In its 2017 financial report, the Michelin Group’s outgoing CEO explained what’s to come from Michelin in 2018 and how the company plans to achieve its goals through 2020.
Jean Dominique Senard, who will leave his post at the end of 2019, said the group is in line financially with its 2020 targets with a structural free cash flow of 1.4 billion euros ($1.7 billion) and expects to see growth in sales volume, which leads to an increase in operating income, in certain areas despite changes in the exchange rate.
“We expect to see moderate growth in demand for car, light truck and truck tires and robust growth in the mining tire and original equipment agricultural and earthmover tire markets,” he said in the report. “The strength of our strategy is to serve a meaningful corporate mission, which is to lead the way in sustainable mobility, with a commitment to driving growth and value creation in four areas: tires, services, experiences and technological materials. We will continue to seize acquisition opportunities capable of fulfilling our growth and value creation objectives, and we will remain actively committed to enabling safe, high-performance mobility that is also resource, energy and carbon efficient.”
Senard said Michelin’s strength is to be present in every tire market around, and “technological innovation has been a fantastic engine driving faster growth.”
“Technological innovation is the best way to shield our margins from the threat of rising raw materials costs,” Senard said. “Customers will accept higher prices as long as our tires and solutions deliver more benefits. As we envision a world of scarcer resources and tighter environmental standards, technological innovation gives us the resources we need to meet these challenges with peace of mind.”
Under Senard, Michelin announced a global organizational restructure last year with the creation of 10 new regions responsible for increasing sales and managing customer relationships. He said that restructure was put in place to allow the company to grow faster and be more competitive by “aligning our operating procedures with the emerging expectations of our customers and employees.” The restructure also included the creation of 14 business lines for different customer segments, eight operating departments and a more streamlined corporate unit with a leaner management structure.
“Our new organization is bringing us closer to our customers and getting our employees more engaged in our decision-making processes,” he said. “This organization is going to free up our energies, stimulate our collective intelligence and give us the ability to take initiative and the room to maneuver that are so critical in our volatile, uncertain, complex business environment.”
