Michelin discusses mid-term targets

At the Autumn Conference organised by Luxembourg-based broker Kepler Cheuvreux and held in Paris on 18 September, Michelin chief executive officer Jean-Dominique Senard confirmed the tyre maker’s 2015 operating profit target of €2.9 billion, some 20 per cent higher then 2013 estimates. He also said that capital expenditure is expected to peak between €1.8 billion and €2.2 billion in 2014 and 2015 before declining to between €1.6 billion and €1.9 billion in 2016 and €1.5 billion and €1.8 billion in 2017.

DB Equity Research Automotive notes that if Michelin generated a free cash flow of €660 million in 2012, with capex exceeding depreciation by €1 billion, the free cash flow should exceed €1 billion by 2016, with capex exceeding depreciation by only €300 to 400 million – four years earlier than what Michelin management is currently guiding for (€1 billion or more of free cash flow in 2020). 

Senard also shared that Michelin aims for production to increase 33.0 per cent over 2012 levels by 2016; this is 21.6 per cent above pre-crisis 2007 levels. Output in terms of tonnes per employee is anticipated to rise 31.4 per cent compared with 2012 levels by 2016, at which date tonnes per employee will be 80 per cent higher than in 2006.

In regards to products, Senard stated Michelin’s 2020 objective of globally increasing new product performance by a total of ten per cent over 2010 levels. This, he said, will be achieved by increasing safety, longevity, energy saving and road noise by five per cent, coupled with a five per cent mass reduction bonus.