First-Half 2009 Financial Highlights Net sales Operating income before non-recurring items Operating margin before non-recurring items Net Loss Net debt-to-equity ratio Free cash flow** 7,134m 282m 4.0% (122)m 75% +575m % Change YoY -13.4% -60.2% -4.6 pts N/M* 9 pts improvement (vs. Dec. 31, 20) +1,020m *Non meaningful **Cash-flow from operating activities less cash flow from investing activities 2 - First-Half 2009 Results July 31, 2009
3 - First-Half 2009 Results July 31, 2009
Sharp Drop in World Markets Passenger Car/Light Truck Markets at June 30, 2009 % change YoY Europe with CIS North America Asia South America Africa Middle East Total Original Equipment -33.1-51.0-17.3-20.7-25.0-29.1 Replacement -12.1* -10.7-4.6-7.4-5.2-9.4 *Europe excluding CIS: -6.5% Truck (radial market) Europe with CIS North America Asia South America Africa Middle East Total Original Equipment -67.4-47.8-21.9-30.7-25.1-44.5 Replacement -31.4-18.2-12.0-22.3-7.1-17.2 4 - First-Half 2009 Results July 31, 2009
12 10 US Economic Indicators Continued to Weaken in H1 2009 Unemployment rate (adjusted for seasonal fluctuations) 5% 4% Average hourly wage (% change, YOY) 8 6 4 2 3% 2% 1% 0 60 65 70 75 80 85 90 95 00 05 0% 90 92 94 96 98 00 02 04 06 12 10 Private savings rate (as a % of disposable income) 2 500 2 000 Construction starts (thousands, rolling 12 months) 8 1 500 6 4 1 000 500 2 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 0 75 80 85 90 95 00 05 5 - First-Half 2009 Results July 31, 2009
Similar Macroeconomic Scenario in Europe 10,0 9,5 9,0 8,5 8,0 7,5 Europe OECD Unemployement Rate 9,67 9,38 9,18 8,70 8,52 8,2 8,30 8,0 8,00 7,9 7,85 7,92 7,7 7,6 7,55 7,63 7,71 % 10 5 0-5 Industrial Production 7,0 6,5-10 6,0 5,5-15 5,0 2007 20 2009-20 janv-06 avr-06 juil-06 oct-06 janv-07 avr-07 juil-07 oct-07 janv- avr- juil- oct- janv-09 avr-09 Private Savings Rate Source: Global Insight Customer Satisfaction Index 16 14 12 10 8 6 4 2 0 France Allemagne Germany 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 110 105 100 95 90 85 janv-98 juil-98 janv-99 juil-99 janv-00 juil-00 janv-01 juil-01 janv-02 juil-02 janv-03 juil-03 janv-04 juil-04 janv-05 juil-05 janv-06 juil-06 janv-07 juil-07 janv- juil- janv-09 juil-09 6 - First-Half 2009 Results July 31, 2009
Chinese Inventory Rebuilding Insufficient to Qualify as a True Global Economic Upturn 500 450 400 350 300 250 200 150 Jan- Feb- Reuters/Jefferies-CRB Index* Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- *Raw Material Purchase Index 65 60 55 50 45 40 35 30 Jan- Feb- Mar- 7 - First-Half 2009 Results July 31, 2009 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 China Purchase Manager Index (PMI) & ISM Manufacturing Report 9500 8500 7500 6500 5500 4500 3500 2500 1500 500 Jul Oct Jan 09 Apr 09 Jul 09 Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Baltic Dry Index China PMI US ISM Manufacturing Report
Heavy Destocking in H1 Europe North America Q1 Q2 Q3 Q4 Q1 09 Q2 09 Q1 Q2 Q3 Q4 Q1 09 Q2 09 +1 +3-3 Original Equipment Markets change in % -11-14 -15-27 -30-39 -28-52 -50 Replacement Markets change in % -3-3 -4-6 -11-13 -2-2 -5-12 -12-10 8 - First-Half 2009 Results July 31, 2009
Slight Improvement in US Vehicle Miles Traveled in April and May 3,050 3,000 2,950 Miles in billions 2,900 2,850 2,800 2,750 2,700 2000 2001 2002 2003 2004 2005 2006 2007 20 2009 9 - First-Half 2009 Results July 31, 2009
OE* Markets tending to bottom out at very low level Huge Destocking in Replacement Markets Europe North America Q1 Q2 Q3 Q4 Q1 09 Q2 09 Q1 Q2 Q3 Q4 Q1 09 Q2 09 +8 +19 0 Original Equipment Markets change in % -6-10 -29-32 -19-45 -50-62 -72 +1 Replacement Markets change in % -5-8 * Original Equipment -27-35 -28-1 -8-4 -20-25 -12 10 - First-Half 2009 Results July 31, 2009
Steep Drop in Truck Registrations in Europe Truck Registration Trends >16t in rolling 12 months In units 340,000000 320,000000 300,000000 280,000000 260,000000 240,000000 2006 2007 20 2009 11 - First-Half 2009 Results July 31, 2009
Average US Truck Fleet Age at Historic High Average age 6.4 6.3 6.3 6.2 6.1 6.0 5.8 5.6 5.4 6.0 5.6 5.4 5.4 5.5 5.5 5.3 5.3 E P A 5.5 5.7 5.9 5.9 5.8 5.7 E P A 6.0 6.2 6.3 5.2 5.0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 09 E P A Environmental Protection Agency New Regulation 12 - First-Half 2009 Results July 31, 2009
Western Europe Freight Tonnage Down approx. 15% vs Q4 20 Monthly Truck Tonnage in France and Spain (as of May 31, 2009) In France In Spain 210,000 140 205,000000 130 200,000000 195,000 190,000000 185,000 180,000000 120 110 100 90 175,000 2000 2001 2002 2003 2004 2005 2006 2007 20 2009 80 1999 2000 2001 2002 2003 2004 2005 2006 2007 20 2009 13 - First-Half 2009 Results July 31, 2009
US Freight Tonnage Down 13.6% Since June 20 Truck Tonnage in the United States (as of June 30, 2009) 125 120 115 110 105 100 95 June -13.6% June 09 90 85 97 98 99 00 01 02 03 04 05 06 07 09 Source: ATA Truck Tonnage Index 14 - First-Half 2009 Results July 31, 2009
15 - First-Half 2009 Results July 31, 2009
Net Sales Declined by 13.4% at Current Exchange Rates YoY change (in millions) as a % of net sales -1,917 8,239 Volumes -23.3% +6 +204 Price Mix +9.6% Currency +2.9% 7,134-13.4% H1 20 Net Sales H1 2009 Net Sales 16 - First-Half 2009 Results July 31, 2009
Sharp Drop in H1 Volumes Price Mix Steady YoY change in % Volumes Price Mix Currency Q1 Q2 Q3 Q4 Q1 09 Q2 09 Q1 Q2 Q3 Q4 Q1 09 Q2 09 Q1 Q2 Q3 Q4 Q1 09 Q2 09 +1.1 +3 +0.2 +11.0 +8.1 +1.7 +2.5 +4.9 +8.2 +1.4 +2.2 +3.6-5.3-6.4-4.2-15.8-24.4-22.2 17 - First-Half 2009 Results July 31, 2009
Operating Income: Sharp Drop in Volumes Partly Offset by the Price Mix YoY in millions, as a % of sales +6-875 7 Price mix H1 20 Operating Income before non-recurring items Volumes +12-16 -155 Currency Other External Costs* (o/w raw materials: (117)m 282-60.2% H1 2009 Operating Income before non-recurring items *External costs: raw materials, energy, logistics at constant exchange rates 18 - First-Half 2009 Results July 31, 2009
Raw Materials Costs Down -500/-600M in 2009 After Six Years of Increases In millions (at constant exchange rates) +740 +175 +804-500/-600 +455 +360 +320 2003 2004 2005 2006 2007 20 2009 (e) 19 - First-Half 2009 Results July 31, 2009
Firm Resistance in Passenger Car and Specialty Businesses Steep Drop in Truck Tires Operating margin before non-recurring items, as a % of net sales 20% 17.8% 7.6% 6.3% 5.2% 8.6% 4.0% -7.9% Passenger Car Light Truck & Distribution Truck & Distribution Specialty Businesses Total H1 20 H1 2009 20 - First-Half 2009 Results July 31, 2009
Good Resilience of the Michelin Brand Passenger Tourisme Car camionnette Light Truck & Distribution & RelatedAssociée Distribution Net Sales H1 2009 (in millions) 3,949 YoY (% change ) -9.4% Operating Income (before non-recurring items) 247-25.6% Operating Margin (before non-recurring items) 6.3% -1.3 points 21 - First-Half 2009 Results July 31, 2009
Significant Drop in Volumes Truck Poids & Related lourd & Distribution Associée Net Sales H1 2009 (in millions) 2,071 YoY (% change ) -23.2% Operating Income (before non-recurring items) (163) N/M Operating Margin (before non-recurring items) -7.9% -13.1 point 22 - First-Half 2009 Results July 31, 2009
Sustained High Margins Specialty Activités Businesses de spécialités Net Sales H1 2009 (in millions) 1,114 YoY (% change ) -6.1% Operating Income (before non-recurring items) 198-16.5% Operating Margin (before non-recurring items) 17.8% -2.2 points 23 - First-Half 2009 Results July 31, 2009
Strong Impact From Non-Recurring Expenses in millions Net Sales H1 2009 H1 20 YoY 7,134 8,239-13.4% Operating Income (before non-recurring items) % of net sales 282 4.0% 7 8.6% -60.2% -4.6 points Non-Recurring Expenses (292) - - Operating Income (10) 7 - Cost of Net Debt Other Financial Income and Expenses (138) (106) - Income Tax +23 (181) - Share of Profit from Associates +3 +9 - Net Loss (122) 430-24 - First-Half 2009 Results July 31, 2009
25 - First-Half 2009 Results July 31, 2009
Strong Free Cash Flow Generation in millions EBITDA* (before non-recurring items) H1 2009 H1 20 YoY 751 1,172-421 Change in inventory +580-453 +1,033 Change in trade receivables -17-110 +93 Change in payables -490-131 -359 Tax and finance costs paid -100-259 +159 Change in provisions -24 +107-131 Other WCR +263 +177 +86 OPERATING CASH FLOW 963 174 +789 Gross capex -319 +181-500 Other -69-119 +50 FREE CASH FLOW** +575-445 +1,020 *EBITDA before non-recurring items: operating income excluding depreciation, amortization and impairment of PP&E and intangibles **Free cash flow: operating cash flow less gross capex and other 26 - First-Half 2009 Results July 31, 2009
Responsive Production Actions Have Brought Inventories Under Control 114 112 110 1 106 104 102 100 98 96 94 92 90 88 End Dec. 07 End Mar. Quarterly change in volumes End June End Sept. End Dec. End Mar. 09 End June 09 27 - First-Half 2009 Results July 31, 2009
Sharp Reduction in Net Debt In millions 4,273-575 Free cash flow +70 +26 +24-455 Other Currency 3,818 Dividend (cash) Net debt January 1, 2009 Net Debt June 30, 2009 28 - First-Half 2009 Results July 31, 2009
Record Low Gearing by End-June Despite the Difficult Environment 112% 104% 90% 90% 89% 86% 70% 80% 84% 75% 2004 06/30/05 2005 06/30/06 2006 06/30/07 2007 06/30/ 20 06/30/09 Gearing: Net debt/equity 29 - First-Half 2009 Results July 31, 2009
2009: Focusing on Key Economic and Financial Metrics Strongly improved responsive production actions Costs under control Inventory down in volume and in unit value Capex scaled back sharply except in emerging markets Objective: Generate positive free cash flow in H2 30 - First-Half 2009 Results July 31, 2009
31 - First-Half 2009 Results July 31, 2009
Production Capacity in Growth Regions Will Increase Brazil: new Passenger Car/Light Truck tire plant India : new Truck and Earthmover tire plant China: doubling Truck and Passenger Car/Light Truck production capacity 32 - First-Half 2009 Results July 31, 2009
33 - First-Half 2009 Results July 31, 2009
Gains in Logistics and SG&A Costs in Line with Objectives 300-350m in gains 230 172 106 2007 20 H1 2009 Objectives Cumulated Gains in millions 34 - First-Half 2009 Results July 31, 2009
Ongoing Product Range Optimization 500-550m in gains 8,000 g 7,200 g 151 203 43 2007 20 H1 2009 Objectives Cumulated Gains in millions 35 - First-Half 2009 Results July 31, 2009
Sustained Productivity Efforts Despite Fall in Volumes Tonnage/Headcount* 100 Production 100 91 67 H1 20 H1 2009 H1 20 H1 2009 * Including temps 36 - First-Half 2009 Results July 31, 2009
A Steady Decline in the Headcount Since June 20 122,000-7.0% 120,000 118,000 116,000-4.3% 114,000 112,000 110,000 1,000 June- July- August- Sept- Oct- Nov- Dec- Jan-09 Feb-09 Mar-09 Apr-09 May-09 June-09 Employees on payroll (excluding temps) 37 - First-Half 2009 Results July 31, 2009
38 - First-Half 2009 Results July 31, 2009
Regulations Geared to Safety and Environment Improve safety Reduce air pollution Limit noise pollution 39 - First-Half 2009 Results July 31, 2009
New Tire Regulation Strengthens Michelin s Brand Equity All tire types Labeling: Fuel consumption categories Wet grip categories External rolling noise categories Minimum performances threshold Applicable in 2012 40 - First-Half 2009 Results July 31, 2009
More Flexible and Responsive for a Greater Rebound 41 - First-Half 2009 Results July 31, 2009
Contacts Investor Relations Valérie Magloire Jacques-Philippe Hollaender +33 (0) 1 45 66 16 15 46, avenue de Breteuil 75324 Paris Cedex 07 France investor-relations@fr.michelin.com 43 - First-Half 2009 Results July 31, 2009
Disclaimer «This presentation is not an offer to purchase or a solicitation to recommend the purchase of Michelin shares. To obtain more detailed ed information on Michelin, please consult the documentation published in France by Autorité des Marchés Financiers available from the www.michelin.com website. This presentation could contain a number of provisional statements. ts. Although the Company believes that these statements are based on reasonable assumptions at the time of the publication of this document, they are by nature subject to risks and contingencies liable to translate into a difference between actual data and the forecasts made or induced by these statements.» 44 - First-Half 2009 Results July 31, 2009