CLERMONT-FERRAND, France—By the start of the next decade, Michelin will be a markedly different company, with non-tire-related business activities accounting for up to 30 percent of the firm's annual sales, the firm's top executives said this week during a Capital Markets Day presentation.
By 2030, the group expects to report nearly $28 billion in annual sales, up 22.5 percent over 2020's revenue, with the bulk of the growth coming from new business activities, according to Chief Financial Officer Yves Chapot. That represents compounded annual growth of 5 percent.
"With this new … strategic plan, [Michelin] is embarking on an ambitious growth dynamic for the next 10 years," Michelin CEO Florent Menegaux told those listening to the virtual presentation of the "Michelin in Motion" strategic plan.
"By 2030 the group's profile will have significantly changed with the ramp-up of new, high value-added businesses in both around and beyond markets," he added. "It is this ability to constantly reinvent itself that has underpinned Michelin's strength for more than 130 years and which today gives us confidence in the future."
Along with growth, Michelin is targeting an operating ratio of 13.5 percent and annual cash flow of more than $3.5 billion, along with a revision to the dividend policy to pay out 50 percent of earnings before non-recurring items, starting in 2021.
Other financial targets outlined during the presentation included various industrial competitiveness drivers that will deliver $90 million in savings a year, net of inflation, through 2023, and a net reduction in selling, general and administrative expenses in the tire business by 2023 of nearly $75 million and $140 million by 2025.
Michelin's top executives also outlined a wide-ranging portfolio of the company's expectations, concerns and responsibilities.
"I am convinced that the engagement and capacity for innovation of our teams will enable us to deliver a harmonious blend of sustained business performance, continuous employee development and a commitment to the planet and our host communities," Menegaux said, adding that Michelin intends to "remain true its DNA" as it grows and ramps up new high-value-added businesses.
As part of the strategy, Michelin said it was targeting new non-tire growth territories, while continuing to expand and invest in its tire business.
Led by its capacity for innovation and its materials expertise, Michelin said it was looking to drive "strong expansion" in five "around and beyond tire" business segments: services and solutions, flexible composites, medical devices, metal 3D printing and hydrogen mobility.
In services and solutions, the group said it will "broaden and deepen" its portfolio of fleet solutions, in particular by leveraging smart objects and the value of its collected data.
Michelin also intends to "expand significantly in the fast-growing flexible composites market," which the company defines as conveyors, belts, coated fabrics and seals.
Furthermore, the Clermont-Ferrand-based group said it had begun to calculate the costs of some of its "negative externalities," such as carbon emissions and water and solvent use. The group said it was committed to reducing those costs by 10 percent by 2023.
European Rubber Journal contributed to this article.