(Updated with details)
Michelin MICP.PA announced on Tuesday that it was aiming for an increase in its sector operating margin to 14% by 2026 thanks to sales of tires with higher added value, particularly for SUVs and electric cars, but was more cautious on its diversification objectives beyond tires.
The Clermont-based group, whose operating margin stood at 12.6% last year, explained during an investor day that a recovery in volumes, a strong product mix effect and the increase in its sales excluding tires should enable it to achieve sector operating income of 4.2 billion euros in 2026, compared to 3.6 billion in 2023.
But if it continues to focus on the development, beyond its core business, of the expertise acquired in polymers and composites, which now have a dedicated line of activity “Polymer Composite Solutions”, Michelin has lowered its ambitions outside of tires.
The group has so far forecast that diversification activities, expanded in particular through mergers and acquisitions, will represent 20% to 30% of its total net sales by 2030.
This objective has been lowered to “more than 20%”, and now also applies to the distribution of tires alongside connected solutions, polymers (carbon fiber fabrics, non-toxic resins, biomaterials for implants) and “lifestyle” , which means that the objective is now almost achieved since activities “excluding tire manufacturing” already account for 16% of sales.
“The ambition is always to have a significant portion of our activity in these other types of composites, but we will not do stupid things to reach this level,” explained general manager Florent Ménégaux, during a presentation broadcast on the internet.
He notably ruled out making any acquisitions to achieve the former target, but will continue to monitor M&A targets. The group made acquisitions worth 4.5 billion euros in 2018-19, for a billion euros between 2021 and 2023 and has a budget of 5 to 10 billion euros for the future.
Michelin also expects a cumulative free cash flow before acquisitions of 5.5 billion euros over the period 2024-2026, compared to 4.4 billion between 2021 and 2023, added financial director Yves Chapot during the presentation. .
(Report by Gilles Guillaume, written by Blandine Hénault, edited by Claude Chendjou and Kate Entringer)