Ladies and gentlemen, welcome to the Michelin conference call. The conference call will be conducted by Mr. Yves Chapot, General Manager and Group CFO. You are able to download the presentation from Michelin corporate website. I now hand over to Mr. Yves Chapot. Gentlemen, please go ahead. Good evening, ladies and gentlemen. I'm very pleased to host you for this 2021 Third Quarter Conference Call. I will start by sharing with you the sales performance of the nine first months of this year, and particularly the third quarter. Then we'll come back on the full year guidance. What has characterized this third quarter is a very turbulent environment, which is characterized, of course, by the persistent health crisis, particularly in areas such as Southeast Asia. We have a very strong pandemic hikes during the summer. We are facing very severe disruptions across every supply chain. Of course, we have all been seeing what happened on the original equipment market with the semiconductor, the chips crisis have worsened over the past month and weeks. Inflation now is rising across the board, from raw material first, logistic cost, and now energy cost. We are also facing worsening labor shortage, particularly in North America and to a lesser extent in Europe. In this context, the market, of course, and we already announced that the comparatives are less favorable for our businesses through this quarter compared to the first half of the year. The demand has varied widely in the third quarter. Of course, in the original equipment market for automotive, for passenger car, the market fell down by 21% over the quarter, dragged down by the chip shortage. At the same time, the replacement market was stable over the summer with already a steady comparable sales market in 2020. The truck tire market continued to expand outside China, raising by 7% over the quarter. While in China, the market has been going down by 30%. The demand in specialty markets remained robust, with a particularly strong rebound in original equipment in construction and agriculture tire segments. In this context, the group has reported at the end of the nine months, EUR 17.2 billion sales, which is a rise of 15.6%. For the third quarter, sales of EUR 6 billion. The 15.6% growth year-on-year, year- to- date, explained by 14.8% growth in tire volume, of which 1.3% in the third quarter. We have altogether gained from price increase of 2.8%, which have been designed to offset sharply rising costs, 1.3% from mix effect, reflecting both the gain in 18 inch and above for the SR1 segment and a favorable original and replacement mix within this segment, within the Automotive division. A 5.8% increase in non-tire sales and a negative effect of currency exchange rate. Over the last quarter, this currency exchange rate effect was neutral. In this context, despite, let's say, some worsening environment markets, the group maintain its guidance for 2021. The sharp slowdown of OE PCLT markets is weighing on demand, and in an environment that we believe is likely to be disrupted for a long time. If you remember well, at the end of the first half of the year, we have shared with you our prospects for both light car, light truck tire market for the remaining part of the year and truck tire market, and we present you a range of market evolution. You can observe that if in the passenger car tire market, the market was, let's say, within the range in July and August, it went below the range in September, reflecting the worsening situation in the original equipment market. On the other hand, the truck tire market outside China slightly overperformed our forecast during the summer. Regarding the environment, I think all what we are sharing now has been already disclosed at the end of July. I will maybe add one element which was not present at the end of July, which is a sharp run-up in energy cost, particularly in gas and with a strong increase of energy cost increase in Europe. Looking now at the market quarter by quarter. For passenger car tire, you see -5% on Q3 and -5% year- to- date versus 2021. Looking at Q3, as I already explained, OE was down 21% where replacement was stable. Looking across the different regions, Europe and North America posted a slight decrease, -4%, -6%, when China, probably also comparing with a very strong 2020 summer, is posting a -14% market evolution. On the other end, you see that the worldwide truck market is now at the end of September, back at its 2019 level with a Q3 at -8%. That, again, explained by a sharp decrease of the market in China, particularly the original equipment. Europe is stable, +2%, slight growth. North America is posting a strong growth, +13%, and is already 11% above 2019 comparable. In China, you see the huge range of market evolution between Q1, it was +72%, Q3, -30%. Year to date, the market is at +1%. Specialties are running, let's say, very consistently with what we have announced previously with a sharp rebound in agriculture and construction, particularly in OE. Mining is also showing stronger prospects. The aircraft market is also increasing with the opening of the commutation between countries. Just to explain quickly the bridge of our sales between the first nine months of 2020 and the first nine months of 2021. Limited scope effect. Volume +1 4.8%, which represent EUR 2.2 billion. Price and mix at 4.1%, of which 1.3% is mix, 2.8% is price effect, which represent EUR 600 million. Non-tire activities are contributing for €47 million at the end of these nine months. We still have a currency exchange rate negative. You will see afterward that this figure is stable over the third quarter. On the third quarter, our sales have grown by 8.2%. The scope is slightly negative, - 0.3%. Volume are slightly positive, 1.3%. We have a very important price mix effect with 7%, nearly EUR 400 million, of which 1.8% is explained by the mix and 5.2% by the price. It reflects, in fact, already the full effect of the two first price increase that we have implemented since the beginning of the year, end of March, end of June. The beginning of the third one that we have implemented between 1st September and 1st October, according to the business segment and the regions. Non-tire activities are also contributing positively, and you see that over the quarter, the currency exchange rate was practically neutral. Breaking down this figure by business segment. You observe that on the segment one, our sales grew by 18.9%, reflecting a strong growth in sales, led by our pricing management, market share gains in 18 inch and above, and a favorable OE and RT mix, as OE has been impacted by the shortage of microchips. SR2 is also posting a very strong performance, +16.4%, mostly led by our strong position in Europe and North America. Here also, very strong pricing management and a sustained expansion in our fleet management activities. SR3 is at +8.4%. SR3 has been more resilient in 2020, facing the first month of the crisis than the two other segments. On one hand, the market is driven by beyond road business, construction, agriculture, materials handling, which is creating also a negative business mix within the segment. We have also the effect of a very strong price management. Although some of these businesses are indexed through raw material clauses. We are also-- probably it's the area where we are facing the most, the turmoil in the supply chain, given the fact that mining and beyond road businesses are exposed to a lot of shipping, both for upstream and of course, downstream businesses. Which are where we are encountering a lot of, let's say, operation challenges over the summer. As far as the guidance is concerned, I will start with our market scenario for the three segments. First, regarding the Automotive segment, we have slightly lower our market forecast versus those that we share with you at the end of July. We estimate that the market should evolve over the full year between 6% and 8%. Our previous market assumption was a range between 8% and 10%. It's mostly the consequence of the original equipment supply chain challenges that is waiting on demand. Knowing that across the board, we consider that in most of the regions, our distributors, for replacement, have now rebuilt their inventory to a level which is very close to the normative. That demand seems very steady in our key markets. On the truck market, our forecast now is a market which will be between 6%-8% worldwide. If we exclude China, between 11%-13%, when our previous forecast was more a market between 9%-11% outside China. Here we consider also the strong situation of the original equipment market. In some regions, we know that OEMs are now starting to accept orders for trucks that are going to be delivered in 2023. We can consider that all the supply chain given also the challenge that everyone is facing is running at full speed. In the replacement market, global demand outside China remain very strong with a freight activity which is also very strong and we are now entering into a season where the freight is at its peak before the end of the year. Specialties, we have slightly lower down the market assumptions from 10%-12% at the end of July to between 9% and 11%. Mining tire demand remain robust, but we are encountering a lot of supply chain disruptions, particularly due to the shipments, as our factories are based in Europe and North America, and we are serving markets that are scattered all over the world with a stronger mix in Australia, South Africa, South America. Off-road tires demand will be very strong as well as two wheels. We are also seeing the CrossClimate Tire market growing in demand from weak comparative. Based on these assumptions, our scenario is that our volume should land slightly above the market given the fact that we have been able to gain market share in some key strategic market segments. We are also expecting a net price mix raw material effect which will be positive including in the second half. You have to take into account that this price and mix effect should cover not only the raw material cost increase, but also the other element of inflation that are logistics and energy costs, which will be strongly negative over the year. The currency effect, if we consider that the last quarter should be, let's say, close to neutral, should remain negative as it was at the end of the first half. In this context, we have decided to maintain our guidance, which is a segment operating income at constant exchange rate, which will be above EUR 2.8 billion, and a structural free cash flow, which will be also above EUR 1 billion. Having shared with you these elements, just take this opportunity to remind you that Michelin has launched the second generation of this all-season tire during the last months and weeks, which is the CrossClimate 2, which was the product which has really created this all-season market in Europe. I am now opening the Q&A session. Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. The first question comes from Tom Narayan from RBC. Sir, please go ahead. Tom Narayan, RBC. Thanks for taking the questions. My first one's on the 2021 outlook, and apologies if I missed this, but how are you able to maintain the guidance despite lowering the market outlook? If possible, could you give us the breakout within SR1 in the outlook of the 68% between OEM and replacement? The next question. SR1 posted a very strong mix again in Q3, up 5.2%. The ratio of replacement to OE is obviously helping here. Understandably, when OE returns back to normal levels, this could normalize. Just wondering why you couldn't shift or increase production into the replacement market more permanently. In other words, what is the benefit of being as big as you are in the OEM market? Thanks. Thank you, Tom. First, we are able to maintain our guidance because, of course, we are facing the drop of the original equipment market for the Automotive segment. One of the strengths of the Michelin Group is balance between different businesses that are generally not simultaneously obeying to the same underlying trends. You saw that we are rather optimist outside China on the prospects of the truck tire market. We have also strong position in SR1 on the replacement market, and we have also a very strong position in beyond road and mining market. It's the first element which help us to compensate the impact of the drop of the original equipment market. The second one is our price discipline, our ability to pass through to the market most of the element of inflation. I'm saying most because you have to remember that we have 30% of our sales that are based on mid or long-term contract, where we have raw material clauses adjustments, which are generally playing with some time lag. Overall, if you look at the figures that were in the bridge, when we are speaking about 4.1% price mix effect and 2.8% of price is to EUR 420 million just on price pass during the nine first months, of which EUR 291 million in the third quarter. That allow us to be able to cover the inflation that we are facing. Regarding the second part of your question, there is a few elements. First, more strategical standpoint. Our presence at original equipment is key because the original equipment market is also leading innovation. It's important that we are very strong long-term cooperation with some OEMs. We are able to anticipate on new vehicle designs, evolution of OEMs product overall, that we cannot do if we were only a replacement player. The second element between the management of the mix between OE and RT is that, of course, we can convert, and that is what our teams have done very well during the nine first months. We can convert some of these capacities from OE to RT, but with a certain limit. The third element that I would also like to draw to your attention is the fact that, particularly during the nine first months, we were needing not only to follow the demand in term of replacement, but we were facing distributors who needed strongly to rebuild their inventories. We are probably now at the, more or less at the end of this period, which explain why the mix, of course, although it's positive, it might return when original equipment will come back to, let's say, more favorable season. This mix effect was very strong during the first nine months. Okay. Thank you very much. The next question comes from Martino De Ambroggi from Equita SIM. Sir, please go ahead. Thank you. Good evening, everybody. One more question on the price. If you could elaborate on the split by division of your + 5.2% in Q3. For the time being, are you comfortable with your last price increase, or you are planning any further price hike going forward? If you are willing to disclose it, what was the range of the last price hike between September or end of October? We start by this last question. The overall range of the price hike between September or October was in average around 3%-4%. What I can tell you is that the price effect was rather consistent across the different segments. Of course, in some segments you have a little bit more OE, so a little bit more contracted business with raw material price adjustments. Beside that, our teams, and I would like to take the opportunity to thank them, were able to pass the price increase across the board. We are globally satisfied with our price increase. I'm not going to tell you if we are going to implement another one, because first we should be aware of that, our customers. We believe that we have entered into a very volatile environment. The supply chain disruptions that can sometimes come from areas that we are not able to anticipate. For example, the sharp increase of the gas price over the summer in Europe is now impacting some of our raw material suppliers that are coming back to us to ask for price increase on their side. We consider that we have now entered into an area where we should manage our price on a rather dynamic way. It means that adjusting price from one quarter to another should not be an issue. Our teams are organizing themselves to manage that with the right information system, the right way to capture what's going on in the market. We believe that we have entered into a very dynamic price environment, and our agility will be key to succeed and to maintain our price positioning over time. Okay, thank you. The second question is on the free cash flow guidance in excess of EUR 1 billion. Are you moving some of your underlying assumptions on CapEx net working capital, or it's all confirmed? We are moving it, but let's say one is compensating the other. Of course, the raw material and energy prices that we are facing that are increasing our production costs are going to weigh on our working capital. Part of our accounts receivable and inventories value at the end of the year will be pulled by the increase in raw material prices and energy cost prices. On the other hand, supply chain is also impacting our ability to spend our CapEx plan, and we'll probably underspend by the end of the year, and let's say one will more or less compensate the other. I must insist on the disruption level that we are facing. Of course, as you follow the automotive industry, you are well aware what is happening with the semiconductors. You have probably seen also that some other materials are starting to be in shortage, and we are sometimes surprised. We have a huge number of crisis cells open within the company to manage some shortage of some specific materials, including some that we just learned over the summer. Okay, thank you. The next question comes from José Asumendi from JP Morgan. Sir, please go ahead. Thank you. José from JP Morgan. Hi. Just a few questions, please. When we think about your 2023 targets or your midterm targets, it looks to me like you will have already achieved the targets in the second half of this year, if not this year. Are you thinking to, as you close off the year, do you think it could be a possibility to revisit the midterm targets? That is first question, please. Okay. Good evening, José. In the target that we share for 2023, of course there was operating margin rate and value. The rate is going to be probably penalized by the price increase, because as we are increasing prices, it has a dilutive effect on the rate. I don't believe that we'll have achieved our 2023 target during the second semester of 2021. As far as its long-term or midterm target is concerned, it's of course a milestone on our 2030 strategy, Michelin in Motion. We will first, I think at the end of the year or early in 2022, start to guide for 2022, and then during the course of 2022, we'll see if we have to modify our 2023 targets. For me, it's far too early to discuss about changing our 2023 target. Okay. Two quick follow-ups, please. Can you talk a little bit about around the dynamics you're seeing within SR3 and do you consider that the historical 24% margin target for SR3 could still be valid for Michelin? Those two please. Thank you. The demand is here, but you have also to keep in mind that these markets are probably the ones that are, except of course, the two-wheel business and the aircraft business, but they are probably the most cyclical within our portfolio. Clearly, construction, agriculture are on a very, let's say, positive level in the cycle. Mining, we are also seeing the mining operator activities well-oriented with very strong customer demand. At the same time, we are facing very strong operational challenge, particularly on the maritime shipping, and to some extent, some manufacturing challenge, because we have large part of our capacity which is based in the U.S., where we are facing across the board, difficulties to hire employees, let's say all categories of the labor force, but particularly for the blue collar. As far as, let's say, the operating margin is concerned, we have communicated a minimum weight of 17%. I'm not going to bet on should we reach or not the 24% that we have reached in the past. Thank you very much. Thank you. Thank you, José Asumendi. The next question comes from Victoria Greer from Morgan Stanley. Madam, please go ahead. Good evening. The first thing I wanted to ask you about, was just explicitly about the price mix number that you could expect for Q4, very strong at +7. Can we see that accelerate further in Q4, bearing in mind the price increases that you've talked through already, perhaps with a few mix changes? That's the first question. The second thing, I think you made a bit of a comment in one of the previous questions that you think you're more or less at the end of the restock of dealer inventories in the replacement channel. Could you give us a bit more color on that by region, please? Thanks. Regarding the price mix, of course, we should see an acceleration over the fourth quarter of the price part. The mix, you know that in the mix, there is some components that we do not master. We try to master the favorable product mix. The market mix is not completely in our hand or the market, the mix between different businesses can also be impacted, either positively or negatively. We consider that this mix is not only completely in our hand. In the 7%, if you remember well, and there is 5.2% coming from the price. This one should be even stronger on the fourth quarter. At the same time, you should have both raw material, energy and in some areas, labor costs that are increasing, logistic cost of course, that are increasing sharply. It shows you also the extent of the headwind that we are encountering on the cost of the goods that we are purchasing. Okay. Price should accelerate in Q4 mix, as you said, not all of it is in your hands. Yeah. First we have some, let's say index business where we should have another set of raw material clause adjustment as of October 1st. As I said earlier, our third price increase, was spread between 1st September and the 1st October. Regarding distribution inventories, we consider that the situation was already at normative level in Asia before the summer. In Europe, there was, let's say, a situation a little bit more contracted. We can say that during the summer, most of the distributors have reached normative level. In U.S., there is, let's say, maybe some upside with some distributors. Overall, we are not too far from to have reached the global normative level for their inventories. Great. Thank you very much. Thank you, Victoria. The next question comes from Gabriel Adler from Citi. Gab, please go ahead. Hi, good evening. Gabriel Adler from Citi. My first question is on the cost pressures that you're facing. In your guidance, you're now including custom duties, logistics, and energy, alongside raw materials as cost headwinds. You've also reiterated that price mix raw mats will be positive. Could you help us better interpret the changes here? Maybe comment on the magnitude of the positive impact you expect the net price mix raw mats at the 2021. That's my first question. Okay, Gabriel. As we said, we should price mix raw material and all of the inflator. Fine. Price and mix should allow us to cover all inflator's impact. I just want to draw your attention, I was mentioning earlier the magnitude of the price effect over the first nine months. We are speaking about EUR 420 million, including EUR 290 million on the third quarter. It lets you imagine the impact of both the raw material, the logistic cost, and the energy cost that we are facing in our operations. We have always, in the past, in this slide, we always mention raw material and custom duties, particularly because in 2019, 2020, we have seen some countries implementing duties either on finished product or on raw materials. The truth that we have had this year, the notion of logistics and energy costs, because the rise in energy and in logistic cost is particularly spectacular. When mentioning energy costs, it's really an order of magnitude that we have not experienced in the past 7-8 years. We have to come back probably to the crisis between 2007 and 2011 to see such an inflation on energy. In logistics, you all know that basically, the price of a container from Asia to North America, which was sold $3,000 before the COVID-19 crisis, had jumped up to $20,000 after the crisis. Okay. Maybe are you willing to confirm that the magnitude of the net impact you expect now hasn't changed since your previous guidance? No, the magnitude of the net impact has not changed. Okay, great. Then two quick follow-ups. One, on volumes. Could you just confirm the downgrade to SR1 volumes? Is that wholly related to regrowth? Were you also anticipating some softer replacement because of your comments around dealer inventory now having been rebuilt? Then my 3rd question is on imports, and just what impact we should expect maybe from imports normalizing and what impact lower imports is having right now on the pricing environment. Thank you. Yeah. Regarding volume on SR1, I can confirm you that it's 100% due to the original equipment market. For the replacement, you know we are in the winter season, or we are entering into the winter season, which is generally playing favorably on our volume, at least for the two first months of this quarter. Of course, there is always an uncertainty about the impact of the weather on the season. The main impact is, again, the original equipment market situation. Regarding imports, curiously, in some regions, we have, for example, an important joint venture in North America, in distribution, TBC, with a strong business of importing Tier 3 tires from Asia. Of course, they have faced a lot of headwind on the cost side, but they have been able to replenish their inventory to help their customers. Of course, we are seeing some disruptions. The business is not as smooth as it used to be, because containers are delayed. Our own assessment is that today you have only roughly 1/3 of the boats and the containers that are arriving at their estimated time of arrival in the port. You imagine the consequence on the management of the customer demand, customer orders. We don't expect a drastic change regarding ports, let's say, if we look at our end market, both in North America and in Europe. That's great. Thank you very much. The next question comes from Giulio Pescatore, Exane. Sir, please go ahead. Thank you. Thank you for taking my question. The first one on plant utilization. Can you maybe comment on your current rates of utilization, and could that provide maybe a tailwind into next year as potentially earlier covers? Plant utilization, we generally use a comparison which is first quarter of 2019. If you remember well, 2019 was not completely a free ride as the market has also switched during the 2nd half of the year. Overall, in terms of plant utilization, we were on the Q3 around 92% versus what I mentioned, standard, which is first quarter of 2019. It reflects, of course, all the difficulties that we are facing in some regions to hire people. As you know, we are facing labor shortage in some important regions for us. Overall, we believe that we should stay in this range, knowing that practically today, our factories are globally running at the maximum of what they can do with the workforce that is present in their premises. Okay. Thank you. Second one, a bit of a maybe an exercise for next year. If we were to analyze the headwinds that you're seeing into H2 this year, think about energy, raw material, and everything else into next year, do you think you're going to have enough price and mix potentially to offset this headwind? If the situation doesn't improve, then eventually the equation is going to turn negative. Yes. You know our policy is, as I said earlier, to systematically try to pass the impact of raw material, energy, logistics, any kind of inflators in our pricing. We stick for this policy for already a while, with I would say some success. We are definitively convinced that we should continue. Overall, we have been able, in various strategic segments, such for example, 18 and above in the SR1 market, in the SR1 segment, not only to increase our price, but at the same time, to gain market share. We believe that this policy that has been pretty successful, if you look at the price effect in our bridge, should continue. Okay. Thank you. The next question comes from Thomas Besson from Kepler Cheuvreux. Sir, please go ahead. Thank you very much. I have a couple of questions, please. First, I'd like to make sure I understand more simply what you're saying, Yves. Is it a fair summary to say that you're going to reach your guidance despite slightly lower volumes because pricing is much stronger? With slightly lower volumes in SR1, but with a favorable mix effect and a strong price policy. Perfect. Could you confirm that you're also comfortable with current consensus expectations for 2021? Is that beyond what you want to say today? Comfortable, I don't know if it's the right word. Yes, we consider that the consensus, although the environment has worsened over the summer, we consider that we should be able to achieve what the consensus is today forecasting. Okay. Thank you. When I look at the Q4 comps, is it reasonable to say that volumes were already tough last year, so maybe it's slightly easier, even if the original equipment development seems to be the same in Q4 as in Q3? Q4 was pretty strong last year because, don't forget that last year, in fact, the sharp rebound that was started in the Q3, exactly around mid-June 2020, has led to, let's say, the start of the issues regarding supply chain and the sharp decrease in the dealer's inventory. Not only dealer's inventory, but also our inventory. Last year, we cannot say that the Q4 was particularly low. It was already a very strong quarter. Maybe from a pure financial standpoint, slightly less attractive than the Q3. Against Q3, we were, let's say, opening up our facilities and all the system was playing with a very low cost structure and at its maximum speed. Q4 2020 was already a pretty good quarter. Okay. Last quick question, please. I don't think you've commented on the winter tire market and what you expect for CrossClimate2. Could you give us an idea of do you anticipate the winter tire market, including all season, to grow this year? Where are dealer inventories? How did it start so far? Overall, in SR1 replacement, particularly in Europe, what you call the all season, what we call the all season market, has grown sharply since we launched the CrossClimate in 2014. It's the segment of the market that is growing at nearly double-digit rate for the past 5 years. We consider that the CrossClimate 2 is adding, let's say, it's an offer that will probably help us to further grow in this segment. Thank you very much. Thank you, Thomas. The next question comes from Philipp Koenig from Goldman Sachs. Sir, please go ahead. Thanks for taking my questions. I have two questions on China, please. Firstly, could you please comment on the underlying replacement demand you're seeing in the region, given that the data there has been a bit softer recently, and if that had any implications on your ability to increase the prices? My second question is on your production in China, and whether you've seen any impacts from the recent restrictions on power, or you're seeing any impacts on your supply chain in the region. Thank you. The challenge in China is of course the comparison between 2020 and 2021. It's particularly true for the SR2, for the truck tire market, but it's also true for the passenger car tire market, particularly the original equipment. There was some softening during the summer in China. Keep in mind that distributor's inventory has been completely rebuilt during the Q2. We did not have the effect that we had during the previous quarter. Overall, if I look at the replacement market in China for passenger car tire, it was roughly in Q3 2021 at the same level than Q3 2019. As far as the impact of the power cuts on our facilities in China, as you know, electricity quota have been implemented in 19 provinces, among 30. We have two different situations. In the Liaoning province, where our main facility is implemented, we were impacted by this quota, so our factory has to shut down some days at the end of September. Fortunately, they have been able to resume, and for October, we had a minor impact. Our second factory, which is based in Shanghai, has not been impacted by the power cuts decisions. Thank you. The next question comes from Edoardo Spina from HSBC. Sir, please go ahead. Hello, good afternoon. Thanks for taking my two questions. The first is on capacity and CapEx. I understand that you mentioned that you're running your plants at a reduced capacity also because of bottlenecks in shipping. I think you also mentioned that you do not expect an improvement in the foreseeable future. I wanted to ask how this will be impacting your capital investments, if you would like to increase capacity as a result of this, or you expect other competitors to do so, or in fact, if you prefer to wait for, I don't know, a few quarters or years for a normalization of this supply situation. The second question is more on the truck market. If you could comment and compare the market a little bit, a few years ago, especially Europe, maybe 5 years ago or so, are you seeing a more consolidated, more disciplined market in the truck business, which is helping also your EBIT overall? Is it a function of raw materials, maybe input duties? If you can comment a bit on that, would be great. Thank you. Edoardo, regarding capacities short-term, generally we are in an industry where CapEx lead to capacity increase, but after a while. There is always a ramp-up timing. You don't, let's say, increase capacity on the spot like that. As I mentioned, our capacity are today limited partially by the shipping situation, but mostly by the labor shortage that we are facing and which is acute in particularly in North America. Of course it has an impact, the global supply situation has an impact on our CapEx. That's why in our, let's say, free cash flow equation, we will probably spend less CapEx in 2021 than we expected at the beginning of the year. We will have to catch up in the years to come in order to compensate the delay in the implementation of some programs. For some equipment that we need to implement in our factories are needing semiconductors. Sometimes some basic supply are missing. Regarding the truck market in Europe, in 2019, first there was the implementation of customs duties from tires coming from China. These customs duties are supposed to last till 2023, if I remember well. Some of the Chinese players that have a facility in Southeast Asia, in the meantime, redirect some of their sourcing to Europe through their Southeast Asian facilities such as Vietnam, Thailand, or mostly Vietnam and Thailand. Regarding price, I will not comment, let's say, our competitors' behaviors. What we can say is that we have passed up to now three price increase. It might be a bit early to qualify the third one. The two first one has been accepted by the market. Most of our competitors have also increased their price more or less simultaneously. All right. Thank you very much. The next question comes from Michael Jacks from Bank of America. Sir, please go ahead. Hi. Good evening. Thanks for taking my questions. I know you've covered inflation and freight cost already, it seems a large proportion of the inflation we've witnessed in various cost items has come towards the end of Q3. The first question is your guidance for a positive net price cost impact based on current prices in energy and freight markets? That's the first question, linked to the second question, to what extent is Michelin exposed to freight contracts which are yet to be negotiated to reflect the highest spot freight rates? My final question is, are you not worried about potential demand destruction if replacement tire market prices rise too much from the current levels? Thank you. Okay. That's a lot of questions. First, what you have to understand is that we are roughly between raw materials, semi-finished and finished product, one full month of inventory. When you purchase raw material, for example, now, raw material, which our factory in October this given material will impact our cost of goods sold in January next year. You have also a delay between the moment you acquire a material and the moment this material translate in the cost of the tire that you have produced and that you are selling. That's why also there is this phenomenon, this lag effect, which impact although we have started to see the raw material price increase during the first quarter. If you remember well at the end of the first quarter, the raw material by themselves we are not feeling the increase in our P&L. That later that phenomenon impacted our cost structure. That's the first element of answer. The second element of answer is that we increase the price between 1st September and 1st October, of course, based on the information that we had at the end of the summer and during the month of September. We size the magnitude of this price increase in order to cover the inflation to come in our cost of goods sold. We consider that this positive price mix raw material should play including during the fourth quarter. I'm sorry I'm going to ask you to repeat your two other questions. Sure. No problem. The second question is, to what extent is Michelin exposed to freight contracts which are yet to be negotiated to reflect higher spot rates? The last question is, are you worried at all about potential demand destruction if replacement tire prices continue to rise from these levels? Regarding shipping freight contracts as we are an important player because we import a lot of containers of natural rubber, for example, from Southeast Asia to Europe or to North America. Simultaneously, we export a lot of tires from Europe or North America to the rest of the world. We have a yearly contract that we renegotiate let's say between the end of the year and the first quarter, and that generally play from 1st April or 1st May. For the current year, prices have been fixed. Of course, if we need to, because we are either underestimated our needs or we are facing new needs, sometimes we have to go on the spot market. And there, the price are not the same. Most of our shipping costs are, let's say, framed within contract with the major shipping lines. As far as the price impact on the demand, our market is a need-based market, where both consumers and fleet are not buying tires for their pleasure. When you have to replace your tires, particularly when you know that either you want to postpone the acquisition of a brand-new vehicle, or you cannot get a brand-new vehicle, which is the case nowadays with the scarcity of the OE market. This has, for the time being, a limited effect on our price, has a limited effect on the final demand. Thanks. If I could maybe just slip in one follow-up to that. Just going back to the freight costs. If we look at where spot rates are relative to contract rates, in some instances, it looks like spot rates are 2x - 3 x higher than what prevailing contract rates are, which means there could be a potentially very sizable increase in contract rates going into next year. Are you able to give us some sort of indication of the quantum, how large it could potentially be, either in terms of how many containers you move or what percentage of total costs freight contributes? It's significant. I cannot disclose you the detail. By the way, I don't have in mind the number of containers we move, but we are shipping. We are selling roughly 3.3 million tons of finished product. We are purchasing equally the same quantity, more or less the same quantity of raw material, which give you, let's say, the impact of the shipping on our P&L. We are not speaking about a few EUR million, but we're speaking more about hundreds of EUR million. Thank you very much. I believe Michael was the last person to ask for question. Yes. Yes. Thank you very much, ladies and gentlemen, for your attention. Our next, let's say, official communication will be early February with full year results and 2022 guidance. In the meantime, I wish you all the best, and I'm sure that we'll be in contact with some of you by the end of the year. Thank you very much, and thank you for your attention. Bye-bye. Ladies and gentlemen, thank you all for your participation. You may disconnect.