PARIS—Energy costs are rising. Quickly.
And Michelin says it has a plan to manage them—for both the short- and medium-terms—in part by staying focused on sustainability and net zero-emissions goals.
The Clermont-Ferrand, France-based tire maker told those attending the Dec. 8 Goldman Sachs Global Autos conference that energy costs have risen to about 4 percent of its 2022 sales, a significant increase from the 2.5 percent and 2 percent in 2021 and 2020, respectively. Moving forward, the world's largest tire maker looks to mitigate those costs as best as it can, considering about half of its production is located in "lower Russian gas sensitive" countries.
Most immediately, Michelin said it had "hedged by 50 percent" energy prices for its European operations, noting that its cost position had been secured for 2023. And when it comes to keeping operations running continually and efficiently, both from a production and financial standpoint, the tire maker said it has secured back-up fuel sourcing, including "coal by exception."
Longer term, Michelin's overarching sustainability commitments will have a greater impact on energy costs. As the tire maker focuses on achieving its net zero-emissions goals by 2050, it will continue to implement an energy transition program. This includes a 50 percent reduction in CO2 emissions by 2030 and a capital spending allocation of about $84.3 million annually.