-year 2012 results will be reviewed with analysts and investors during a conference call today, Tuesday February 12, at 11:00 am CET (10:00 am UT). The conference will be in English, with simultaneous interpreting in French. If you wish to participate, please dial-in one of the following numbers from 10:50 am CET: oIn France 01 70 77 09 19 (Français) oIn France 01 70 77 09 39 (English) oIn the UK 0203 367 9462 (English) oIn the United States +1 866 907 5924 (English) oFrom anywhere else +44 203 367 9462 (English) Please refer to the website www.michelin.com/corporate for practical information concerning the conference call. Investor Calendar oQuarterly information for the three months ended March 31, 2013: Monday, April 22, 2013 after close of trading oFirst-half 2013 net sales and results: Thursday, July 25, 2013 before start of trading Investor Relations Media Relations Valérie Magloire Corinne Meutey +33 (0) 1 78 76 45 37 +33 (0) 1 78 76 45 27 +33 (0) 6 76 21 88 12 (cell) +33 (0) 6 08 00 13 85 (cell) firstname.lastname@example.org email@example.com Individual shareholders Alban de Saint Martin Jacques Engasser +33 (0) 4 73 32 18 02 +33 (0) 4 73 98 59 08 +33 (0) 6 07 15 39 71 (cell) firstname.lastname@example.org email@example.com DISCLAIMER This press release is not an offer to purchase or a solicitation to recommend the purchase of Michelin shares. To obtain more detailed information on Michelin, please consult the documents filed in France with Autorité des Marchés Financiers, which are also available from the www.michelin.com website. This press release may contain a number of forward-looking statements. Although the Company believes that these statements are based on reasonable assumptions as at the time of publishing this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or inferred by these statements. 2012 FY ENG ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Michelin via Thomson Reuters ONE HUG#1677188
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Michelin : Michelin : Financial Information for the Year Ended December 31, 2012
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