Financial information for the year ended December 31, 2015
2015: Strong free cash flow before acquisitions, at €965 million
Tonnages up 3.2%, outperforming the markets
Operating income before non-recurring items at €2,577 million or 12.2% of net sales, up €407 million
2016: Further growth in volumes
Increase in operating income before non-recurring items at constant exchange rates
- Tonnages up 3.2%, outpacing the market in all business segments, especially in Passenger car and Light truck tires (up 6.7%)
- Increase in the fourth quarter of 4.2% for the Group and 8.7% for Passenger car and Light truck tires
- Strong free cash flow, at €965 million before €312 million in acquisitions, reflecting €1,804 million in capital expenditure, down from 2014
- Significant increase in operating margin thanks to a very good second half (12.3%), particularly for:
- Passenger car and Light truck tires: 12.2%, up 2.6 points versus second-half 2014
- Truck tires: 11.1%, up 2.6 points versus second-half 2014
- Good resilience in Specialty tires: 18.6% for the full year
- The price mix/raw materials effect had a €105 million positive impact in the second half, as expected.
- The competitiveness plan resulted in €261 million in gains over the year, once again offsetting the increase in production costs and overheads
- New tranche of the share buyback plan launched in January 2016, following on from the 2015 buyback and cancellation of €451 million in Michelin shares, representing 2.7% of issued capital
- Dividend of €2.85 per share, reflecting management's confidence in the Group's future and representing a payout ratio of 37%, to be submitted to shareholders at the Annual Meeting on May 13, 2016
In 2015, we successfully drove profitable, over-market growth in tonnages sold and gained new market share in all our businesses, thanks to the quality of the Group's offering. Our growth and margins have both improved significantly. Looking forward to 2016 and beyond, we have to continue our efforts in four areas – enhancing customer service, streamlining operating procedures, deploying digital solutions and increasing the empowerment of our teams. With our strengthened fundamentals, the Group is on the right track.
In 2016, demand for Passenger car, Light truck and Truck tires is expected to continue rising in the mature markets and remain in line with 2015 trends in the new markets. Demand for Specialty tires is expected to continue to be affected by mining company inventory drawdowns.
In this environment, Michelin's objectives for 2016 are volume growth in line at least with global trends in its operating markets, an increase in operating income before non-recurring items at constant exchange rates, and structural free cash flow of more than €800 million.
For 2016-2020, the Group set ambitious targets in terms of operating margins before non-recurring items, between 11% and 15% in the Passenger car and Light truck tire segment, 9% and 13% in the Truck tire segment and 17% and 24% in the Specialty segment.