Michelin’s Confident AGM

Executives at Michelin’s AGM have reiterated their target of achieving at least the same operating profit margin in 2005 as they did in 2004, despite lower volumes in the first half of this year. At the same time the company appointed Michel Rollier as new managing partner.

In response Deutsche bank analysts re-affirmed their belief that the way to do this is to cut back on workforce costs through retirements. The analysts said this could amount to up to 24,000 employees in the next 5-7 years or a high 32 per cent of company’s western European and North America workforce.

Furthermore executives indicated that they could eventually increase the pay out ratio towards 40 per cent (35 per cent last year). This is said to equate to a doubling of dividend in two years.

The Deutsche Bank analyst also predicted that passenger car replacement volumes are 1 per cent down year-to-date in Europe, improving from the first quarter average of 3 per cent. In the US the same figure is believed to be up 1 per cent. The European truck replacement market is still 9 per cent down year-to-date, although OE sales have shot up 14 per cent in the same time.

The analysts maintained their forecast that Michelin will report a 3 per cent decline in operating profit in the first half of 2005.

Shareholders also appointed Mr Michel Rollier, the Group’s financial director, was appointed managing partner alongside Mr Michelin and Mr Zingraff. The group now has three managing partners.

“This is an important stage for the company” said Edouard Michelin. “We know Mr Rollier very well, particularly over the last five years he has spent as financial director. We have been able to appreciate his determination and courage, together with a professionalism of high calibre. What is more, his devotion to the company and to its values was a determining factor” Mr René Zingraff added.

After the shareholders’ vote, Michel Rollier said: “This honour has been bestowed on me by the shareholders of Michelin. I am totally aware of the responsibilities that go with the function, and very happy to join Mr Zingraff and Mr Michelin in the management team. With Mr Zingraff, I am determined to support fully the action of Mr Edouard Michelin, as did my father with Mr François Michelin for many years.”