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Financial information for the six months ended june 30, 2009

First-half net sales down 13.4% to €7.1 billion

Operating margin of 4.0% before non-recurring items and major business metrics maintained thanks to efficient management of operations

Net loss of €122 million, after high restructuring costs

  • Unit sales down 23%, primarily due to the fall-off in tire demand in all of the country markets except China. The decline was especially apparent in the original equipment business and, more broadly, in Truck tires.

  • Highly positive 9.6% impact from the price mix, reflecting the resistance of the MICHELIN brand and the Group’s firm pricing policy.

  • Operating income before non-recurring items down 60.2% to €282 million, hit by the decline in unit sales and the increase in capacity under-utilization costs.

  • Generation of €575 million in free cash flow, driven by efficient management of working capital (particularly inventory) and the sharp reduction in capital expenditure, to €319 million from €500 million in first-half 2008.

Faced with the persistent, steep decline in global tire markets, Michelin has responded swiftly and effectively by tightening its management and deploying production adjustment programs,. As part of this response, the Group nevertheless had to introduce short-time working hours in a number of countries and to implement the production reorganization programs needed to make Michelin more competitive. Concerning the business environment, inventories have now returned to more normal levels, but not to the extent that we can talk about a real upturn. We will therefore maintain our efforts in the months ahead, although the decline in raw materials prices should support second-half margins. The Group is committed to generating positive free cash flow in the second half, in order to continue preserving its major business metrics. The dedicated involvement of our teams and the measures taken to enhance our responsiveness will enable Michelin to emerge from the current period stronger and more efficient than ever.

Michel Rollier Managing General Partner

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