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June 23, 2006 02:00 AM

Michelin going forward after leader´s death

Bruce Davis
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    PARIS-Michelin´s No. 1 task following the death May 26 of CEO Edouard Michelin is to execute the strategy the company´s top echelon worked out under his direction, according to new CEO Michel Rollier.

    "The strategy is in place. Our task is to roll out this strategy," Rollier said at a news conference June 10 during the 2006 Challenge Bibendum forum held near Paris.

    Earlier this year, Edouard Michelin had laid out several performance goals, including achieving an operating margin of 10 percent or more by 2010-it was 8.8 percent last year-by a combination of internal cost-control efforts and "focused growth."

    That goal, however, has come under pressure from higher-than-anticipated raw materials costs, a situation that has caused some stock analysts to revise downward their financial projections for the company.

    While acknowledging the pressure Michelin is facing from rising raw material costs-especially the "surprising" surge of natural rubber prices-Rollier said he views the challenge as an opportunity for innovative companies like Michelin to tackle the dilemma internally through cost-control measures and research and development.

    "Our world is ruled by expensive commodities," said Rollier in one of his first public appearances as the sole CEO of Michelin. He said NR accounts for about 25 percent of the firm´s commodities costs and its research and development teams are working constantly on ways to improve the company´s ability to substitute synthetic rubber for natural where possible.

    Rollier ruled out Michelin expanding its natural rubber holdings in light of the NR price situation. He said Michelin obtains only about 4 percent of its annual NR needs from its own plantations in Brazil and Thailand, although the knowledge it gains from harvesting rubber on its own proves valuable in dealing with independent suppliers of NR.

    Rollier and Didier Miraton, Michelin´s top ranking research and development executive, also stressed a vision championed by Michelin-that of striving to produce a tire that delivers twice the life while using half the resources. This goal, they said, is in line with the spirit of Challenge Bibendum´s "sustainable mobility" challenge.

    Rollier also assured the public that he´s in charge, saying: "There is only one CEO at Michelin. I am that man." He also assured that Challenge Bibendum-an initiative personally led by Edouard Michelin the past eight years-would continue, although the company didn´t announce when or where the next one would take place.

    Whether the firm´s executive board might decide at a later date to name a co-chief executive-as had been the case before Michelin´s death-is a matter for the directors on the board to take up, Rollier said.

    "I have confidence in the management team," Rollier said. "They are reliable, strong, united and focused."

    In return, the firm´s supervisory board has expressed confidence in Rollier´s leadership.

    Rollier, 61, has been with Michelin since 1996, starting with the firm in legal services and financial operations. He was appointed director for planning and accounting in August 1998 and chief financial officer in October 1999.

    He became a general partner of the company in May 2005 alongside Edouard Michelin and Rene Zingraff, who retired at the firm´s most recent annual meeting May 12 after 10 years as a managing partner.

    The price of Michelin´s shares on the Paris Bourse has declined about 9 percent in the two-and-half weeks since Edouard Michelin´s death, closing June 14 at 46.37 Euros.

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