2016: Objectives met
Volumes up 2.1%.
€2,692 million in operating income from recurring activities,
up €235 million at constant exchange rates.
Over €1 billion in free cash flow.
2017: Another year of progress, in line with the Group's 2020 objectives
- Volumes up 2.1%, outperforming the markets,
- Passenger car and Light truck tires up 3%, Truck tires up 1% and Specialty businesses down 1%.
- Volumes up 4.2% for the Group in the fourth quarter, with gains of 5% in Passenger car and Light truck tires and 6% in the Specialty businesses.
- €2,692 million in operating income, or 12.9% of net sales, up €235 million at constant exchange rates.
- €159 million net positive impact from changes in price mix and versus raw materials costs, thanks to effective management.
- Competitiveness plan target met with €1.2 billion in gains over the 2012-2016 period.
- Strong free cash flow for the year, at €1,024 million.
- €128 million improvement in structural free cash flow, to €961 million.
- €750 million share buyback program completed over the 2015-2016 period.
- 1.8% of outstanding shares canceled in 2016, corresponding to €301 million.
- Proposed dividend of €3.25 per share, reflecting the Group's commitment to shareholders and representing a payout ratio of 36.5%, to be submitted to shareholders at the Annual Meeting on May 19, 2017.
2016 represented a successful milestone in our strategic roadmap. Our growth, which once again outpaced the markets, was driven by the strength of the MICHELIN brand, our steady stream of innovations, the improvement in the quality of our customer service and the success of our intermediate lines. Our pricing policy, which is designed to capture the full value of our technological leadership, and our sustained commitment to improving competitiveness enabled us to fulfill the financial guidance announced early in the year. Looking ahead, 2017 is expected to be another year of growth, in line with the Group's 2020 objectives.
In 2017, tire markets are expected to track the trends observed in late 2016, in particular with the upturn in mining tire sales. The year will also see an increase in raw materials costs, for an estimated impact of approximately €(900) million, in response to which Michelin will agilely manage prices so as to hold unit margins firm in businesses not subject to indexation clauses.
In this market environment, Michelin's objectives for 2017 are volume growth in line with global market trends, operating income from recurring activities equal to or exceeding the 2016 figure at constant exchange rates, and structural free cash flow of more than €900 million.
Year over year comparison
|(In € millions)||2016||2015|
|Operating income from recurring activities||2,692||2,577|
|Operating margin on recurring activities||12.9%||12.2%|
|Passenger car/light truck tires and related distribution||13.1%||11.5%|
|Truck tires and related distribution||9.7%||10.4%|
|Operating income/(Loss) from non-recurring activities||99||-370|
|EBITDA from recurring activities||4,084||3,934|
|Employee benefit obligations||4,763||4,888|
|Free cash flow 1||1,024||653|
|Structural free Cash Flow 2||961||833|
|Employees on payroll 3||111,708||111,681|
|Earnings per share||9.21 €||6.28 €|
|Dividend per share 4||3.25 €||2.85 €|
1 Free cash flow: Net cash from operating activities less net cash from investing activities
2 Structural free cash flow: free cash flow before acquisitions, adjusted for the impact of changes in raw materials costs on trade payables, trade receivables and inventories and for the impact of end-of-year volumes on working capital requirement
3 At period-end
4 2016 dividend to be submitted to shareholder approval at the Annual Meeting on May 19, 2017