A Michelin tire. (source: Adobe Stock)
(AOF) – Michelin will divide the par value of its share by 4 on June 16. “This decision follows the sharp rise in the share, whose stock price rose from 86.70 euros at December 31, 2018 to 144.15 euros at December 31, 2021 (i.e. an increase of 66%)”, explains the tire manufacturer. For any old share with a nominal value of €2 held on that date, shareholders will receive in exchange 4 new shares with a nominal value of €0.50, and the total number of shares making up the capital will be multiplied by 4.
Consequently, the maximum unit purchase price provided for under the share buyback program, authorized by the General Meeting of May 13, will be reduced from 220 euros to 55 euros.
Michelin adds that this operation will have no effect on the double voting rights attached to the shares under the conditions defined in the company’s articles of association.
Finally, the group specifies that it will be carried out without costs or formalities for its shareholders and will have no impact on their rights.
AOF – LEARN MORE
Key points
– World leader in tires with 1/5 th of the market, born in 1889;
– Group organized into three divisions generating €23.8 billion in sales: automotive (50%), road transport (26%) and specialty activities, equally from North America, Europe and the rest of the world ;
– 3/4 of the business is carried out in the replacement tire market, which is less cyclical than “original equipment” and less sensitive to the health of car manufacturers;
– Business model based on the sale of sustainable and high-tech tires, produced in 4.0 factories redeployed in emerging countries and on the strengthening of the presence in Asia;
– Partnership limited by shares controlled by the founding family (4% of the capital and 5.17% of the voting rights), Barbara Dalibard chairing the 11-member supervisory board;
– Very healthy balance sheet, rated A, with a debt ratio of 19% and free cash flow of €1.4 billion.
Challenges
– 2030 strategy: annual increase of 5% in sales and return on invested capital of more than 10.5% from 2023, decline towards 70% of tires in revenues, the rest coming from medical applications, hydrogen mobility systems and connected, metal 3DS printing…;
– Innovation strategy led by the president: responding to 3 challenges – additive manufacturing, flexible composites and hydrogen mobility, based on 5 pillars: R&D (700 M€ per year in 8 centers), strategic external partnerships (Enviro, Vabios, addUp , Pyrowave) and institutional (Black Cycle with the European Union, co-design with customers, industrial innovation and internal dynamics (100,000 ideas per year of progress and innovation coming from employees) and the incubation/operating and monetizing program the customer database;
– “Planet” environmental strategy: an offer of tires that protect the environment by using recycled materials (2030 target of 46% and 100% in 2050) and sustainable materials (29% of tires in 2021), support for mobility electricity and hydrogen mobility via Symbio, a joint venture with Faurecia / CO2 emissions reduction targets: in 2030, -50% compared to 2010 and, in 2050, total neutrality, from sites and logistics to suppliers / “4 R” circular economy (Reduce, Reuse, Renew, Recycle), boosted by breakthrough technologies in partnership (Carbios, Enviro, Pyrowave, Black Cycle, etc.);
– Execution of the production redeployment plan (closure of 3 factories in developed countries and rise of the Indonesian and Mexican sites) and of the SIMPLY efficiency plan over 3 years;
– Strengthening of the world’s No. 1 position in tires for electric vehicles;
– Ability to integrate the increase in raw materials (rubber, carbon blacks and oil derivatives, i.e. 1/3 of purchases) and inflation in logistics and energy by that of selling prices (3 increases in 2021) and by the mix effect.
Challenges
– Negative effect of the disorganization of supply chains and the shortage of labor (drivers and workers) in America and Europe;
– Towards new synergies-generating acquisitions;
– Spin-offs from industrial investments in 2022-23, estimated at €1.8 billion per year.
Lowered targets
Due to shortages, manufacturers’ assembly lines must sometimes stop, affecting the activity of equipment manufacturers, who supply them with just-in-time flows. Added to this is the jump in the price of raw materials and energy, deteriorating margins. Several equipment manufacturers, including Plastic Omnium and Forvia (formerly Faurecia), had thus lowered their outlook for 2021.