Financial information for the six months ended june 30, 2016

• Passenger car and Light truck tire markets rose over the period, with replacement sales leveling off in the second quarter; Truck tire markets were less dynamic and Earthmover markets contracted further.

• Volumes up 2.5%, beating the market in every segment, rising 4% in Passenger car and Light truck tires and 1% in Truck tires, and declining by 2% in the Specialty businesses.

• Strong growth in operating income from recurring activities of €241 million at constant exchange rates to 13.7% of net sales, representing a 1.7 point improvement led by:

  • The €115 million positive impact of changes in the price mix and raw materials costs, thanks to effective management and a favorable basis of comparison.

  • The €155 million in gains from the competitiveness plan, which offset, as expected, the increase in production costs and overheads.

• Positive free cash flow of €8 million, representing a €108 million improvement from first-half 2015 before acquisitions.

• Share buybacks: €150 million tranche completed in the first half; new €150 million tranche scheduled for launch in the second half.

Over the rest of the year, the Passenger car/Light truck and Truck tire markets are expected to lose some momentum in North America and Europe, but to remain buoyant in China's Passenger car/Light truck segment. The Specialty tire market is expected to continue to be impacted as mining companies complete their inventory drawdowns.

In this environment, margin management in the second half should help to deliver a positive price mix/raw materials effect over the full year.

As a result, Michelin is confirming its full-year targets of volume growth exceeding global trends in its markets, an increase in operating income from recurring activities at constant exchange rates, and structural free cash flow of more than €800 million.