Q4 2025 Compagnie Generale des Etablissements Michelin SCA Earnings Call

February 11, 2026

Speaker #1: Michael, that's absolutely incredible. You're fastest by 12.5 seconds. What has been the switch today?

Operator: Michael, that's absolutely incredible. You're fastest by 12.5 seconds. What has been the switch today?

Speaker #2: It's not to me. It's not me. It's Michelin tires. Yeah, I'm really

Guillaume Jullienne: It's not me. It's not me. It's Michelin, I'm tired. Yeah, I'm really honest.

Speaker #2: honest. Ladies and gentlemen, welcome to the

Akshat Kacker: Ladies and gentlemen, welcome to the Michelin Conference Call. I now hand over to Mr. Florent Menegaux, Chief Executive Officer, and Mr. Yves Chapot, General Manager and Group CFO. Gentlemen, please go ahead.

Operator: Ladies and gentlemen, welcome to the Michelin Conference Call. I now hand over to Mr. Florent Menegaux, Chief Executive Officer, and Mr. Yves Chapot, General Manager and Group CFO. Gentlemen, please go ahead.

Speaker #3: Michelin Conference Call. I now hand over to Mr. Florent Menegaux, Chief Executive Officer; and Mr. Yves Chapot, General Manager and Group CFO. Gentlemen, please go

Speaker #3: ahead. Good evening.

Florent Menegaux: Good evening, good afternoon, and good morning to all of you. Thank you for joining us, Yves Chapot and myself, for our 2025 results call. I would like to start by summarizing our 2030 Michelin in Motion strategy. What you see on your screen is our group relies on four strong and clear distinctive assets: our Michelin's way of managing based on empowerment, autonomy, and responsibility. Our company's resilience comes from team cohesion and shared values. Number two, we have a strong and well-recognized brand. Our Michelin brand is now worth more than $10 billion, and it is the ninth strongest brand in the world across all categories, not only in tires. We capitalize on powerful innovation with deep expertise in complex materials assembly. And finally, we sell best-in-class products and services with long-term value delivered to our customers.

Speaker #4: Good afternoon and good morning to all of you. Thank you for joining us, Yves Chapot and myself, for our 2025 results call. I would like to start by summarizing our 2030 Michelin In Motion strategy.

Speaker #4: What you see on your screen is our group relies on four strong and clear distinctive assets. Our Michelin's way of managing is based on empowerment, autonomy, and responsibility.

Speaker #4: Our company's resilience comes from team cohesion and shared values. Number two, we have a strong and well-recognized brand. Our Michelin brand is now worth more than $10 billion, and this is the ninth strongest brand in the world across all categories, not only in tires.

Speaker #4: We capitalize on a powerful innovation with deep expertise in complex materials assembly. And finally, we sell best-in-class products and services, with long-term value delivered to our customers.

Speaker #4: Our group operates—and that's in the middle of your screen—in two complementary fields: tires and mobility, our historic core business, and polymer-composite solutions, in which our group is leveraging its material expertise acquired in tires and where we are accelerating our growth.

Florent Menegaux: Our group operates, and that's in the middle of your screen, in two complementary fields: tires and mobility, our historic core business, and polymer composite solutions, in which our group is leveraging its material expertise acquired in tires and where we are accelerating our growth. In 2025, and that's the right of your screen, our group achieved the following performance: an engagement rate at 84.4%, high and stable, close to our 2030 target of 85%. A segment operating income of EUR 2.9 billion at ISO Forex. This is, of course, disappointing performance as we did not reach our initial 2025 guidance. I am sure, however, you have noticed that we have reached the upper part of our revised guidance. It shows that we were able to turn things around in the last quarter. Our free cash flow before M&A reached EUR 2.1 billion, reinforcing our financial strength and our ability to generate cash.

Speaker #4: In 2025, and that's the right of your screen, our group achieved the following performance: an engagement rate at 84.4, high and stable close to our 2030 target of 85%.

Speaker #4: A segment operating income of $2.9 billion at ISO Forex. This is, of course, disappointing performance, as we did not reach our initial 2025 guidance.

Speaker #4: I am sure, however, you have noticed that we have reached the upper part of our revised guidance. It shows that we were able to turn things around in the last quarter.

Florent Menegaux: Our free cash flow before M&A reached EUR 2.1 billion, reinforcing our financial strength and our ability to generate cash. Our renewable and recycled material rate stands at 32%, one point better than last year. The road ahead to our 2030 ambition is long, but we make strides. Regarding the shareholder return, we are proposing a stable EUR 1.38 per share dividend, which corresponds to a 57% payout ratio. Confident in our future, we intend to launch a new share buyback program of up to EUR 2 billion over the next three years, 2026-2028 period. Here, I would like to reemphasize to all of you that M&A is still a priority as we are deploying our Michelin in Motion 2030 strategy. Our structurally strong cash generation allows us to finance both CAPEX, dividends, and share buyback programs in a flexible way.

Speaker #4: Our free cash flow before M&A reached €2.1 billion, reinforcing our financial strength and our ability to generate cash. Our renewable and recycled material rates stand at 32%, one point better than last year.

Florent Menegaux: Our renewable and recycled material rate stands at 32%, one point better than last year. The road ahead to our 2030 ambition is long, but we make strides. Regarding the shareholder return, we are proposing a stable EUR 1.38 per share dividend, which corresponds to a 57% payout ratio. Confident in our future, we intend to launch a new share buyback program of up to EUR 2 billion over the next three years, 2026-2028 period. Here, I would like to reemphasize to all of you that M&A is still a priority as we are deploying our Michelin in Motion 2030 strategy. Our structurally strong cash generation allows us to finance both CAPEX, dividends, and share buyback programs in a flexible way.

Speaker #4: The road ahead to our 2030 ambition is long, but we make strides. Regarding the shareholder return, we are proposing a stable €1.38 per share dividend, which corresponds to a 50%–57% payout ratio.

Speaker #4: Confident in our future, we intend to launch a new share buyback program to offer up to €2 billion over the next three years, 2026–2028 period.

Speaker #4: Here, I would like to reemphasize to all of you that M&A is still a priority as we are deploying our Michelin In Motion 2030 strategy.

Speaker #4: Our structurally strong cash generation allows us to finance both capex, dividends, and share buyback programs in a flexible way. Regarding our financial guidance for 2026, our ambition is to progress in terms of segment operating income at ISO scope and ISO parity, which we want to make clear that our ambition is to progress at 2025 perimeter.

Florent Menegaux: Regarding our financial guidance for 2026, our ambition is to progress in terms of Segment Operating Income at ISO scope and ISO parity, which we want to make clear that our ambition is to progress at the 2025 perimeter. On the cash side, we intend to generate at least EUR 1.6 billion in Free Cash Flow before M&A. Now, I would like to take a few minutes to come back on our polymer composite solutions development. Aside from our core business in tires and mobility, where our ambitions remain intact as being the world leader, we are determined to grow our PCS, polymer composite solutions, businesses. By doing so, we will improve the resilience of our group and its profitability. Michelin's approach in PCS is based on three pillars: leveraging group R&D. Michelin leverages over 100 years of experience in developing the best tires.

Speaker #4: On the cash side, we intend to generate at least €1.6 billion in free cash flow before M&A. Now, I would like to take a few minutes to come back on our polymer-composite solutions development.

Speaker #4: Aside from our core business in tires and mobility, where our ambitions remain intact as being the world leader, we are determined to grow our PCS Polymer-Composites Solutions businesses.

Speaker #4: By doing so, we will improve the resilience of our group and its profitability. Michelin's approach in PCS is based on three pillars: leveraging group R&D—Michelin leverages over 100 years of experience in developing the best tires; our deep science in materials and unrivaled ability to industrialize and produce at scale provide us with a unique opportunity to access several very attractive adjacent categories.

Florent Menegaux: Our deep science in material and unrivaled ability to industrialize and produce at scale provide us with a unique opportunity to access several very attractive adjacent categories. We are building a diversified portfolio of independent businesses targeting Michelin-critical applications. Within our group, we manage our polymer composite business with a specific operating model. We develop strong synergies in terms of R&D, and we operate in a much more decentralized way than in tires. The destination markets represent an addressable market of more than EUR 70 billion, organized around six main product categories, as you can see on the bottom left of your screen. Since we acquired Fenner in 2019, we have grown at a CAGR of around 7%, with a balanced mix of organic and external growth.

Speaker #4: We are building a diversified portfolio of independent businesses targeting Michelin-critical applications. Within our group, we manage our polymer-composite business with a specific operating model.

Speaker #4: We develop strong synergies in terms of R&D, and we operate in a much more decentralized way than in tires. The destination markets represent an addressable market of more than €70 billion, organized around six main product categories, as you can see on the bottom left of your screen.

Speaker #4: Since we acquired Fener in 2019, we have grown at a CAGR of around 7%, with a balanced mix of organic and external growth. And with the latest three acquisitions we have announced, we could reach pro forma 2025 sales of around 1.7 billion euro with an operating margin of more than 15%.

Florent Menegaux: With the latest three acquisitions we have announced, we could reach pro forma 2025 sales of around EUR 1.7 billion, with an operating margin of more than 15%. Our polymer composite solutions business, including our recently announced acquisitions, shows a good balance both in terms of market verticals and geographies, that's on the right, and market verticals are on the left. What you can see is North America becomes our largest regions after the three latest acquisitions, and it will enable cross-selling synergies and contribute to the upcoming growth in PCS. Now, I'll hand over to Yves for the rest of our presentation.

Speaker #4: Our polymer-composite solutions business, including our recent announced recently announced acquisitions, shows a good balance both in terms of market verticals and geographies, that's on the right, and market verticals are on the left.

Speaker #4: And what you can see is North America becomes our largest region after the three latest acquisitions, and it will enable cross-selling synergies and contribute to the upcoming growth in PCS.

Speaker #4: Now, I'll hand over to Yves for the rest of our

Speaker #4: presentation.

Speaker #5: Thank

Speaker #5: You, Florent. So I'm going to lead you through our performance in our key performance indicators regarding people, profit, and planet. Regarding people, the Group has shown very strong improvement in terms of safety—our TRIR is now below 4.5, which is an improvement of 53 basis points versus 2024.

Yves Chapot: Thank you, Florent.

Yves Chapot: Thank you, Florent. So I'm going to lead you through our performance in our key performance indicators regarding people, profit, and planet. Regarding people, the group has shown very strong improvement in terms of safety. Our TRIR is now below 4.5, which is an improvement of 53 basis points versus 2024. And our net promoter score with our partner customers has improved by 5.3 points versus 2024. We are on track for both indicators on our 2030 ambitions. I will come back on the profit more in detail afterwards. And regarding the planet versus 2019, we have already achieved 48% CO2 emission reductions versus 2019, which was nearly the objective we intend to reach by 2030. So we are far ahead thanks to a lot of levers, including purchasing of green electricity, but as well transiting from more carbon-intensive energy to less carbon-intensive energies.

Florent Menegaux: So I'm going to lead you through our performance in our key performance indicators regarding people, profit, and planet. Regarding people, the group has shown very strong improvement in terms of safety. Our TRIR is now below 4.5, which is an improvement of 53 basis points versus 2024. And our net promoter score with our partner customers has improved by 5.3 points versus 2024. We are on track for both indicators on our 2030 ambitions. I will come back on the profit more in detail afterwards. And regarding the planet versus 2019, we have already achieved 48% CO2 emission reductions versus 2019, which was nearly the objective we intend to reach by 2030. So we are far ahead thanks to a lot of levers, including purchasing of green electricity, but as well transiting from more carbon-intensive energy to less carbon-intensive energies.

Speaker #5: And our net promoter score with our partner customers has improved by 5.3 points versus 2024. We are on track for both indicators on our 2030 ambitions.

Speaker #5: I will come back on the profit more in detail afterwards. And regarding the planet, versus 2019, we have already achieved a 48% CO2 emission reduction versus 2019, which was nearly the objective we intend to reach by 2030.

Speaker #5: So, we are far ahead, thanks to a lot of levers, including the purchasing of green electricity, but as well, transiting from more carbon-intensive energy to less carbon-intensive energies.

Speaker #5: And last, I would like to comment on the abrasion performance. If you compare the set of offers of Michelin in 2025 versus 2020, on average, the performance of our tires in abrasion has improved by 8.4%, which translates into less material for the same usage, but also an improvement in competitive advantage in terms of total cost of ownership for our customers.

Florent Menegaux: Last, I would like to comment on the abrasion performance. If you compare the set of offers of Michelin in 2025 versus 2020, in average, the performance of our tires in abrasion has improved by 8.4%, which translates in less material for the same usage, but as well as an improvement and competitive advantage in terms of total cost of ownership for our customers. It makes us the industry's indisputable leader in this area. Now, coming back more to the economic situation, I would like first to comment on the market. The market has shown very contrasted pictures over the world and over the different segments. Overall, there were generally more soft versus 2024, very tough in original equipment, particularly in B2B applications.

Yves Chapot: Last, I would like to comment on the abrasion performance. If you compare the set of offers of Michelin in 2025 versus 2020, in average, the performance of our tires in abrasion has improved by 8.4%, which translates in less material for the same usage, but as well as an improvement and competitive advantage in terms of total cost of ownership for our customers. It makes us the industry's indisputable leader in this area. Now, coming back more to the economic situation, I would like first to comment on the market. The market has shown very contrasted pictures over the world and over the different segments. Overall, there were generally more soft versus 2024, very tough in original equipment, particularly in B2B applications.

Speaker #5: It makes us the indisputable leader in this area. Now, coming back more to the economic situation, I would like first to comment on the market.

Speaker #5: The market has shown very contrasted pictures over the world and over the different segments, but overall, they were generally softer versus 2024. Very tough in original equipment, particularly in B2B applications.

Speaker #5: If you look at original equipment, and if you set apart passenger car tire in China and truck and bus in Europe, all the markets were down versus 2024, with an even minus 20% for the heavy-duty vehicles in North America.

Florent Menegaux: If you look at original equipment and if you set apart passenger car tires in China, and truck and bus in Europe, all the markets were down versus 2024, with even -20% for the heavy-duty vehicles in North America. The replacement market, if you look at the figure, seems to post a more positive picture. But in reality, we should not ignore that this trend was triggered by the inflow of Asian tires in anticipation of the tariff in North America and the anti-dumping measures that the European Union is intending to implement versus passenger car tires coming from China. So overall, at the end of the year, when we look at the inventory of our wholesalers, they are pretty heavily loaded with these tires, and we estimate that it will take probably another semester to flush out these tires from the distribution channel.

Yves Chapot: If you look at original equipment and if you set apart passenger car tires in China, and truck and bus in Europe, all the markets were down versus 2024, with even -20% for the heavy-duty vehicles in North America. The replacement market, if you look at the figure, seems to post a more positive picture. But in reality, we should not ignore that this trend was triggered by the inflow of Asian tires in anticipation of the tariff in North America and the anti-dumping measures that the European Union is intending to implement versus passenger car tires coming from China. So overall, at the end of the year, when we look at the inventory of our wholesalers, they are pretty heavily loaded with these tires, and we estimate that it will take probably another semester to flush out these tires from the distribution channel.

Speaker #5: The replacement market, if you look at the figure, seems to post a more positive picture. But in reality, we should not ignore that this trend was triggered by the inflow of Asian tires in anticipation of the tariff in North America and the anti-dumping measures that the European Union is intending to implement versus passenger car tires coming from China.

Speaker #5: So overall, at the end of the year, when we look at our inventory of our wholesalers, they are pretty heavy-loaded with these tires. And we estimate that it will take probably another semester to flush out these tires from the distribution channel.

Speaker #5: On the other hand, when we look at our own inventory, they are at quite a healthy level in all channels of distribution. Regarding specialties, mining and aircraft are posting positive growth.

Florent Menegaux: On the other hand, when we look at our own inventory, they are at a quite healthy level in the whole channel of distribution. Regarding specialties, mining, aircraft are posting positive growth. Beyond Road is still plagued by the regional equipment cycle, and I will have the opportunity to come back on the situation of Beyond Road, particularly in OE. Replacement has shown some signs of recovery, particularly in Europe, and the polymer composite solutions are posting low single-digit growth over the year. Regarding ourselves, so 2025, I've seen very strong headwinds, the first one being the volumes. Our volumes were down by 4.7%, mostly driven by original equipment, and I will have the opportunity to come back on that. The situation of volume has improved over the year. Volume in H1 was at -6.1%, in H2 at -3.4%. Price mix is still positive over the year, 3%.

Yves Chapot: On the other hand, when we look at our own inventory, they are at a quite healthy level in the whole channel of distribution. Regarding specialties, mining, aircraft are posting positive growth. Beyond Road is still plagued by the regional equipment cycle, and I will have the opportunity to come back on the situation of Beyond Road, particularly in OE. Replacement has shown some signs of recovery, particularly in Europe, and the polymer composite solutions are posting low single-digit growth over the year. Regarding ourselves, so 2025, I've seen very strong headwinds, the first one being the volumes. Our volumes were down by 4.7%, mostly driven by original equipment, and I will have the opportunity to come back on that. The situation of volume has improved over the year. Volume in H1 was at -6.1%, in H2 at -3.4%. Price mix is still positive over the year, 3%.

Speaker #5: Beyond Road is still plagued by the regional equipment cycle. And I will have the opportunity to come back on the situation of Beyond Road, particularly in OE.

Speaker #5: Replacement has shown some signs of recovery, particularly in Europe. And the polymer-composite solutions are posting low single-digit growth over the year. Regarding ourselves, so 2025, I've seen very strong headwinds.

Speaker #5: First, our volumes were down by 4.7%, mostly driven by original equipment. And I will have the opportunity to come back on that.

Speaker #5: The situation of volume has improved over the year. Volume in H1 was at minus 6.1, in H2 at minus 3.4. Price mix is still positive over the year, 3%.

Speaker #5: The non-tire activity has contributed to 0.3. So you have seen the weight of the polymer-composite solution. But this activity grew by 3.4% during the year.

Florent Menegaux: The non-tire activity is contributing to 0.3%. So you have seen the weight of polymer composite solutions, but this activity grew in itself by 3.4% during the year. And of course, we have been severely impacted by the currency effect: EUR 800 million, 3%, of which half is coming from the US dollar and two-thirds in the second half, one-third in the first half. So overall, our sales, including Forex, have decreased by 4.4% over the year. Now, zooming on the volume, so volume decreased by 4.7%, so nearly 5%, of which 80% is coming from original equipment businesses, half from the truck tire businesses, with a strong drop, particularly in North America, which is a very important market for us. And the rest is shared between passenger car and agriculture all across the regions.

Yves Chapot: The non-tire activity is contributing to 0.3%. So you have seen the weight of polymer composite solutions, but this activity grew in itself by 3.4% during the year. And of course, we have been severely impacted by the currency effect: EUR 800 million, 3%, of which half is coming from the US dollar and two-thirds in the second half, one-third in the first half. So overall, our sales, including Forex, have decreased by 4.4% over the year. Now, zooming on the volume, so volume decreased by 4.7%, so nearly 5%, of which 80% is coming from original equipment businesses, half from the truck tire businesses, with a strong drop, particularly in North America, which is a very important market for us. And the rest is shared between passenger car and agriculture all across the regions.

Speaker #5: And of course, we have been severely impacted by the currency effect—€800 million, 3% of which half is coming from the US dollar, and two-thirds in the second half, one-third in the first half.

Speaker #5: So overall, our sales, including forex, have decreased by 4.4% over the year. Now, zooming in on the volume—volume decreased by 4.7%, so nearly 5%, of which 80% is coming from original equipment businesses.

Speaker #5: Half from the truck tire businesses, with a strong drop particularly in North America, which is a very important market for us. And the rest is shared between passenger car and agriculture.

Speaker #5: All across the regions, passenger car tires have grown in China, but the market and our volumes have decreased in the other regions. Our overall replacement sales were posting a slight negative, so 1.

Florent Menegaux: Passenger car tires have grown in China, but the market and our volumes have decreased in the other regions. Our overall replacement sales were posting a slight negative, so 1-point volume contribution overall, but with a very diverse situation between the Michelin brand, which is growing across practically all the business segments, and our Tier 2 and Tier 3 brand that has been probably more impacted by the inflows of budget tires, both in our North America and Europe core markets. Our operating margin, so the margin landed at EUR 2.7 billion or 10.5%, including Forex. I will start with the Forex because half of this EUR 200 million is coming from the USD, and three-quarters of the Forex effect is coming in the second half of the year. Before the month of April, the USD tended to be more resilient versus the euro.

Yves Chapot: Passenger car tires have grown in China, but the market and our volumes have decreased in the other regions. Our overall replacement sales were posting a slight negative, so 1-point volume contribution overall, but with a very diverse situation between the Michelin brand, which is growing across practically all the business segments, and our Tier 2 and Tier 3 brand that has been probably more impacted by the inflows of budget tires, both in our North America and Europe core markets. Our operating margin, so the margin landed at EUR 2.7 billion or 10.5%, including Forex. I will start with the Forex because half of this EUR 200 million is coming from the USD, and three-quarters of the Forex effect is coming in the second half of the year. Before the month of April, the USD tended to be more resilient versus the euro.

Speaker #5: Overall, but with a very diverse volume contribution situation between the Michelin brand, which is growing across practically all the business segments, and our Tier 2 and Tier 3 brands that have probably been more impacted by the inflows of budget tires, both in our North American and European core markets.

Speaker #5: Our operating margin, so the margin landed at €2.7 billion, or 10.5%, including forex. I will start with the forex, because half of this €200 million is coming from the USD.

Speaker #5: And three-quarters of the forex effect is coming in the second half of the year. Before the month of April, the USD tended to be more resilient versus the euro.

Speaker #5: But if you look across the full year, the euro has revalued against nearly all currencies, and particularly the USD. Volume is down by €700 million, of which is shared between the margin effect and the lack of fixed cost absorption from our factory due to the very low level of factory loading.

Florent Menegaux: But if you look across the full year, the euro has revalued against nearly all currencies, and particularly the USD. Volume is down by EUR 700 million, of which is shared between the margin effect and the lack of fixed cost absorption from our factory due to the very low level of factory loading. We have a very positive price mix; we nearly hedged the volume effect. Raw material is negative for the full year, but has a positive effect on the second half, which was mostly concentrated on the last quarter. Manufacturing and logistics costs are as well negative, but impacted by EUR 235 million due to the tariffs, mostly in the second half. So if you take out this effect, our manufacturing costs, in fact, our manufacturing performance has been improving despite very low factory loading during the second half of the year.

Yves Chapot: But if you look across the full year, the euro has revalued against nearly all currencies, and particularly the USD. Volume is down by EUR 700 million, of which is shared between the margin effect and the lack of fixed cost absorption from our factory due to the very low level of factory loading. We have a very positive price mix; we nearly hedged the volume effect. Raw material is negative for the full year, but has a positive effect on the second half, which was mostly concentrated on the last quarter. Manufacturing and logistics costs are as well negative, but impacted by EUR 235 million due to the tariffs, mostly in the second half. So if you take out this effect, our manufacturing costs, in fact, our manufacturing performance has been improving despite very low factory loading during the second half of the year.

Speaker #5: We have a very positive price mix, which nearly hedges the volume effect. Raw material is negative for the full year, but has a positive effect in the second half.

Speaker #5: Which was mostly concentrated on the last quarter. Manufacturing and low cost are as well negative, but impacted by €235 million due to the tariffs.

Speaker #5: Mostly in the second half. So if you take out this effect, our manufacturing cost—in fact, our manufacturing performance—has been improving despite a very low factory loading during the second half of the year.

Speaker #5: SG&A, which were slightly increasing at the end of the first half of the year, land €5 million below 2020. And thanks to a strong reaction and around €28 million improvement in savings during the second half.

Florent Menegaux: SG&A, which were slightly increasing at the end of the first half of the year, landed EUR 5 million below 2024. Thanks to a strong reaction and around EUR 28 million improvement in savings during the second half, we have a positive contribution from non-tire business. The other effects are mainly due to our group bonuses. As in 2024, we have updated our bonuses in November when in 2025 we did it in June, with a last adjustment in December due to a better free cash flow performance than expected. Now, looking at the picture by business segment, you see that our segments, the most impacted segments, are SR2 and SR3 in terms of volumes. SR1 volume loss is mostly coming from original equipment, Europe and North America, and our Tier 2 and Tier 3 brand.

Yves Chapot: SG&A, which were slightly increasing at the end of the first half of the year, landed EUR 5 million below 2024. Thanks to a strong reaction and around EUR 28 million improvement in savings during the second half, we have a positive contribution from non-tire business. The other effects are mainly due to our group bonuses. As in 2024, we have updated our bonuses in November when in 2025 we did it in June, with a last adjustment in December due to a better free cash flow performance than expected. Now, looking at the picture by business segment, you see that our segments, the most impacted segments, are SR2 and SR3 in terms of volumes. SR1 volume loss is mostly coming from original equipment, Europe and North America, and our Tier 2 and Tier 3 brand.

Speaker #5: We have a positive contribution from the non-tire business. And the other effects are mainly due to our group bonuses, as in 2024 we updated our bonuses in November, whereas in 2025 we did it in June.

Speaker #5: With a last adjustment in December due to better free cash flow performance than expected. Now, looking at the picture by business segment, you see that our segments, the most impacted segments, are SR2 and SR3 in terms of volumes.

Speaker #5: SR1 volume lost is mostly coming from original equipment in Europe and North America, and our Tier 2 and Tier 3 brands. But the Michelin brand in SR1 has been very resilient and has grown over the year.

Florent Menegaux: But the Michelin brand in SR1 has been very resilient and has grown over the year. The SR2 is suffering, obviously, from the 9% volume decrease that I have already detailed. And the SR3 has been impacted as well by a strong volume decrease, which has eased during the second half of the year. At the end of June, we were posting a 6.8% volume decrease in SR3 versus 3.1% for the full year. I would like now to come back on SR2 performance and our plan to recover and to come back to a healthier financial performance on this segment. Here you will see on the right part of the slide two charts, one which is showing you the market fluctuation within a dark blue original equipment and in green replacement for truck and bus tires over the past 10 years.

Yves Chapot: But the Michelin brand in SR1 has been very resilient and has grown over the year. The SR2 is suffering, obviously, from the 9% volume decrease that I have already detailed. And the SR3 has been impacted as well by a strong volume decrease, which has eased during the second half of the year. At the end of June, we were posting a 6.8% volume decrease in SR3 versus 3.1% for the full year. I would like now to come back on SR2 performance and our plan to recover and to come back to a healthier financial performance on this segment. Here you will see on the right part of the slide two charts, one which is showing you the market fluctuation within a dark blue original equipment and in green replacement for truck and bus tires over the past 10 years.

Speaker #5: The SR2 is surviving, obviously, from the 9% volume decrease—that I have already detailed. And the SR3 has been impacted as well by a strong volume decrease.

Speaker #5: Which has eased during the second half of the year. At the end of June, we were posting a 6.8% volume decrease in SR3 versus 3.1% for the full year.

Speaker #5: I would like now to come back on SR2 performance and our plan to recover and to come back to a healthier financial performance on this segment.

Speaker #5: Here you will see on the right part of the slide two charts: one which is showing you the market fluctuation within a dark blue—original equipment—and in green—replacement—for truck and bus tires over the past 10 years.

Speaker #5: So we know, and it's particularly exacerbated for original equipment, that this market is cyclical, with a market that can fluctuate roughly 30% below or above its average depending on the cycle.

Florent Menegaux: So we know, and it's particularly exacerbated for original equipment, that this market is cyclical, with roughly a market that can fluctuate around 30% below or above its average depending on the cycle. And you see below with the operating margin, the strong correlation between the operating margin and these cycles. So our strategy is consisting now in trying to desensitize our SR2 margin to this cyclicality, first by rebalancing the respective weight of our original equipment and replacement volume, right-sizing our manufacturing capacity and its all the effort that has been done by the teams in the past two years, improving our local-to-local sourcing, accelerating our product plan renewal, increasing the share of services through our Michelin-connected fleet activity, and reemphasizing the importance of retrading to extract the full value of the Michelin technology.

Yves Chapot: So we know, and it's particularly exacerbated for original equipment, that this market is cyclical, with roughly a market that can fluctuate around 30% below or above its average depending on the cycle. And you see below with the operating margin, the strong correlation between the operating margin and these cycles. So our strategy is consisting now in trying to desensitize our SR2 margin to this cyclicality, first by rebalancing the respective weight of our original equipment and replacement volume, right-sizing our manufacturing capacity and its all the effort that has been done by the teams in the past two years, improving our local-to-local sourcing, accelerating our product plan renewal, increasing the share of services through our Michelin-connected fleet activity, and reemphasizing the importance of retrading to extract the full value of the Michelin technology.

Speaker #5: And you see below, with the operating margin, the strong correlation between the operating margin and these cycles. So our strategy is consisting now in trying to desensitize our SR2 margin to this cyclicality.

Speaker #5: First, by rebalancing the respective weight of our original equipment and replacement volume. Right-sizing our manufacturing capacity, and it's all the effort that has been done by the teams in the past two years.

Speaker #5: Improving our local-to-local sourcing. Accelerating our product plan renewal. Increasing the share of services through our Michelin Connected Fleet activity. And reemphasizing the importance of retrading to extract the full value of the Michelin technology.

Speaker #5: And with all these levels, we believe that we can try to have less exposure to these fluctuations in the years to come. A positive result in 2025 is coming from our cash flow generation.

Florent Menegaux: And with all these levels, we believe that we can try to have less exposure to these fluctuations in the years to come. A positive result in 2025 is coming from our cash flow generation. So despite a drop in EBITDA, we have been able to generate EUR 2.1 billion of free cash flow before acquisition. After acquisition, it's even better because we have made some disinvestments in 2025 thanks to a huge effort in working capital. Despite some inflationary pressures coming from the North American tariff, we spend less in taxes and interest than in 2024. Our restructuring costs have increased versus 2024 by EUR 180 million. You see that our CAPEX has slightly decreased as well, around EUR 100 million. And we have a very positive contribution from our joint venture and associates and from our assets, some asset disposals that we did, real estate in Euromaster or in China.

Yves Chapot: And with all these levels, we believe that we can try to have less exposure to these fluctuations in the years to come. A positive result in 2025 is coming from our cash flow generation. So despite a drop in EBITDA, we have been able to generate EUR 2.1 billion of free cash flow before acquisition. After acquisition, it's even better because we have made some disinvestments in 2025 thanks to a huge effort in working capital. Despite some inflationary pressures coming from the North American tariff, we spend less in taxes and interest than in 2024. Our restructuring costs have increased versus 2024 by EUR 180 million. You see that our CAPEX has slightly decreased as well, around EUR 100 million. And we have a very positive contribution from our joint venture and associates and from our assets, some asset disposals that we did, real estate in Euromaster or in China.

Speaker #5: So, despite a drop in EBITDA, we have been able to generate €2.1 billion of free cash flow before acquisitions. After acquisitions, it’s even better because we have made some disinvestments in 2025.

Speaker #5: Thanks to a huge effort in working capital, despite some inflationary pressures coming from the North American tariffs. We spent less in taxes and interest than in 2024.

Speaker #5: Our restructuring costs have increased versus 2024 by €180 million. You see that our CAPEX has slightly decreased as well, around €100 million. And we have a very positive contribution from our joint venture and associates, and from our assets— from asset disposals that we did in real estate, in Euromaster, or in China.

Speaker #5: Last year, our Rocky has been impacted by a weaker segment operating income, in 2025, despite $550 million less capital employed on average in 2025 versus 2024.

Florent Menegaux: Last, our ROCI has been impacted by a weaker segment operating income in 2025 despite EUR 550 million less capital employed on average in 2025 versus 2024. These cash generations, thanks to this cash generation, it provides us some headroom to deploy our strategy, as Florent highlighted. But we have been able in 2025 to further deleverage our balance sheet with a gearing which landed at 13% at the end of the year. It gives us, gives to the group the flexibility to finance both the growth of its polymer composite solution and to increase its share buyback programs. In terms of shareholder return, so our net results have decreased by EUR 230 million versus 2024 thanks to a better contribution of GV and associates and versus the impact of the segment operating income, less restructuring costs, and despite as well an effective tax rate which has increased from 20.22% to 26%.

Yves Chapot: Last, our ROCI has been impacted by a weaker segment operating income in 2025 despite EUR 550 million less capital employed on average in 2025 versus 2024. These cash generations, thanks to this cash generation, it provides us some headroom to deploy our strategy, as Florent highlighted. But we have been able in 2025 to further deleverage our balance sheet with a gearing which landed at 13% at the end of the year. It gives us, gives to the group the flexibility to finance both the growth of its polymer composite solution and to increase its share buyback programs. In terms of shareholder return, so our net results have decreased by EUR 230 million versus 2024 thanks to a better contribution of GV and associates and versus the impact of the segment operating income, less restructuring costs, and despite as well an effective tax rate which has increased from 20.22% to 26%.

Speaker #5: This cash generation has—thanks to this cash generation, it provides us some headroom to deploy our strategy, as Florent highlighted. But we have been able in 2025 to further deleverage our balance sheet, with a gearing which lands at 13% at the end of the year.

Speaker #5: It gives us, this to the Group, the flexibility to finance both the growth of its polymer composite solution and to increase its share buyback programs.

Speaker #5: In terms of shareholder returns, our net result has decreased by €230 million versus 2024, thanks to a better contribution of GV and associates versus the impact of the segment operating income.

Speaker #5: Less restructuring costs. And despite, as well, an effective tax rate which has increased from 20.22% to 26%. We will propose to our shareholder meeting in May a stable dividend per share of €1.38, which represents a payout ratio of 57%.

Florent Menegaux: We will propose to our shareholder meeting in May a stable dividend per share of EUR 1.38 per share, which represents a payout ratio of 57%. The idea is being that our payout ratio should fluctuate around 50%. And given the strength of our balance sheet, we will propose up to EUR 2 billion share buyback program in the next three years between 2026 and 2028, of which we will implement EUR 750 million in 2026. Now, moving to 2026, I would like first to come back on our future segment reporting, which is aiming to provide to our shareholders and to all of you a better understanding of our different activity. In this slide, you will see a pro forma 2025 segment reporting that will allow you in the next quarters to compare our 2026 financial reporting with 2025 actual performance. I would like to highlight four points on these slides.

Yves Chapot: We will propose to our shareholder meeting in May a stable dividend per share of EUR 1.38 per share, which represents a payout ratio of 57%. The idea is being that our payout ratio should fluctuate around 50%. And given the strength of our balance sheet, we will propose up to EUR 2 billion share buyback program in the next three years between 2026 and 2028, of which we will implement EUR 750 million in 2026. Now, moving to 2026, I would like first to come back on our future segment reporting, which is aiming to provide to our shareholders and to all of you a better understanding of our different activity. In this slide, you will see a pro forma 2025 segment reporting that will allow you in the next quarters to compare our 2026 financial reporting with 2025 actual performance. I would like to highlight four points on these slides.

Speaker #5: The idea is that our payout ratio should fluctuate around 50%. And, given the strength of our balance sheet, we will propose up to a €2 billion share buyback program over the next three years, between 2026 and 2028, of which we will implement €750 million in 2026.

Speaker #5: Now, moving to 2026, I would like first to come back on our future segment reporting, which is aiming to provide to our shareholders—and to all of you—a better understanding of our different activity.

Speaker #5: In this slide, you will see a pro forma 2025 segment reporting that will allow you, in the next quarters, to compare our 2026 financial reporting with 2025 actual performance.

Speaker #5: I would like to highlight four points on this slide. First, you have probably observed that we have decided to rename our reporting segments to better translate, as much as possible, the nature of our customers.

Florent Menegaux: First, you have probably observed that we have decided to rename our reporting segments to better translate as much as possible the nature of our customers. The first segment, which is automotive and two wheels, is mostly addressing consumers, even if through distributors or OEMs. The second segment has not changed. It's about transportation, goods, and people transportation specialties. It speaks by itself. Polymer composite solutions, it's the name that we have shared with you since our last Capital Markets Day in 2024. What you will observe is that consumer and transportation segments performance has not changed. Specialty now is made of three business lines: mining, which represents 40% in terms of sales, aircraft, 10%, and Beyond Road, 50%.

Yves Chapot: First, you have probably observed that we have decided to rename our reporting segments to better translate as much as possible the nature of our customers. The first segment, which is automotive and two wheels, is mostly addressing consumers, even if through distributors or OEMs. The second segment has not changed. It's about transportation, goods, and people transportation specialties. It speaks by itself. Polymer composite solutions, it's the name that we have shared with you since our last Capital Markets Day in 2024. What you will observe is that consumer and transportation segments performance has not changed. Specialty now is made of three business lines: mining, which represents 40% in terms of sales, aircraft, 10%, and Beyond Road, 50%.

Speaker #5: So the first segment, which is automotive and two wheels, is mostly addressing consumers, even if it's through distributors or OEMs. The second segment has not changed; it's about transportation—goods and people transportation.

Speaker #5: Specialties—it speaks for itself. And Polymer Composite Solutions is the name that we have shared with you since our last Capital Market Day in 2024.

Speaker #5: So what you will observe is that Consumer and Transportation segments' performance has not changed. Specialty now is made up of three business lines. Mining, which represents 40% in terms of sales.

Speaker #5: Aircraft 10%, and Beyond Road 50%. Although specialties are relative for the group, with a 13.1% operating margin, this segment is clearly underperforming due to the weight and the performance of our Beyond Road activity, which is impacted by the cyclicality of the agro and the construction businesses. It's clearly, along with the SR2 priority, that the recovery of the performance of this subsegment is a priority for the management of the company.

Florent Menegaux: Although specialties are relative for the group with a 13.1% operating margin, this segment is clearly underperforming due to the weight and the performance of our Beyond Road activity, which is impacted by the cyclicality of the agro and the construction businesses. It's clearly, along with the SR2, priority to the recovery of the performance of this subsegment, is clearly a priority for the management of the company. You see that the polymer composite solution represents 4.7% of the group sales and nearly 7% of the segment operating income. It's the most profitable segment in terms of operating margin, with nearly 15%. Florent mentioned earlier the acquisition that we have announced in the past weeks and that will be closed during 2026. In reality, the Kool-Aid Group, the first acquisition, has been closed on 2 February.

Yves Chapot: Although specialties are relative for the group with a 13.1% operating margin, this segment is clearly underperforming due to the weight and the performance of our Beyond Road activity, which is impacted by the cyclicality of the agro and the construction businesses. It's clearly, along with the SR2, priority to the recovery of the performance of this subsegment, is clearly a priority for the management of the company. You see that the polymer composite solution represents 4.7% of the group sales and nearly 7% of the segment operating income. It's the most profitable segment in terms of operating margin, with nearly 15%. Florent mentioned earlier the acquisition that we have announced in the past weeks and that will be closed during 2026. In reality, the Kool-Aid Group, the first acquisition, has been closed on 2 February.

Speaker #5: And you see that the Polymer Composite Solutions represents 4.7% of the group sales and nearly 7% of the segment operating income. And it's the most profitable segment in terms of operating margin, with nearly 15%.

Speaker #5: Florent mentioned earlier the acquisition that we have announced in the past weeks and that will be closed during 2026. In reality, the QLE Group—the first acquisition—had been closed on the 2nd of February.

Speaker #5: And we expect Textec and Flexitalic to close during the first half of the year. If you take all these activities, they are all North American companies, bringing nearly 2,000 new employees within the group.

Florent Menegaux: We expect Textec and Flexitallic to close during the first half of the year. If you take all these activities, they are all North American companies bringing nearly 2,000 new employees within the group headquartered in different regions and with an aggregate turnover of EUR 450 million, which is an increase of 35% for PCS, an average operating margin of 17%, so which is accretive and relative versus the existing polymer composite solution business for an enterprise value of around EUR 1 billion, which translates in a ratio of 11.5x EV on EBITDA and even 9.7x if we take the EBITDA of 2025 plus the synergies that we are expecting to extract in the coming four years. Not taking into account the growth potential, the intrinsic growth potential of these activities.

Yves Chapot: We expect Textec and Flexitallic to close during the first half of the year. If you take all these activities, they are all North American companies bringing nearly 2,000 new employees within the group headquartered in different regions and with an aggregate turnover of EUR 450 million, which is an increase of 35% for PCS, an average operating margin of 17%, so which is accretive and relative versus the existing polymer composite solution business for an enterprise value of around EUR 1 billion, which translates in a ratio of 11.5x EV on EBITDA and even 9.7x if we take the EBITDA of 2025 plus the synergies that we are expecting to extract in the coming four years. Not taking into account the growth potential, the intrinsic growth potential of these activities.

Speaker #5: Headquartered in different regions and with an aggregate turnover of €450 million, which is an increase of 35% for PCS. An average operating margin of 17%, so which is accretive and relative versus the existing Polymer Composite Solutions business.

Speaker #5: For an enterprise value of around €1 billion, which translates into a ratio of 11.5% EV/EBITDA, and even 9.7% if we take the EBITDA of 2025 plus the synergies that we are expecting to extract in the coming four years.

Speaker #5: So, not taking into account the growth potential—the intrinsic growth potential—of these activities. So, in terms of markets coming back, particularly on the tire market, we are expecting a rather soft market over 2026, with a probably balanced market between regional equipment and replacement, both for truck and passenger car, and probably a more optimistic picture for specialties.

Florent Menegaux: So in terms of markets, coming back on particularly on the tire market, we are expecting a rather soft market over 2026 with a probably balanced market between regional equipment and replacement, both for truck and passenger car, and probably a more optimistic picture for specialties in original equipment in passenger car due to the fact that the incentive that has been implemented in China will have probably less effect in 2026. We expect the market not to grow, at least in the first half, and to be close to zero in the second half. So overall, a market that will probably be slightly decreasing versus 2025. And on the replacement market, we are confident that the market should slightly grow, and particularly on the second half of the year, the two-wheel market should as well post a positive trend.

Yves Chapot: So in terms of markets, coming back on particularly on the tire market, we are expecting a rather soft market over 2026 with a probably balanced market between regional equipment and replacement, both for truck and passenger car, and probably a more optimistic picture for specialties in original equipment in passenger car due to the fact that the incentive that has been implemented in China will have probably less effect in 2026. We expect the market not to grow, at least in the first half, and to be close to zero in the second half. So overall, a market that will probably be slightly decreasing versus 2025. And on the replacement market, we are confident that the market should slightly grow, and particularly on the second half of the year, the two-wheel market should as well post a positive trend.

Speaker #5: In original equipment in passenger car, due to the fact that the incentive that has been implemented in China will have probably less effect in 2026, we expect the market not to grow, at least in the first half, and to be close to zero in the second half.

Speaker #5: So overall, the market will probably be slightly decreasing versus 2025. And on the replacement market, we are confident that the market should slightly grow, particularly in the second half of the year.

Speaker #5: The two-wheel market should as well post a positive trend. In the truck and bus, you see a very constrained situation in original equipment, with a still depressed H1, particularly in the North American market. We expect the OE truck market to decrease by 11% over the year, with a depressed first half and a slight recovery in the second half.

Florent Menegaux: In the truck and bus, you see a very constructed situation in on original equipment with still depressed H1, particularly in the North American market. We expect the OE truck market to decrease by 11% over the year and with a depressed first half and a slight recovery in the second half. The replacement market should be more resilient over the year. Mining should continue to grow at a mid-single digit pace. We expect Beyond Road to stabilize and start to rebound with the replacement market that should further increase. We have a positive orientation for aircraft as well as for polymer composite solutions. So in terms of guidance, as Florent shared already, we expect to deliver segment operating income at ISO scope and Forex above 2025 and a free cash flow above EUR 1.6 billion before acquisitions.

Yves Chapot: In the truck and bus, you see a very constructed situation in on original equipment with still depressed H1, particularly in the North American market. We expect the OE truck market to decrease by 11% over the year and with a depressed first half and a slight recovery in the second half. The replacement market should be more resilient over the year. Mining should continue to grow at a mid-single digit pace. We expect Beyond Road to stabilize and start to rebound with the replacement market that should further increase. We have a positive orientation for aircraft as well as for polymer composite solutions. So in terms of guidance, as Florent shared already, we expect to deliver segment operating income at ISO scope and Forex above 2025 and a free cash flow above EUR 1.6 billion before acquisitions.

Speaker #5: And the replacement market should be more resilient over the year. Mining should continue to grow at a mid-single-digit pace. We expect beyond road to stabilize and start to rebound, with the replacement market that should further increase.

Speaker #5: And we have a positive orientation for Aircraft as well as for Polymer Composite Solutions. So in terms of guidance, as Florent shared already, we expect to deliver segment operating income at ISO scope and forex above 2025, and the free cash flow above €1.6 billion before acquisitions.

Speaker #5: These guidance is relying on some key assumptions. We expect overall for the year to recover a growth in volume, probably with a flat H1 and a slight growth in H2.

Florent Menegaux: This guidance is relying on some key assumptions. We expect overall for the year to recover a growth in volume, probably with a flat H1 and a slight growth in H2 with a gradual recovery of original equipment market, particularly in B2B. We expect this growth thanks to an increased differentiation from innovation, both in terms of product and data. We should have the tailwind of the raw material that will play for the full year. We expect with the assumptions we have in terms of tariff and Forex, and I might come back on that, we build our forecast on the Forex situation at the end of 2025. So a USD around $118 per euro and a stable tariff situation.

Yves Chapot: This guidance is relying on some key assumptions. We expect overall for the year to recover a growth in volume, probably with a flat H1 and a slight growth in H2 with a gradual recovery of original equipment market, particularly in B2B. We expect this growth thanks to an increased differentiation from innovation, both in terms of product and data. We should have the tailwind of the raw material that will play for the full year. We expect with the assumptions we have in terms of tariff and Forex, and I might come back on that, we build our forecast on the Forex situation at the end of 2025. So a USD around $118 per euro and a stable tariff situation.

Speaker #5: With a gradual recovery of the original equipment market, particularly in B2B, and we expect this growth thanks to increased differentiation from innovation, both in terms of product and data.

Speaker #5: We should have the tailwind of the raw material that will play for the full year. And we expect, with the assumptions we have in terms of tariff and Forex—and I might come back on that—we expect that we build our forecast on the Forex situation at the end of 2025.

Speaker #5: So a USD around 118 dollars for per euro. And stable tariff situation the tariff has impacted us in at around 250 million euro on the in 230 million euro in 2025 and should have an impact of around 120 million euro in 2026.

Florent Menegaux: The tariff has impacted us at around EUR 250 million on the in EUR 230 million in 2025 and should have an impact of around EUR 120 million in 2026. So taking into account all these assumptions and the levers and the willingness of the group to recover the growth path during that year, we believe that we can achieve these ambitions. Thank you very much. And I think now we can open the Q&A session.

Yves Chapot: The tariff has impacted us at around EUR 250 million on the in EUR 230 million in 2025 and should have an impact of around EUR 120 million in 2026. So taking into account all these assumptions and the levers and the willingness of the group to recover the growth path during that year, we believe that we can achieve these ambitions. Thank you very much. And I think now we can open the Q&A session.

Speaker #5: So, taking into account all these assumptions and the levers, and the willingness of the group to recover the growth path during that year, we believe that we can achieve these ambitions.

Speaker #5: Thank you very much, and I think now we can open the Q&A session.

Speaker #2: Thank you, ladies and gentlemen. If you wish to ask a question, please press star and one on your phone keypad. Please ask your question in English.

Operator: Thank you, ladies and gentlemen. If you wish to ask a question, please press star and one on your phone keypad. Please ask your question in English. In the interest of time, we kindly ask you to limit yourself to two questions only. The first question is from Akshat Kaker, JP Morgan. Please go ahead.

Speaker #2: In the interest of time, we kindly ask you to limit yourself to two questions only. The first question is from Akshat Caker. JP Morgan, please go ahead.

Speaker #3: Good evening. Akshat from JP Morgan. I have two questions, please. The first one on capital allocation—clearly a greater intent from your side to give back cash to shareholders, almost allocating 100% of free cash flow between dividends and share buybacks. And you also mentioned in your prepared remarks about M&A still being a priority.

Akshat Kacker: Good evening. Akshat from JP Morgan. I have two questions, please. The first one on capital allocation. Clearly a greater intent from your side to give back cash to shareholders, almost allocating 100% of free cash flow between dividends and share buybacks. And you also mentioned in your prepared remarks about M&A still being a priority. So could you just remind us how you're thinking about your balance sheet going forward and leverage targets over the cycle, please? That's the first question. And the second one is on your SOI development in 2025. Now, when I think about the two halves, clearly very different from each other, EUR 1.45 billion SOI in the first half, roughly EUR 1.25 billion in the second half. And I remember you telling us that second half seasonality is for better profits.

Speaker #3: So, could you just remind us how you're thinking about your balance sheet going forward, and leverage targets over the cycle, please? That's the first question.

Speaker #3: And the second one is on your EBIT development in 2025. Now, when I think about the two halves, clearly very different from each other: €1.45 billion SOI in the first half, €1.25 billion roughly in the second half. And I remember you telling us that second half seasonality is for better profits.

Speaker #3: And you talked about a large element or one-offs based on lower capacity utilization in the second half. So, are you in a position to tell us what was the real underlying earnings of the business in the second half, excluding those one-offs, and how it could be extrapolated going into 2026?

Akshat Kacker: You talked about a large element of one-offs based on lower capacity utilization in the second half. Are you in a position to tell us what was the real underlying earnings of the business in the second half, excluded for those one-offs, and how it could be extrapolated that going into 2026? Thank you so much.

Speaker #3: Thank you so

Speaker #3: much. So I will start

Florent Menegaux: So I will start with a few elements and then we will complement. So on the first, on the EBIT development and the seasonality, sometimes H2 is better than H1, and sometimes it's the reverse. Now, 2025 has been really special because of huge movements of inventories across the globe due to the situation in the US, and therefore this has perturbed the normal cyclicality of markets. So today we don't anticipate the situation to improve in the market in the first semester, but we have already signals that it will be gradually improving based on the circumstances we see now. Of course, it will be gradually improving. So we are confident, plus the fact that we have been very reassured by what happened in Q4 2025 where we adjusted.

Speaker #4: With a few elements on the EVE, we will complement. So, first, on the EBIT development and the seasonality—sometimes H2 is better than H1, and sometimes it's the reverse.

Speaker #4: Now, 2025 has been really special because of huge movements of inventories across the globe, due to the situation in the US, and therefore this has perturbed the normal cyclicality of markets.

Speaker #4: So today, we don't anticipate the situation to improve in the market in the first semester, but we already have signals that it will be gradually improving based on the circumstances we see now, of course.

Speaker #4: It will be gradually improving, so we are confident. Plus the fact that we have been very reassured by what happened in the fourth quarter of 2025, where we adjusted. It took us some time, but all the strong assets of Michelin are still there and transformations are—so we have tuned, and we have adapted to the market conditions and it paid—it has paid dividend in the fourth quarter.

Florent Menegaux: It took us some time to realign and readjust what we had to do, but all the strong assets of Michelin are still there, and transformations are still ongoing, and our capacity to grow is still there. So we have tuned, and we have adapted to the market conditions, and it has paid dividend in the fourth quarter. So we are confident in our ability to deliver what Eva just said. In terms of capital allocation, we have decided to say that our balance sheet is too deleveraged, and at 13% we have a lot of flexibility. So of course we anticipate the interest rates to decrease in the coming years. We have today debt that are at a very advantageous rate.

Speaker #4: So, we are confident in our ability to deliver what EVE have decided. Allocation-wise, we have a lot of flexibility. The interest rates are at 13%. We are to distribute our generated today dividends according to what we have said, plus to share to buy back shares, because that is in the past.

Florent Menegaux: So basically we said, okay, we can use our balance sheet that we have generated today to distribute our dividends according to what we have said, plus to share to buy back shares because that is in the past. In the future, our balance sheet is still strong and is very low leverage. So that's why we have said we can do everything without compromising our strategy. Maybe if you want to. And maybe to focus on this capital allocation. Before the COVID, we used to end the year with a cash of around EUR 2.5 billion. Then, with the COVID, with the huge inflationary pressure that we get in 2022, which was nearly EUR 2 billion on our working capital, we and with a much bigger cash at the end of the year.

Speaker #4: In the future, our balance sheet is still strong and has very low leverage. So that's why we have said we can do everything without compromising our

Speaker #4: strategy. Maybe Eve if you want to. And

Yves Chapot: And maybe to focus on this capital allocation. Before the COVID, we used to end the year with a cash of around EUR 2.5 billion. Then, with the COVID, with the huge inflationary pressure that we get in 2022, which was nearly EUR 2 billion on our working capital, we and with a much bigger cash at the end of the year.

Speaker #5: maybe to focus on this capital allocation we before the COVID we used to lend the year with a cash of around 2.5 billion euro.

Speaker #5: the with the COVID with the huge inflationary pressure that In we get in 2022 which was nearly 2 billion euro on our working capital we and with a much bigger cash at the end of the year and we consider that it's not optimized to keep this level of cash.

Florent Menegaux: And we consider that it's not optimized to keep this level of cash. So that's why we need as well to come back to a more healthier level. And yeah. And of course we are at 13% gearing. If I take the assumption of at least EUR 1.6 billion of free cash flow and I had the dividend of a little bit more than EUR 900 million plus the EUR 750 of share buyback, it means that will increase at the end of the year the debt by nearly EUR 1 billion, which is basically the enterprise value of the acquisition we just announced, which will probably lead us to still land in the round of 20% or below 20% gearing. So we are still in a very healthy and solid situation. And I'm sorry.

Yves Chapot: And we consider that it's not optimized to keep this level of cash. So that's why we need as well to come back to a more healthier level. And yeah. And of course we are at 13% gearing. If I take the assumption of at least EUR 1.6 billion of free cash flow and I had the dividend of a little bit more than EUR 900 million plus the EUR 750 of share buyback, it means that will increase at the end of the year the debt by nearly EUR 1 billion, which is basically the enterprise value of the acquisition we just announced, which will probably lead us to still land in the round of 20% or below 20% gearing. So we are still in a very healthy and solid situation.

Speaker #5: So that's why we need, as well, to come back to a more healthy level.

Speaker #5: Yeah. And of course, we are at 13% gearing. If I take the assumption of at least €1.6 billion of free cash flow, and I add the dividend of a little bit more than €100 million plus the €750 million of share buyback, it means that will increase at the end of the year the debt by nearly €1 billion, which is basically the enterprise value of the acquisition we just announced.

Speaker #5: Which is not—which is which—will probably lead us to still lend in the round of 20% or below 20% gearing. So we are still in a very healthy and solid situation.

Speaker #4: And I'm sorry, and to come back on the market situation, I forgot to mention that the fundamentals of passenger car, the mileage driven all across the world, is very stable.

Florent Menegaux: And I'm sorry. To come back on the market situation, I forgot to mention that the fundamentals of a passenger car, the mileage driven all across the world is very stable. So it means that the OE being down in most mature markets, what happens is the vehicle parc is aging very fast, actually. It's the same situation in truck, despite the fact that the Cass Freight Index in the US is sharply down. But the vehicle parc is still very much aging, so it cannot age forever. So at some point the market will have to recover, and that's what we start to anticipate.

Florent Menegaux: To come back on the market situation, I forgot to mention that the fundamentals of a passenger car, the mileage driven all across the world is very stable. So it means that the OE being down in most mature markets, what happens is the vehicle parc is aging very fast, actually. It's the same situation in truck, despite the fact that the Cass Freight Index in the US is sharply down. But the vehicle parc is still very much aging, so it cannot age forever. So at some point the market will have to recover, and that's what we start to anticipate.

Speaker #4: So it means that, with OE being down in most mature markets, what happens is the vehicle park is aging. Very fast, actually. And it's the same situation in truck, despite the fact that the freight cash index in the US is sharply down.

Speaker #4: But we the vehicle park is still very much aging. So it cannot age forever. So at some point the market will have to recover and that's what we start to

Speaker #4: anticipate.

Akshat Kacker: Giving profit comments, should we think about any extraordinary costs in the second half result of what you reported in the second half in terms of sharp adjustments to capacity? Or do you think that second half result is a good number to look at when you think about what carries over to the first half of this year?

Speaker #5: Comments: should we think about any extraordinary pause in the second, getting profit?

Speaker #5: Half result of what you reported in the second half in terms of sharp adjustments to capacity, or do you think that second half result is a good number to look at when you think about what carries over to the first half of this?

Speaker #5: year? No because you the second

Florent Menegaux: No, because in the second half we had a very contrasted picture between Q3 and Q4. We had a very bad Q3, particularly North America, which led us to the profit warning in October. And we had a far stronger and far healthier situation in the Q4. So when we look at the trend of Q4 and projecting Q4 in Q1, it makes us relatively optimistic on our ability to improve our operating margin in 2026, starting in the first half.

Yves Chapot: No, because in the second half we had a very contrasted picture between Q3 and Q4. We had a very bad Q3, particularly North America, which led us to the profit warning in October. And we had a far stronger and far healthier situation in the Q4. So when we look at the trend of Q4 and projecting Q4 in Q1, it makes us relatively optimistic on our ability to improve our operating margin in 2026, starting in the first half.

Speaker #4: In the first half, we had a very contrasted picture between Q3 and Q4. We had a very bad Q3, particularly in North America, which led us to the profit warning in October.

Speaker #4: And we have a far stronger and far healthier situation in Q4. So, when we look at the trend of Q4 and projecting Q4 into Q1, it makes us relatively optimistic on our ability to improve our operating margin in 2026, starting in the first half.

Speaker #5: Thank you so much.

Akshat Kacker: Thank you so much.

Speaker #1: The next question is from Harry Martin Bernstein. Please go ahead.

Operator: The next question is from Harry Martin Bernstein. Please go ahead.

Speaker #6: Yeah, thanks. Good evening, everyone. The first question I have is on the price/mix performance. When we spoke at Q3, you didn't have a lot of confidence in Q4 price/mix and guided it to slow sequentially.

Yves Chapot: Yes. Thanks. Good evening, everyone. The first question I have is on the price mix performance. When we spoke at Q3, you didn't have a lot of confidence in Q4 price mix, guided it to slow sequentially, driven by what competitors were doing with discounting and imports. In the end, price mix accelerated in Q4. So how did you achieve that? Which markets were better than the expectations and how do you feel about the price premium for your products in the key segments? And then I'd like to ask about the non-tire M&A as well. It would be good to hear some more of the rationale and how you go about choosing targets of the three acquisitions in the US. Some seem to be more in quite technical products, specialty fabrics and coatings.

Harry Martin: Yes. Thanks. Good evening, everyone. The first question I have is on the price mix performance. When we spoke at Q3, you didn't have a lot of confidence in Q4 price mix, guided it to slow sequentially, driven by what competitors were doing with discounting and imports. In the end, price mix accelerated in Q4. So how did you achieve that? Which markets were better than the expectations and how do you feel about the price premium for your products in the key segments? And then I'd like to ask about the non-tire M&A as well. It would be good to hear some more of the rationale and how you go about choosing targets of the three acquisitions in the US. Some seem to be more in quite technical products, specialty fabrics and coatings.

Speaker #6: Driven by what competitors were doing with discounting and imports. In the end, price mix accelerated in Q4. So how did you achieve that? Which markets were better than expectations, and how do you feel about the price premium for your products in the key segments?

Speaker #6: And then I'd like to ask about the non-tire M&A as well. It would be good to hear some more of the rationale and how you go about choosing targets.

Speaker #6: Of the three acquisitions in the US, some seem to be more quite technical products—specialty fabrics and coatings. Some, you could say, are a little bit more simple-type products, seals and gaskets.

Yves Chapot: Some you could say are a little bit more simple type products, seals and gaskets. So help us understand where in this very disparate industry the real value creation opportunity is and where that genuine underlying demand growth is for these products. Thank you.

Harry Martin: Some you could say are a little bit more simple type products, seals and gaskets. So help us understand where in this very disparate industry the real value creation opportunity is and where that genuine underlying demand growth is for these products. Thank you.

Speaker #6: So, help us understand where in this very disparate industry the real value creation opportunity is, and where that genuine underlying demand growth is for these.

Speaker #6: products. Thank you. So

Florent Menegaux: So on the price mix, what happened during the 2025 was very stressful because we had Q1, we had to fix China, Q2, we had to fix Europe, and Q3 we had to fix the US. And so it moved around, and it put us in a very stressful situation. Basically, the tariff situation led us, as we are the leader in price, to adapt to the market conditions and to the tariff situation, which put us out of the market, basically. So we were not according to the market situation, to the market conditions. So we have adapted. And as soon as we have adapted, immediately the good, strong fundamentals of Michelin came back. And that's why we have seen the price mix came back.

Speaker #4: On the price mix, what happened during 2025 was very stressful because in Q1 we had to fix China, Q2 we had to fix Europe, and Q3 we had to fix the US.

Speaker #4: And so it moved around and it put us at in very stressful situation. Basically the tariff situation led us to as we are the leader in price we led us to adapt to the market conditions and to the tariff situation.

Speaker #4: Which put us out of the market, basically, so we were not, according to the market situation, to the market conditions. So we have adapted.

Speaker #4: And as soon as we had adapted, immediately the good, strong fundamentals of Michelin came back. And that's why we have seen the price mix come back.

Speaker #4: So, when we are, you're slightly—deposition, of course, we've lost share during those moments. In the various regions, we lost share, but we recaptured those lost share very quickly towards the end of the year.

Florent Menegaux: So when we are, you're slightly de-positioned, of course we lost share during those moments in the various regions. We lost share, but we recapture those lost share very quickly towards the end of the year because we came back to what is acceptable by the market. And of course now we are much more agile and we can adapt to any market conditions and any market situation much more quickly than what we were able to do in the past. So we have done a lot of work on this subject. So we are now much, much more agile and maybe even on the non-tire activity. So how do we choose the targets? We have a team in the polymer composite solution, which is dedicated to this segment.

Speaker #4: Because we came back to what is acceptable by the market. And of course, now we are much more agile, and we can adapt to any market conditions and any market situation much more quickly than what we were able to do in the past.

Speaker #4: So, we have done a lot of work on this subject. So, we are now much, much more agile. And maybe on—

Yves Chapot: On the non-tire activity. So how do we choose the targets? We have a team in the polymer composite solution, which is dedicated to this segment. First, some targets can come from the business units we have already in our portfolio and that have very strong knowledge of their ecosystem. But we are as well studying potential targets that are offered to us or that we identify. Well, the criteria have no change versus what we share with you during the May 2024 Capital Market Day. We look at critical applications where generally the value of the product offered by these companies is relatively small versus the value of the entire system they contribute to move or to make functioning. Then we look at companies or activities where we consider that we have a parenting advantage in terms of research and development.

Speaker #4: the. On the non-tire activity.

Speaker #5: So, how do we choose the targets? We have a team in polymer composite solutions which is dedicated to this segment. First, some targets can come from the business units we have already in our portfolio and with very strong knowledge of their ecosystem.

Florent Menegaux: First, some targets can come from the business units we have already in our portfolio and that have very strong knowledge of their ecosystem. But we are as well studying potential targets that are offered to us or that we identify. Well, the criteria have no change versus what we share with you during the May 2024 Capital Market Day. We look at critical applications where generally the value of the product offered by these companies is relatively small versus the value of the entire system they contribute to move or to make functioning. Then we look at companies or activities where we consider that we have a parenting advantage in terms of research and development.

Speaker #5: But we are, as well, studying potential targets that are offered to us or that we identify. The criteria have not changed versus what we shared with you during the May 2024 Capital Market Day.

Speaker #5: We look at critical applications. Generally, the value of the product offered by these companies is relatively small versus the value of the entire system they contribute to move or to make. Companies or activities where we consider that we have functioning.

Speaker #5: Then we look at a parental advantage in terms of research and development. As Florent shared at the beginning, we look at: are we able, with our capabilities in terms of material science, to enhance the performance, to reduce the cost, to improve the sustainability of the product that these companies are offering.

Florent Menegaux: As Florent shared at the beginning, we look at how we're able with our capabilities in terms of material science to enhance the performance, to reduce the cost, to improve the sustainability of the product that these companies are offering. Then of course we look at the financials. We look at the growth also potential. Are these businesses, these companies in segments that are at risk of commoditization or not? What are the underlying growth levers? So that's why we look at that very carefully. It took us three years, and basically in 2023 and 2024 we did not achieve 2023. We did the FTG, but 2024 and 2025 we did not achieve any major acquisition. It's just at the very end of the year and early 2026 that we were able to communicate.

Yves Chapot: As Florent shared at the beginning, we look at how we're able with our capabilities in terms of material science to enhance the performance, to reduce the cost, to improve the sustainability of the product that these companies are offering. Then of course we look at the financials. We look at the growth also potential. Are these businesses, these companies in segments that are at risk of commoditization or not? What are the underlying growth levers? So that's why we look at that very carefully. It took us three years, and basically in 2023 and 2024 we did not achieve 2023. We did the FTG, but 2024 and 2025 we did not achieve any major acquisition. It's just at the very end of the year and early 2026 that we were able to communicate.

Speaker #5: And then, of course, we look at the financials. We look at the growth, also potential. Are these businesses, these companies, in segments that are at risk of commoditization or not?

Speaker #5: What are the underlying growth levers? So that's why we look at that very carefully. It took us three years, basically. In 2023 and 2024, we did not achieve—2023 we did the FCG, but 2024 and 2025 we did not achieve any major acquisition.

Speaker #5: It's just at the very end of the year and early 2026 that we are able to communicate. So it shows that we are both prudent but as well we want to invest where we can really bring value to the customers and of course to the company and our

Speaker #5: It's just at the very end of the year and early 2026 that we are able to communicate. So it shows that we are both prudent, but as well we want to invest where we can really bring value to the customers, and of course to the company and our shareholders.

Florent Menegaux: It shows that we are both prudent, but as well we want to invest where we can really bring value to the customers and of course to the company, and our shareholders. Thank you.

Yves Chapot: It shows that we are both prudent, but as well we want to invest where we can really bring value to the customers and of course to the company, and our shareholders. Thank you.

Speaker #4: Thank

Speaker #4: you. The next question is

Operator: The next question is from Martino De Ambroggi, Equita. Please go ahead.

Speaker #1: From Martino D'Ambrogi, Equita. Please go ahead.

Speaker #1: ahead. Thank you.

Yves Chapot: Thank you. Good evening, everybody. Two more questions on the polymers division. So what's your best case scenario in 2, 3 years time? And under the current perimeter, you used to provide a medium long term target in terms of profitability for your divisions. Now we have a split of the specialty. So could you provide any target for the standalone polymers division in the current perimeter? And the second question is on the financial leverage because you mentioned we have low leverage, but what is the maximum amount of cash out or debt to EBITDA? I don't know. Just to understand what is the firepower you are available, you are comfortable with in case of additional M&A?

Martino De Ambroggi: Thank you. Good evening, everybody. Two more questions on the polymers division. So what's your best case scenario in 2, 3 years time? And under the current perimeter, you used to provide a medium long term target in terms of profitability for your divisions. Now we have a split of the specialty. So could you provide any target for the standalone polymers division in the current perimeter? And the second question is on the financial leverage because you mentioned we have low leverage, but what is the maximum amount of cash out or debt to EBITDA? I don't know. Just to understand what is the firepower you are available, you are comfortable with in case of additional M&A?

Speaker #6: Good evening, everybody. Two more questions on the Polymers division. So, what's your best-case scenario in two or three years' time? And under the current perimeter, you used to provide a medium to long-term target in terms of profitability for your divisions.

Speaker #6: Now we have a split of the specialty, so could you provide any target for the standalone Polymers division in the current perimeter? And the second question is on the financial leverage, because you mentioned we have low leverage.

Speaker #6: But what is the maximum amount of cash out or debt to EBITDA? I don't know. Just to understand what is the firepower you are available you are comfortable with in case of additional M&A?

Speaker #5: The first question, and Yves will probably take the second question. So on the first one: in terms of profitability, the specialties today are way below where they should be.

Florent Menegaux: First question and Eve will probably take the second question. So on the first one is in terms of profitability, the Specialties today is way below where it should be because of the weight of our Beyond Road activities that are having a tough time. So we are confident that the Specialty business should be much higher rates because mining and aircraft are showing that it's very strong. And if we look at the polymer composite solutions, it's what I've said in my introduction: it should be in excess of 15%. So like the Specialties, this should be highly relative in terms of operating income and even in cash flow generation because they are light. The polymer composite solutions are light in assets compared to the tire activities.

Speaker #5: Because of the weight of our Beyond Road activities that are having a tough time. So, but, so we are confident that the Specialty business can be—should be—much higher rates.

Speaker #5: Because mining and aircraft are showing that it's very strong. And if we look at the polymer composite solutions, what I said in my introduction was it should be in excess of 15 percent.

Speaker #5: So like the specialties this should be highly relative in terms of operating income and even also in cash flow generation. Because they are light the polymer composite solutions are light in assets.

Speaker #5: Compared to the tire activities. So that's why we have chosen to get there. Now also the part of the synergies we have most of the time small cost synergies but high and we have demonstrated that with Fener and also we are demonstrating that with the FCG.

Florent Menegaux: So that's why we have chosen to get there. Now also it's part of the synergies we have most of the time small cost synergies but high, and we have demonstrated that with Fenner and also we are demonstrating that with the FTG. We have high revenue synergies related to the technology we can bring in the market we get in, like Eve just mentioned. So in terms of profitability, we have said it's PCS should be at minimum 15% and giving us growth for the group and we intend to grow that share.

Speaker #5: We have high revenue synergies related to the technology we can bring in the market we get in, like Yves just mentioned. So, in terms of it, PCS should be at minimum 15 percent profitability, we have said, and giving us growth for the Group.

Speaker #5: And we intend to grow that

Speaker #5: share. So

Guillaume Jullienne: So in terms of leverage, first I did not comment it, but all the rating agencies have confirmed our rating, which is basically A with a stable outlook. And we know basically that we can increase our debt by a few billion, EUR 3 to 4 billion without impacting our rating. So it's a first answer. We have the room to stay strong investment grade with a strong investment grade rating while spending increasing by EUR 3 to 4 billion our net debt.

Yves Chapot: So in terms of leverage, first I did not comment it, but all the rating agencies have confirmed our rating, which is basically A with a stable outlook. And we know basically that we can increase our debt by a few billion, EUR 3 to 4 billion without impacting our rating. So it's a first answer. We have the room to stay strong investment grade with a strong investment grade rating while spending increasing by EUR 3 to 4 billion our net debt.

Speaker #4: In terms of leverage, first, I did not comment on it, but all the rating agencies have confirmed our rating, which is basically 'A' with a stable outlook.

Speaker #4: And we know basically that we can increase our debt by a few billions three to four billion euro without impacting our rating. So it's a first answer we have the room to stay strong investment grade with a strong investment grade rating while spending increasing by three to four billion euro our net debt.

Florent Menegaux: I think we have demonstrated so far that we make moves that are interesting for the shareholders in the long run.

Speaker #5: demonstrated so far, and I think we have, that we make moves that are interesting for the shareholders in the long

Speaker #5: run. Thank

Yves Chapot: Thank you.

Martino De Ambroggi: Thank you.

Speaker #1: The next question is you, from Thomas Besson, Capel Chevreux. Please go ahead.

Operator: The next question is from Thomas Besson, Kepler Cheuvreux. Please go ahead.

Speaker #1: ahead. Thank you very much.

[Analyst] (Kepler Cheuvreux and Deutsche Bank): Thank you very much. Good evening. First question, could you confirm that in Q4, both in SR1 and SR3, your volumes were positive, and also confirm that we should expect these two segments to have positive volumes for 2026 so that your group volumes are effectively positive for the year? The first question. And the second is 2 small topics on modeling. There's been a much stronger contribution in the P&L from your associates. Could you explain why and what we should expect again in 2026 for this associates line? And the second small modeling question is your CapEx has been a positive surprise in 2025. The group has clearly shrunk in terms of volumes over the last 3 years.

Thomas Besson: Thank you very much. Good evening. First question, could you confirm that in Q4, both in SR1 and SR3, your volumes were positive, and also confirm that we should expect these two segments to have positive volumes for 2026 so that your group volumes are effectively positive for the year? The first question. And the second is 2 small topics on modeling. There's been a much stronger contribution in the P&L from your associates. Could you explain why and what we should expect again in 2026 for this associates line? And the second small modeling question is your CapEx has been a positive surprise in 2025. The group has clearly shrunk in terms of volumes over the last 3 years.

Speaker #6: Good evening. First question could you confirm that in Q4 both in SR1 and SR3 your volumes were positive and also confirm that we should expect these two segments to have positive volumes for 2026 so that your group volumes are effectively positive for the year.

Speaker #6: The first question, and the second, is two small topics on modeling. There’s been a first, much stronger contribution in the P&L from your associates. Could you explain why and what we should expect again in '26 for these associates line?

Speaker #6: And the second small modeling question is, your CAPEX has been a positive surprise in '25. The group has clearly shrunk in terms of volumes over the last three years.

Speaker #6: Could you expect that you can stay at a relatively lower CAPEX than what was projected that the last CMD in 2026 or is it was it just a one-off in '25?

[Analyst] (Kepler Cheuvreux and Deutsche Bank): Could you expect that you can stay at a relatively lower CAPEX than what was projected at the last CMD in 2026, or is it just a one-off in 2025? Thank you.

Thomas Besson: Could you expect that you can stay at a relatively lower CAPEX than what was projected at the last CMD in 2026, or is it just a one-off in 2025? Thank you.

Speaker #6: Thank

Speaker #5: So, on the volume, Yves was clear on that. We have grown at the Michelin brand, especially in the replacement markets in SR1 and SR3.

Florent Menegaux: So on the volume, Yves was clear on that. We have grown at the Michelin brand in, especially, on replacement markets in SR1 and SR3. Now OE is still depressed, so we didn't grow at OE specifically, but we have improved the performance at OE in SR1.

Speaker #5: Now OE is still depressed so we did not grow at OE specifically but we have improved the performance at OE in SR1.

Speaker #4: But to answer precisely to the question, our volume in both SR1 and SR3 was positive in Q4.

Guillaume Jullienne: But to answer precisely to the question, our volume both in SR1 and SR3 were positive in Q4.

Yves Chapot: But to answer precisely to the question, our volume both in SR1 and SR3 were positive in Q4.

Speaker #5: Now, in terms of CAPEX, we did not spend exactly what we wanted to spend in 2025. Because of internal things, it's not—we didn't drive specifically CAPEX to shrink that much.

Florent Menegaux: Now in terms of CAPEX, we did not spend exactly what we wanted to spend in 2025 because of internal thing. It's not we didn't drive specifically CAPEX to shrink that much. So we have said we should be in the neighborhood of EUR 2 billion to 2.1 billion because we want to improve the ergonomics and especially the productivity everywhere. So we still have a lot of things to do to complete our productivity effort. So that's why we maintain that level. But we have almost zero capacity investment.

Speaker #5: So we have said we should be in the neighborhood of two billion to one billion because we want to improve the ergonomics and especially the productivity everywhere so we still have a lot of things to do to complete our productivity effort.

Speaker #5: So that's why we maintain that level. But we have almost zero capacity.

Speaker #5: investment. So regarding

Guillaume Jullienne: So regarding the JV and associates, we had in these categories different kind of activities. We have some mature activities such as our distribution JV and associates and the activities that are linked to the natural rubber plantation and transformation as well as one we have as well the medical joint venture Solesis that we have put in a joint venture a few years ago. These companies are generally positively contributing. And in the case of TBC, there was some additional contribution due to the fact that TBC concentrated itself on its core business, which is mostly wholesale and sold first its retail business in companion retail in 2023 and more recently its Midas franchise. So there was a, let's say, an extra contribution. On the other hand, we used to have in this segment also some technological ventures such as Adobe and Symbio.

Yves Chapot: So regarding the JV and associates, we had in these categories different kind of activities. We have some mature activities such as our distribution JV and associates and the activities that are linked to the natural rubber plantation and transformation as well as one we have as well the medical joint venture Solesis that we have put in a joint venture a few years ago. These companies are generally positively contributing. And in the case of TBC, there was some additional contribution due to the fact that TBC concentrated itself on its core business, which is mostly wholesale and sold first its retail business in companion retail in 2023 and more recently its Midas franchise. So there was a, let's say, an extra contribution. On the other hand, we used to have in this segment also some technological ventures such as Adobe and Symbio.

Speaker #4: Associates, we had in these categories different kinds of activities. We have some mature activities, such as our distribution, GV and associates, and the activities that are linked to the natural rubber plantation and transformation.

Speaker #4: As well as one, we have as well the medical joint venture, Solesis, that we have put in a joint venture a few years ago.

Speaker #4: These companies are generally positively contributing, and in the case of TBC, there was some additional contribution due to the fact that TBC concentrated itself on its core business, which is mostly wool sales, and sold first its retail business in Compagnon Retail in 2023, and more recently its Midas franchise.

Speaker #4: So there was, let's say, an extra contribution. On the other hand, we used to have in this segment also some technological ventures such as Adop and Symbio. Symbio, as you know, due to Stellantis' decision to withdraw from the hydrogen value chain, has to bear some heavy restructuring costs in 2025.

Guillaume Jullienne: Symbio, as you know, due to Stellantis' decision to withdraw from the hydrogen value chain, has to bear some heavy restructuring costs in 2025. So it has negatively impacted. But when we look forward, these negative contributions are not over. We are still Symbio shareholder, and we have a plan over the next three-year. But the cost of the next three-year Symbio turnaround plan is already embedded in our 2025 contribution from JV and associates. So looking forward, we should have, let's say, the natural recurrent contribution of distribution, medical business, and natural rubber value chain.

Yves Chapot: Symbio, as you know, due to Stellantis' decision to withdraw from the hydrogen value chain, has to bear some heavy restructuring costs in 2025. So it has negatively impacted. But when we look forward, these negative contributions are not over. We are still Symbio shareholder, and we have a plan over the next three-year. But the cost of the next three-year Symbio turnaround plan is already embedded in our 2025 contribution from JV and associates. So looking forward, we should have, let's say, the natural recurrent contribution of distribution, medical business, and natural rubber value chain.

Speaker #4: So it has negatively impacted. But when we look looking forward these negative contribution are no over. We have we are still Symbio shareholder and we have a plan over the next three years but the cost of the next three years Symbio turnaround plan is already embedded in our 2025 contribution from GV and associates.

Speaker #4: So looking forward, we should have, let's say, the natural recurrent contribution of Distribution, Medical business, and Natural Rubber value.

Speaker #4: chain. Great.

[Analyst] (Kepler Cheuvreux and Deutsche Bank): Great. Thank you very much.

Thomas Besson: Great. Thank you very much.

Speaker #6: Thank you very much.

Speaker #1: The next question is from Monica Bosio in Pisa San Paolo. Please go ahead.

Operator: The next question is from Monica Bosio in Intesa Sanpaolo. Please go ahead.

Speaker #7: Hi, good evening, and thanks for taking my questions. I have three, if I may. The first one is on the price mix for 2026.

Monica Bosio: Good evening and thanks for taking my questions. I have three if I may. The first one is on the price mix for 2026. If I'm not wrong, for 2026 we should see mostly a mix effect rather than price. And if I'm right, which is the division do you expect the mix will be with which division will benefit the most the most from the mix in 2026 if I can ask? And the second question is on the truck business. I understand that the company is implementing actions to make the truck tires less related to the cycle. So considering this action, what do you see as a sustainable sustainable margins for this area? And very finally, the last question is on the SR3. Are you planning any specification regarding the manufacturing loading rates in beyond tires?

Speaker #7: If I'm not wrong, for 2026 we should see mostly a mix effect rather than price. And if I expect the mix will be right, which division do you believe— which division will benefit the most from the mix in 2026, if I can ask?

Speaker #7: And the second question is on the truck business. I understand that the company is implementing actions to make the truck tires less related to the cycle.

Speaker #7: So, considering this action, what do you see as sustainable margins for this area? And very finally, the last question is on the SR3.

Speaker #7: Are you planning any specific action regarding the manufacturing loading rates in Beyond Tires? And if so, what could be, once again, sustainable margins for this area?

Monica Bosio: And if so, what could be once again a sustainable margins for this area? Thank you very much.

Speaker #7: Thank you very much.

Speaker #5: So, on the price mix effect, you're right—it's mainly a mix effect, but the mix is composed of many different dimensions. You have the geographic mix.

Florent Menegaux: So on the price mix effect, you're right, it's mainly a mix effect, but the mix is composed of many different dimensions. You have the geographic mix, you have the division mix, you have the product mix, you have the segment mix. There are many mixes. So, unfortunately, we don't have the time to go into the details of the type of mixes. But yes, on the other one, the price should be; it would be more a mix and then the price. But remember that we have a lot of indexed businesses and the raw materials started to go down, and there is a lag between the index business, the lag time before we see the decrease in the cost and before it translates into the price. That's what you start to see in 2026.

Speaker #5: You have the division mix. You have the product mix. You have the segment mix. There are many mixes. So it's unfortunate we don't have the time to go into the details of the type of mixes.

Speaker #5: But yes on the other one the price should be it would be more a mix and then the price. But remember that we have a lot of indexed businesses and the raw materials started to go down and there is a lag between the in the in the index business the lag the lag time before we see the decrease in the cost and before it translates into the price.

Speaker #5: That's what you start to see in 2026. But we know that we know very well how to manage pricing, and we understand what are our input costs.

Florent Menegaux: But we know that we know very well how to manage pricing, and we understand what our input costs are. So we will be very agile and adapt. In SR2, we have done a lot of restructuring, and we forgot to mention that most of the restructuring in SR2, especially industrial restructuring, is behind us. And 2025 has been affected by the chalet closure; specifically, that closure has heavily affected a portion of the SR2 business. This is behind us now. So it's very easy. Yves has been very clear in the down cycle. We want the margins of this business to be not destroying value and, in the up cycle, creating value. That's where we; that's how we want to drive the business.

Speaker #5: So we will be very agile and adapt. In SR2 we have done a lot of restructuring and we forgot to mention that we have the most of the restructuring in SR2 especially industrial restructuring is behind us.

Speaker #5: And in 2025, it has been affected by the Cholet closure specifically. That has—a portion of the SR2 business has been heavily affected by that closure.

Speaker #5: This is behind us now. So it's very easy—it has been very clear: in the down cycle, we want the margins of this business to be not destroying value, and in the upper cycle, creating value.

Speaker #5: That's where we that's how we want to drive the business. And when we look at beyond road the loading rates are low because of OE and we know in this business very cyclical business when OE gets back back then we we we almost immediately fall into shortfall.

Florent Menegaux: When we look at Beyond Road, the loading rates are low because of OE, and we know in this business very cyclical business when OE gets back, then we almost immediately fall into shortfall. We in back orders and we lack products. So because the ramp up is going to be extremely steep. So what we are doing is we are flexing our industrial capacity right now so that in terms of mining we are creating we are very innovative in the way we can flex these plants so that we are less sensitive to the market fluctuation. But then we cannot give you more details on that.

Speaker #5: We in back orders and we lack products. So so because because the ramp up is going to be extremely steep. So what we are doing is we are flexing our industrial capacity right now so that in terms of manning we are creating we are very innovative in the way we we can flex these plants so that we are less sensitive to the market fluctuation.

Speaker #5: But then we cannot give you more details on—

Speaker #5: that. Very

Speaker #1: Mad, thank you very much. The next question is from Stephen Benamou, Bank of America. Please go ahead.

Operator: Very nice. Thank you very much. The next question is from Stephen Benhamou, Bank of America. Please go ahead.

Monica Bosio: Very nice. Thank you very much.

Operator: The next question is from Stephen Benhamou, Bank of America. Please go ahead.

Speaker #1: ahead. Hello.

Stephen Benhamou: Hello. Good evening. I have two questions, please. The first one is on the roadmap. So can you please give us more detail regarding the magnitude of the roadmap tailwind that you anticipate for 2026 and what's the expected logistics and the wages cost inflation that you also anticipate and what's the phasing between H1 and H2? This is my first question. My second question is about the share buyback program. Can you please confirm that you've said that you're committed to a program of EUR 750 million this year? And what about the remaining potential portion of EUR 1.3 billion? Should we expect a balanced program between 2027 and 2028? And last question is about your potential new roadmap. When do you expect to present this new roadmap? Thank you.

Speaker #6: Good evening. I have two questions. The first one is on the raw materials. So, can you please give us more detail regarding the magnitude of the raw materials tailwind that you anticipate for 2026?

Speaker #6: And what's the expected logistics and the wages cost inflation that you also anticipate? And what's the phasing between H1 and H2? This is my first question.

Speaker #6: My second question is about the share buyback program. Can you please confirm that you've said that you're committed to a program of €750 million this year, and what about the remaining potential portion of €1.3 billion?

Speaker #6: We expect the balance program between 2027 and 2028. And last question is about your potential new roadmap. When do you expect to present this new roadmap?

Speaker #6: Thank

Speaker #6: you. Okay.

Florent Menegaux: Okay. So I will take the last portion of your two, actually it's four questions, but so very quickly, we have said it's up to EUR 2 billion in three years on share buyback. We have said we will launch EUR 750 and we will look where we are at in terms of cash generation, our balance sheet, and our acquisitions. And then we will see. On the new roadmap, the new roadmap of course we have to finish 2026 and it's 2026 just started. And before we come back to you on the CMD to say, okay, what is our roadmap from 2027 up to 2030? And we will give you that roadmap at that time. And maybe on the two first questions.

Speaker #5: So I will I will take the the last portion of your to actually it's four questions. But but so very quickly we have said it's up to 2 billion in three years on share buyback.

Speaker #5: We have said we will launch 750, and we will look where we are at in terms of cash generation, our balance sheet, and our acquisitions.

Speaker #5: And then we will see. On the new roadmap—the new roadmap, of course, we have—we had—we are finishing 2026. We have to finish 2026, and it's 2026, just started.

Speaker #5: And before we come back to you on the CMD to say, okay, what is our roadmap from 2027 up to 2030? And we will give you that roadmap at that time.

Speaker #5: And maybe on the two first.

Speaker #5: questions. Yeah.

Guillaume Jullienne: Yeah. So on the raw material, we estimate that we'll have a favorable effect around EUR 400 million in 2026 with a negative logistics and wage inflation in the range of EUR 220 million. Today it's around EUR 180 million of wages, labor costs, and around EUR 40 million in logistics. Don't forget that we'll have as well EUR 120 million of the 2026 effect of the North American tariffs that we hope to be able to transfer to the market. But we have seen, 2025 has shown us, that it's not always a long and peaceful journey.

Yves Chapot: Yeah. So on the raw material, we estimate that we'll have a favorable effect around EUR 400 million in 2026 with a negative logistics and wage inflation in the range of EUR 220 million. Today it's around EUR 180 million of wages, labor costs, and around EUR 40 million in logistics. Don't forget that we'll have as well EUR 120 million of the 2026 effect of the North American tariffs that we hope to be able to transfer to the market. But we have seen, 2025 has shown us, that it's not always a long and peaceful journey.

Speaker #4: So on the raw material, we estimate that we'll have a favorable effect of around €400 million in 2026, with a negative logistics and wage inflation in the range of €220 million.

Speaker #4: Today, it's around €180 million of wage labor cost and around €40 million in logistics. Don't forget that we'll have as well €120 million in 2026 as the effect of the North American tariffs.

Speaker #4: That we hope to be able to transfer to the market. But we have seen, 2025 has shown us that it's not always a long and peaceful journey.

Speaker #5: Okay. We I think we have to take the last question.

Florent Menegaux: Okay. I think we have to take the last question.

Speaker #1: The last question is from Christoph Laskawy. Deutsche Bank. Please go ahead.

Operator: The last question is from Christoph Laskawi, Deutsche Bank. Please go ahead.

Speaker #6: Good evening. Thank you for taking my questions. Sorry for for being a relatively short term. So good you commented on a very negative Q1 in volume terms down 10 percent.

[Analyst] (Kepler Cheuvreux and Deutsche Bank): Good evening. Thank you for taking my questions. Sorry for being relatively short term. So Goodyear commented on a very negative Q1 in volume terms, down 10%. Given that you've essentially now repositioned in China, in Europe, and the US, could you comment where you expect Q1 volumes roughly to be for the market and if we should think about your performance be rather in line with the market or slightly different to that? And then just second question really on the PCS business, do you see after the three transactions here to date the business in a place where you want it to be or would there be further white spots that you seek to add? Thank you.

Christoph Laskawi: Good evening. Thank you for taking my questions. Sorry for being relatively short term. So Goodyear commented on a very negative Q1 in volume terms, down 10%. Given that you've essentially now repositioned in China, in Europe, and the US, could you comment where you expect Q1 volumes roughly to be for the market and if we should think about your performance be rather in line with the market or slightly different to that? And then just second question really on the PCS business, do you see after the three transactions here to date the business in a place where you want it to be or would there be further white spots that you seek to add? Thank you.

Speaker #6: Given that you've essentially now repositioned in China, in Europe, and the US, could you comment on where you expect Q1 volumes roughly to be for the market, and if we should think about your performance being rather in line with the market or slightly different to that?

Speaker #6: And then, just a second question really on the PCS business. Do you see, after the three transactions here to date, the business in a place where you want it to be, or would there be further white spots that you seek to add?

Speaker #6: Thank you.

Speaker #5: So, I will not comment on what our competitors are saying. That's down to their business. We do not see the same thing, and we expect to bring out—especially—the Michelin brand where it should be, and where it has been, and where it should be.

Florent Menegaux: So I will not comment on what our competitors are saying. That's down to their business. We do not see the same thing and we expect to bring out the especially the Michelin brand where it should be and where it has been and where it should be. So we have every signal that it should be the case. So our anticipation in Q1, we don't see the market being down 10%. So I will not comment further on this and maybe on PCS.

Speaker #5: So, and we have every signal that it should be the case. So our anticipation, in the first quarter, we don't see the market being down 10 percent.

Speaker #5: So, I will not comment further on this. And maybe on PCS.

Speaker #4: And maybe inventories to complete the answer to the first question. Inventories in distribution for our product are at healthy levels.

Guillaume Jullienne: Maybe inventories, to complete the answer to the first question, inventories in distribution for our product is at a healthy level.

Yves Chapot: Maybe inventories, to complete the answer to the first question, inventories in distribution for our product is at a healthy level.

Florent Menegaux: Everywhere.

Speaker #4: In all Everywhere segments. For PCS, yes, we are constantly looking at potential opportunities. But as you know, as I explained, the deal can take up to 18 months or two years.

Guillaume Jullienne: In all segments. For PCS, yes, we are constantly looking at potential opportunities. But as you know, as I explained, the deal can take up to 18 months or 2 years. So the teams are working on some deals. But to tell you when they will be finalized, I don't have a crystal ball because it depends as well on the willingness of the seller and of course our ability to understand. I mentioned the question of the parental advantage to make sure that we have a real parental advantage. So that's why we take the time we need to make sure we are making sound decisions in terms of acquisitions.

Yves Chapot: In all segments. For PCS, yes, we are constantly looking at potential opportunities. But as you know, as I explained, the deal can take up to 18 months or 2 years. So the teams are working on some deals. But to tell you when they will be finalized, I don't have a crystal ball because it depends as well on the willingness of the seller and of course our ability to understand. I mentioned the question of the parental advantage to make sure that we have a real parental advantage. So that's why we take the time we need to make sure we are making sound decisions in terms of acquisitions.

Speaker #4: So the teams are working on some deals. But to tell you when they will they will be finalized I don't have a crystal ball because it depends as well of the the willingness of the of the seller and of course our ability to as well to well understand I mentioned the question of the parental advantage to make sure that we have a real parental advantage.

Speaker #4: So that's why we take the time we need to make sure we are making sound decisions in terms of acquisitions.

Speaker #5: Well, thank you. This concludes our call. Thank you very much for attending. See you soon. Thank you.

Florent Menegaux: Well, thank you. This concludes our call. Thank you very much for attending. See you soon.

Guillaume Jullienne: Thank you. Bye bye.

Yves Chapot: Thank you. Bye bye.

Speaker #4: Bye

Speaker #4: bye. Ladies and gentlemen

Operator: Ladies and gentlemen, this concludes today's Michelin conference call. Thank you for your participation. You may now disconnect.

Q4 2025 Compagnie Generale des Etablissements Michelin SCA Earnings Call

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