Financial information for the year ended December 31, 2018

• Sales up 4.1% at constant exchange rates.

• Volumes up 0.9%: after declining in the first quarter, volumes rose by 2% over the following nine months, in markets disrupted by the contraction in Chinese and original equipment Passenger car tire segment demand

  • Sustained fast growth in the Specialty businesses.

  • Further market share gains in the 18” and larger Passenger car tire segment.

  • 7% rebound in Truck tire volumes in the second half.

• The price-mix/raw materials effect added a net €286 million, as expected.

  • The price effect totaled €255 million, confirming disciplined price management.

  • The mix effect was a very strong €189 million, led by the growth in 18’’ and larger tire sales, the Specialty businesses and the smaller percentage of OE business in the sales mix.

  • Priority focus was maintained on protecting margins, particularly in markets impacted by steep currency declines against the euro.

• Unfavorable currency effect, totaling a negative €271 million.

• Competitiveness plan stepped up in the second half, lifting total savings to €317 million for the year and offsetting the impact of a higher inflation cost (up €38 million year-on-year).

• €1,274 million in structural free cash flow, confirming the Group’s commitment to improvement.

• Faster acquisitions-led growth (Fenner and Camso), in line with Group strategy, and greater access to the North American market (TBC joint venture).

• Proposed dividend of €3.70 per share, representing a payout of 36.4% of consolidated net income before non-recurring items.

In 2019, the Passenger car and Light truck tire markets are expected to be mixed, with modest growth in the Replacement segment and a contraction in the Original Equipment segment. Truck tire markets are expected to remain stable overall, given the decline in demand in China, while the Mining, Aircraft and Two-wheel tires markets should remain dynamic. Based on January 2019 exchange rates, the currency effect is expected to have a slightly favorable impact on segment operating income. The impact of raw materials costs is currently estimated at around a negative €100 million.

In this environment, Michelin's objectives for 2019 are: volume growth in line with global market trends; segment operating income exceeding the 2018 figure at constant exchange rates and before the estimated €150 million contribution from Fenner and Camso; and structural free cash flow of more than €1.45 billion.**