French tyre maker Michelin (MICP.PA) said on Tuesday it was targeting a segment operating margin of 14% by 2026, citing sales of higher value-added tyres particularly for sports utility vehicles (SUVs) and electric cars.
It was more cautious about its diversification targets beyond tyres.
The group, whose operating margin came to 12.6% in 2023, said at an investor day on Tuesday that a recovery in volumes, a strong product mix effect and growth in sales excluding tyres should enable it to achieve segment operating income of 4.2 billion euros ($4.57 billion) in 2026, compared with 3.6 billion last year.
However, the group cut its targets for its non-tyre business.
It now expects that its non-tyre business will account for more than 20% of total sales by 2030, versus 20% to 30% previously forecast.
This target now includes tyre distribution alongside connected solutions, polymers and "lifestyle", which means that it has almost been reached, since non-tyre manufacturing activities already account for 16% of sales.
"The ambition is still to have a significant portion of our business in these other types of composites, but we won't do stupid things to reach that level," Managing Chairman Florent Ménégaux said during a presentation broadcast.
Michelin also expects cumulative free cash flow before acquisitions of 5.5 billion euros over the period 2024-2026, compared with 4.4 billion euros between 2021-2023, chief financial executive Yves Chapot said.
($1 = 0.9198 euros)
