Ladies and gentlemen, welcome to the Michelin 2022 first half results conference call. I now hand over to Mr. Florent Menegaux, CEO, and Yves Chapot, General Manager and Group CFO. Gentlemen, please go ahead. Good evening and good morning to all of you. Thank you for joining us for this semester results. Let me first start by just reminding everyone that our equity story is that Michelin's value will be driven by its growth in a time of shifting paradigms. I'm sure all of you have noticed that our environment is much more challenging than it was 18 months ago. If we recap what you see on the screen, if we recap what our growth strategy is to expand the size of our business and the size of the value created for our shareholders in three areas of business, of course, with tires, like we've done for the past decades. Around the tires, it's mainly on service and solutions, and beyond tires is mainly leveraging our strong capabilities and know-how in high-tech materials. All of that, the around tires and beyond tires, will extend the reach of our know-how and our capabilities in fast-growing markets and with good EBIT generation and with lower capital intensity, therefore enhancing our value creation overall. What you see on the right of your screen is that the paradigms have shifted. Now we operate in a high inflation environment. The global GDP is under stress after a deep dive during the COVID period with a very sharp recovery and now with a lot of uncertainties in front of us, plus many issues in the transportation, logistics, and the overall upstream supply chain, and also the energy transition we have to also accommodate. The paradigm shifts are now impacting our activities, and we are adapting to them while we are confident that our strategy, we think, is the right one for Michelin. If we now move to our results for the semester. We are staying the course in a very turbulent environment with sales up almost 19% and with an operating income of EUR 1.5 billion. We maintain our guidance for the year. If we move into some more details, the market environment in which we operate has overall deteriorated with a new systemic impact affecting our business. Of course, we have the rippling effect of the conflict in Ukraine and the health crisis, the COVID health crisis that is still in front of us in some part of the world. Despite that, our sales have been up almost 19%, despite also the supply chain disruptions and the fast rising inflation that is dragging down the tire markets. Our tire volumes were down 2.2%, but stable if we exclude the sales in Eastern Europe and in China. Eastern Europe is our activities around Russia. We have a strong momentum in non-tire sales that are up 18% at constant exchange rates. We have very positive price mix effect of 14% that is reflecting our pricing policy and our determination to offset every cost inflation. We have experienced a 5.2% positive currency effect led by the US dollar. Our operating income of EUR 1.5 billion or 11.5% of sales is due to our pricing management that has maintained our unit margin integrity. This operating income is up in every reporting segment. Our operating margin reflects a 1.2% derivative effect from the price increases introduced to offset inflation. Our free cash flow has come back to a more normal frame and is negative in the first semester of EUR 1.014 billion before acquisition. The EBITDA has improved to EUR 2.4 billion. The working capital requirements have been hit by inventory replenishment and also by a price element in inventory. It's been overall hit by inflation. We also have a usual seasonal pattern. Our cash flow for the year will be generated by the business in the second half of the year. That's for all these reasons, we have decided to maintain our 2022 guidance with an operating income in excess of EUR 3.2 billion at constant exchange rates, and with a structural free cash flow in excess of EUR 1.2 billion for the year. I now leave the mic to Yves Chapot, who is going to give you some more details about our results. Good evening, everyone. Before zooming on the business and financial performance, let's share the overall, let's say, holistic group performance, looking at our profit, but also the people and planet dimensions. We have selected a certain number of KPIs extracted from our strategic scorecard. On the people side, we have progress in the share of non-French nationals within our top management, which means the top 100 senior executives within the group. It's a progress of seven points over 2020. We are now at 37.5% of non-French population within this population. Our TCIR, which is the frequency incident rate, labor accident rate, has improved by 0.21 basis points over the first half of 2021, demonstrating here also the progress we are making on that domain. Sales and operating income has been already commented by Florent, and I will come back more detail on it. We are also improving on the planet side. Our CO₂ emissions, scope one and two, has reached 2.6 million tons over the last 12 rolling months, which is an improvement over the figure that we reach at the end of December last year by 0.1 million tons. We are online with our target to decrease it by 50% by 2030. Our IMAP, which is a composite indicator of our manufacturing impact, including CO₂, water, VOC, and waste, has also improved. It was at 92.6 at the end of December, and it reached 89.7 at the end of June 2022. The business environment has been already pretty perturbed at the beginning of the year. Of course, the invasion of Ukraine by Russia has exacerbated the situation. We should not forget that the health situation has not stabilized. I mean, China has seen some of its cities or provinces locked down during several weeks during the Q2, particularly. As I said, all the perturbation linked to supply chain and has been intensified because of the war in Ukraine. Just few example, transportation, shortage of truck drivers has been spread over Europe because a lot of fleets were relying on Ukrainian truck drivers. The increase of cost has spread through energy to a lot of value chain, including some raw material that are using a lot of energy to be produced. The labor shortage is pervasive in North America, but also in a lot of areas where we can consider that we have really entered into a period of talent war. If we look at our markets, the global passenger car and light truck tire market has been in the Q1, let's say on average in the range we have initially forecasted. In the Q2, except in June, where there was some rebound of the original equipment market, particularly in China and the US, the market has trended below our expectations. Global truck tire market, including China, has traded more on the upper side of the range we have forecasted at the beginning of the year. Our sales, EUR 13.3 billion +18.7%. The main driver is of course the price mix, 13.9%, of which 12.8 points are coming from pure price increase. We have implemented the price increase over the semester, January 1st, April 1st, and in a lot of areas, May 1st or June 1st. The scope effect is mostly due to the Allopneus integration, and the volume effect is primarily due to the sales losses cumulated both in Eastern Europe and in China. If we exclude China and Eastern Europe from our figures, we are recording flat sales in volumes versus the first half of 2021. Non-tire business growing by 18%, so without currency exchange rate, which shows, let's say, the fact that we invested in areas around and beyond tires that are intrinsically generating higher growth rate. The currency effect is mostly due to the dollar, but basically all currencies except Japanese yen and Turkish lira has improved over euro during the semester. Regarding the segment operating income, it has increased by EUR 109 million despite 2.2% volume less than the first half of 2021, and it's primarily due to the price mix, raw material and manufacturing logistic cost effect. We have been able just with the price effect to hedge all the inflation in our cost of goods sold by nearly EUR 140 million. There was also some inflation in G&A, and you observe that the currency effect is only 10% of what was the currency effect on the sales. It's due to the fact that we have a large revenue base in U.S. dollar, but we have also a large cost base in U.S. dollar. On the contrary, for example, the Turkish lira, which has devaluated by 47% versus the euro on average over the semester, we have mostly revenue in Turkish lira, particularly no cost in this currency. By segment, so you see first that all segments are contributing positively to the improvement in the segment operating income. SR1 by EUR 52 million, SR2 by EUR 28 million, and SR3 by EUR 29 million. I just would like to highlight the progress, the recovery of the SR3 segment, which was generating 11.3% operating margin on the second half of 2021, and which is now at 13.5% during the first half of 2022. When we look internally quarter per quarter, we are clearly seeing very strong signs of recovery. Regarding the cash, we have, as Florent already mentioned, a negative cash pattern, which is looking more, let's say, what was the traditional cash pattern before 2021. We have highlighted that last year, but maybe it's difficult to remember that in 2021, we have a really abnormal year. We started in December of 2020 with a very low level of inventory, and we have been generating a positive cash flow during the first half, which has never been the case for the group over the past 20 years. EBITDA improved by EUR 161 million, but we have an increase in working capital by EUR 1.7 billion. EUR 1.2 billion is coming from inventories, and on which the EUR 1.2 billion, there is nearly one-third that is coming from the pure price effect of raw material in the value of inventories. Looking over the past five years, you will observe that there is always a structural gap between, let's say, the high tide and low tide cash position between EUR 1.5 billion to EUR 2.6 billion, if you look at the pattern of the previous years. It make us confident that we are able to reach our second-half cash targets. The debt, of course, has increased along with the free cash flow and the dividend payment. The gearing is at 29.9 versus 18.6 at the end of last year and 26% at the end of the first half of 2021. Our capital expenditure. You remember in the end of 2019, we have announced that we should spend around EUR 1.9 billion over the coming years, so basically 2020 and 2021. Due to the COVID crisis first, and then our ability to recover in 2021, we underspent over these past two years nearly EUR 0.9 billion. As we have announced during the 2021 yearly presentation, we are expecting to catch up this EUR 0.9 billion over the next three years. In 2022, we should reach around EUR 2.2 billion of CapEx recognized. The CapEx cash out is slightly below because we have a seasonality of CapEx, which is very strong in the second half of the year. Before moving to the full year guidance, I would like to draw your attention on two observations. The first one is looking at the way the group has been able to hold its CapEx through the different cycles. In green you have the market, the volumes effect over the past 14 years. We can draw two conclusions from this slide. The first one is that the group has, let's say, improved its ability to resist to the crisis. We faced nearly the same volume effect in 2019 versus 2020. In one case, our operating margin dropped to 6%. In 2020, it dropped only to 9%. If you look at the cash generation, since basically 2017, the group has constantly generated EUR 1.2 or EUR 1.3 billion more of free cash flow over the period, despite different, let's say, volume and market situation. The second observation I would like also to share with you is the ability of the group to successfully integrate its strategic acquisition and deliver the expected synergies. That's true both, of course, in tires, with the integration of Multistrada and Camso. Multistrada, which was a loss-making company when we acquired in 2019, is now generating very strong profit, thanks to, the move and our ability to move the production capacity toward our T2 brands, which are now accounting for 70% of our total output. On the other hand, if I look around tires, we have now created the Michelin Connected Fleet brand, which is the umbrella brand, around all our services and solutions, activities. Masternaut, which has been acquired, at mid-2019 now is spreading over Europe, in Germany, in Spain, but also outside Europe, in South Africa or Australia. Fenner, which is the core of our flexible composite activities, is developing its activities both with organic and bolt-on M&A around its different activities, either conveyor belts, but also sealing and power transmissions belts. Regarding the synergies, in the past three years, we have been always on track and even ahead of track we look at the overall synergies coming from these acquisitions. Moving now to the guidance, I would like to come back on the market scenario on which we are basing our which are the assumptions of our full year and second half guidance. The markets are far more uncertain, and the environment is far more uncertain than six months ago. We consider that overall, with, let's say, the global risks, linked to the supply chain, potential energy crisis in Europe, the fact that the original equipment market as for passenger car tires has not yet recovered, we have decided to lower our assumptions regarding market scenario. For passenger car and light truck tires, we are now considering the market should be between -2% and +2%, with probably a Q3, which will be very favorable because in 2021, the Q1 has been very bad, particularly for the original equipment market. The Q4 that will be more challenging because the fourth quarter was very strong, particularly in the winter tire market, in 2021. The truck market should be resilient, positively growing, of course, outside China, with a growth rate in the range of 2%-6%. OEMs order books are complete for the year, and the replacement market should benefit from a stronger freight demand, although comparative data on the last quarter were very high. Here also we expect a market more favorable on the Q3 and less favorable on the Q4. On the specialty side, the mining demand is still very robust, but and we believe that shipping difficulties should ease in the second half. I must insist on the fact that it's a real challenge today to ship products from Europe and North America to our mining sites, our mining customer sites. On the off-the-road tires, we expect also a strong demand despite lingering of OEM production difficulties and sometimes of some market cooling down in some areas. With this scenario too, we believe that of course our sales should be in line, growth in volumes should be in line with the market. We expect the cost impact of raw material prices, transportation, and energy costs to be strongly negative, but we expect, on the other hand, to be able to hedge and to do better than hedge these inflations, thanks to our price and mix. Having taken into account all these elements, we have decided to maintain our guidance for the full year with a segment operating income at constant exchange rates above EUR 3.2 billion and structural free cash flow, which will be above EUR 1.2 billion. Thank you for listening to this presentation, and I think now we can open the Q&A session. Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. We have a first question from Tom Narayan from RBC. Sir, please go ahead. Hi. Yes, Tom Narayan, RBC. Thanks for taking the questions. The first one is on energy rationing, natural gas, specifically. My understanding is that tire business is very energy intensive, so this could be an area targeted by governments in Europe. Just curious how this would impact Michelin's plants specifically. Are you maybe overproducing now ahead of energy rationing in Europe? And secondly, it'd be great if it could just, I know you kind of talked about it in the comments, but just maybe some more color on why you expect free cash flow to be so robust in H2, you know, post H1's performance. Thanks. Thank you. I will first give you some elements about our situation regarding energy. Yes, you're right. As we transform materials, we consume a lot of energy. We have created a backup plan for almost every plant in Europe, where we are able to switch from gas back to coal when necessary and when we cannot switch our energy to oil. But all our plants can either switch back to oil or coal, if and when required, across Europe. I think there is only one small exception. Unless there is a cut in electricity, we should be able to operate despite shortages in natural gas. Now, whether we are overproducing right now, the answer is no. We are not creating inventory at this stage to offset future issues on our production capabilities in the second semester. For the free cash flow, I leave the floor to Yves. Yves will answer you. Tom, you have part of the answer in the presentation. If you look at the past, we know that we have structurally cash, as I say, a low tide and high tide cash position with an amplitude of nearly EUR 2 billion over the year. Given the fact that we had already at the end of H1 a bit more than EUR 400 million of price effect in inventory due to the raw material price increase, there is no reason that this figure will dramatically change by the end of the year, so it will enter into the, let's say, the structural free cash flow correction. It means that in the second half, we should generate at least EUR 1.8 billion, and it's a range of what we have done, if you look in 2019 or 2020 in the average. Just for as a reminder, we have, let's say, the lower inventory position during the year, end of the year and beginning of the year, so between December and January. In terms of cash, we have also generally a strong position because the winter season has been ordered by our distributors. Winter tires have been ordered by our distributors in September, October, so they are generally paid by the end of the year. Generally, there is a strong seasonality component in our free cash flow generation between the two semesters. Got it. Thank you so much. If I just have one quick follow-up, are you maintaining the understanding that price could offset raw materials in 2022 in SR1? Yes. Okay. Thank you. Thank you. Next question from Thomas Besson from Kepler Cheuvreux. Sir, please go ahead. Thank you very much. Thomas Besson, Kepler Cheuvreux. I have three questions with firstly, your SR1 performance is actually the main variance to consensus expectations today. Is it possible for you to confirm that there was no one-off in these figures that you reported? Second question, could you? I think that's what you've been saying, but I just want to confirm, the scenario for SR3 margin recovery over the next 18 months, is it still valid? Is it fair to assume that the 11.3% margin we've seen in H2 was a trough, and that we should see over the next 18 months sequential and year-on-year margin improvement? Thirdly, I'd like to come back on the bridge to what you said about the FX tailwind. It was just EUR 47 million, 10% of the revenue impact. Could you guide for what you expect for the full year in terms of FX tailwind? If also clearly highlight what allows you to be confident in having an adjusted EBIT more than 10% above H1 in H2. Thank you. Thank you, Thomas. I will answer your second question, and Yves will answer your first and third question. About SR3, yes, we are confident that we will turn back to the margins. Take into consideration the fact that SR3 is mainly index contracts. We have the anniversaries of the contracts. Plus, we also have had very intense negotiation with all the operators in those segments, in the various activities of this segment, to pass on price increases to cover energy costs and transportation as well. With the volume that will improve as well because we have found ways to ship our tires differently from the way we used to do it. Therefore, we can ship more quantities. We will see our margins quickly coming back to their historical levels. We've hit the low point in the Q1 of 2022, and now, we are on the recovery path. First, there was no one-off regarding the group performance. The only one-off was below the segment operating income. It was the impairment that we did on our assets in Russia of nearly EUR 200 million. In SR1 performance, there is absolutely no one-off. SR1 is probably the segment that has been the most penalized by what happened in Russia and China with SR3. On the other end, the SR2 is we are less exposed to SR2 in these two regions. That's probably the segment that was less penalized. Regarding the FX. Basically, in US dollar, we have a drop-through of, let's say, an average between 25%-35%, which means that when you have a US dollar moving as it moved by basically, I think, 10% versus the euro on the first half of the year, it has an impact on sales of 3.8% and an impact on segment operating income of nearly 30%, so 1.1. On the contrary, the drop-through of the Turkish lira is nearly 85% because, as I said, we have basically only revenue in Turkish lira. The costs are only the logistics and, let's say, sales operations costs, sales force that we have in the country. When you have a currency which is dropping as the Turkish lira did by 40% versus euro, basically you have nearly 35% of that that is translated directly in your P&L. For the second half, well, the appreciation of the US dollar, particularly versus the euro, was of course very strong, stronger in the Q2 than in the first one. We can expect that here also, I don't have a crystal ball, to have a bigger Forex effect in our segment operating income in the second half than in the first one. Thank you very much. Very clear. Thank you. Next question from Gabriel Adler from Citigroup. Sir, please go ahead. Yeah. Hi, it's Gabriel from Citi. Thanks for taking my questions. My first is on inventory level with the dealers. Have you seen any signs of pre-buying in the first half, particularly given the prices have been rising? Is that one of the reasons why you've looked to downgrade your market outlook for SR1? My second question is just coming back to the free cash flow. Could you just comment maybe a little bit further on which elements of the working capital that you expect to support the second half recovery? Because I understand the point around historical seasonality, but historically it's really been receivables swinging back that have supported the second half recovery in cash. Whereas this year, clearly inventories are having a very negative impact in first half. I'm just trying to better understand why you think inventories will reverse given there's been quite a significant impact from inflation of the value of raw materials and your inventory, which is unlikely to soften in the second half. Just some comment around the working capital elements would be really helpful. Thank you. Thank you. For your first question about dealer inventory, across all regions, we have seen the inventory replenishment happening. Now, we have also seen, especially in Europe and to some extent in North America, a pre-buy for competitors' brand at dealers because the competition have followed lately our price increases. Therefore, they are pushing a price increase by the July 1st, which led to big pre-buy of competitors brand in the dealer inventories as of end of June. As far as Michelin is concerned, especially in passenger car, the inventories have been replenished, but we don't have excess inventories across dealers. Now, the pre-buy for Michelin brand did not happen because we have not been really in capacity to supply all the demand because of the issues we have related to production. Yves, maybe for the Regarding the free cash flow and the working capital, I will repeat what I said before. We have traditionally a very strong cash generation during the last three month of the year. One, because of the seasonality of the sales, and 2021 from that standpoint has been not normal year where we have a stronger H1 than H2. We believe that we are back to a normal pattern in term of seasonality. We have at the end of the first half an increase of inventory of EUR 1.2 billion. As I said, part of this increase will remain, which is a price effect, but it is the price effect that we correct to calculate what is a structural free cash flow. Of course, the volume effect should decrease because as I said, at the end of the year, it's probably the lowest position in terms of inventory level during the year if you look at the full yearly cycle. For accounts payable, we have generally very strong sales in September or October. November, it might depend on the winter season, but most of the winter tires are sold to distributors in September and October. Generally, they are paid at the end of the year, which explain also the fact that the end of December is a moment where we have the lowest level of accounts receivable. On the contrary, we acquire some raw materials at the end of the year in order to prepare the spring season at the beginning of the year. Generally, our production facility are running full at the beginning of the year, and it generate a payable that we pay during Q1. We don't see any major reason. This year was a bit exceptional because of the very strong price effect in the inventory. But we have seen such similar situation, I think 10 years ago, at the beginning of the year 2010. Okay. Thank you very much for the detail. Thank you. Next question from Akshat Kacker from Bank of America. Sir, please go ahead. Hi. Good evening. Thanks for taking my questions. Perhaps just the first one on raw mats. We've seen a moderation in the last three months in natural rubber and some of the other raw mat inputs. Should we expect perhaps to see this reflect in the income statement in a normal three- to four-month period? Or will the higher inventory volumes that you alluded to delay this? That's the first question. My second question is on energy cost inflation. To what extent have higher energy prices impacted the first half earnings? And do you expect higher impacts for the second half? Perhaps just as an add on to that, how much of your current energy usage is indexed to spot energy prices, referring to gas and electricity? Thank you. With the question about how the raw materials are going to evolve in the future, we don't know. What we have seen is as you were mentioning a stabilization and but we have been clear from the very beginning that we reassess every quarter what we do in terms of pricing versus what we see happening in raw materials. It means that, why do we do it every quarter? Because it's the time for us to recognize in our P&L the purchase price we see in our account. So far, the stabilization is good news because we don't have to push price increase immediately because of that. What it will be in the future, many unknowns and uncertainties. At this stage, we are not too concerned about that. The second element is also our level of inventory in raw materials is in better shape now than it was last year, same period. We have replenished our semi-finished and raw materials inventories, so we are at good levels. We are in a, I would say, in this environment, I don't know whether I could say in a comfortable position, but we are in a better position than what we were at the same period last year. Yves, maybe for the other elements. First, already, in the H1, you mentioned the more than 700 million of manufacturing and logistics cost inflation. We have very strong increase in transportation costs, both inland and shipping costs. Energy has been also a very strong driver for this. They are the two main driver behind this logistics and manufacturing cost increase. Regarding the energy, I don't want to enter into too much detail, but we have a policy which consists to hedge at the beginning of the year between 25% and 75% of our following year energy consumption in order to protect ourselves against potential increase, but also not to be completely fixed if energy price were going to decrease. Of course, we have such a range because we want to give the flexibility to position ourselves depending on our anticipation on energy prices. I'm not going to disclose our position currently. It means that the rest is linked to spot price. We have a policy of hedging which, let's say, consistent with our overall, let's say, risk management policy. That's clear. Thank you. If maybe I can just add one quick add-on related to energy costs. With regard to retrofitting the boilers to be able to use coal, is this a contingency plan only, or would you potentially preemptively switch? Under either scenario, if you do switch, are there any incremental cost implications, relative to gas prices? I don't know, maybe logistics costs, for instance, makes it a lot more expensive. Thank you. Yeah. Switching back to coal is only happening mainly in Poland, where we had a boiler that used to be on coal, and we, for environmental reasons, we had switched to gas, and now we have to switch it back to coal. It's most of the other facilities is having boilers that are capable of handling either gas or oil. Coal is mainly happening in Poland, and it's we hope it's a temporary situation up until we have found a reliable source of less environmental impact source of energy. Understood. Thank you. Thank you. Next question from Giulio Pescatore, from BNP Paribas. Sir, please go ahead. Hi. Thanks for taking the question. I wanna follow back on energy costs. I understand you don't want to go too much into the details of your contracts, but can you just maybe give us a broad indication of what we should expect in terms of incremental costs from energy for next year based on the spot prices you see today in the market? The second question, moving to pricing. I was just wondering, is it more difficult for you to increase prices in an environment where raw material costs are actually going down, but you still need to offset some of the energy headwinds? A third question on free cash flow. Going back to the winter season, how much are you actually relying on a very strong winter season to reach your guidance? Is this a major factor or it's a minor one? Thank you. On prices, of course, there is a price elasticity in the market, but sometimes we have a static view of the price elasticity and where we should consider a relative view of the price elasticity. So far, we have been able to pass price increases in the market thanks to the quality of our products and services that are appreciated by the market. We have not seen yet any real impact on the demand. Whether that will remain and if we have to pass further price increases, it will depend on our relative positioning versus the rest of the market. It's very difficult to answer definitively that question. Of course, theoretically there would be a price at which people will not be willing to buy our tires. Where is it? It's difficult to say at this stage. Maybe Yves for the other questions. Well, regarding energy cost, contract renegotiation is not for 2023, is not coming, going to be done during the fall, so it's a bit too early to speak about 2023 and next year cost expectations. It will first depend on what is going to happen in 2022. Regarding free cash flow, of course, as I said, there is a seasonality effect. We are back at a normal seasonality, and maybe the main difference in 2022 versus what happened last year is really the fact that in 2021 we have a very low activity during Q3, partially compensated by relatively strong sales in Q4. We are back, let's say, to a normal winter season, which for truck tires is mostly fleets equipping their vehicle with new tires before the winter, which is the most demanding season in terms of safety. In the passenger car tires, of course, winter tires equipment in seasonal market, but also more and more customers switching to all seasons and to our CrossClimate ranges. Thank you. Sorry, can I just follow up on the energy? I mean, I understand that the negotiation happens in the fall, but the fall does feel closer than ever given the energy constraint. So just based on spot prices, should we expect a very significant increase in cost next year? Or is it? Can you give us any indication to help us with the expectations for next year? We don't know whether we will see a very significant increase. It depends on many parameters, so at this stage we don't know. Understood. Thank you. Thank you. Next question from Martino De Ambroggi from Equita. Sir, please go ahead. Thank you. Good evening, everybody from Equita. The first is on the guidance again. You are revising downwards market volumes, and you assume to perform in line with the market. So that means, based on my estimates, that you have more than EUR 100 million lower operating profit contribution from volumes. So how do you plan to offset these lower volumes? The first question. The second, sorry if I missed it, but in the previous call you mentioned that the cost inflation all-inclusive was EUR 2.4 billion increased by EUR 1 billion compared to your expectation at the beginning of the year. Is it still EUR 2.4 billion? Maybe referring to this EUR 2.4 billion, you can split a bit of energy, transportation, labor cost, because in the previous call you mentioned that energy was increased by EUR 500 million, transportation between EUR 300 million and EUR 400 million, labor and other EUR 100 million. Just to have a rough idea. Thank you. Okay. On the first part of your questions, your question is a testimony to our very good performance because we are, as you said, able to increase our profit in volume despite this very messy environment and despite the fact that we have issues on volume, most of them unrelated to our core business, but due to the environment in which we operate. Thank you for asking that question. The recognition of this, your simple question is a good recognition of the excellent work that our teams are doing. For the rest, I leave to Yves. If I may, what are lower costs, higher mix? What is your ability to offset these EUR 100 million or more of lower volumes contribution? You have it in the bridge of the first half. Yeah. You don't necessarily need to multiply all the figures by two. The bridge of the first half is a demonstration that despite the loss of volumes, particularly due to what happened in Eastern Europe and in China, the group was able to generate, so if I exclude the exchange rate, more than EUR 60 million operating margin than first half of 2021. As far as inflation is concerned, we are still in the range of EUR 2.4 billion. Honestly, it's The proportion we share with you during previous calls regarding raw mat, logistics and energy has not fundamentally changed. It means that we are going to absorb in 2022 twice the inflation that we absorb in 2021. Okay, thank you. If it's possible to have a rough indication of profitability divided by SR1 and SR2 for the full year? No, we don't disclose forecast guidance per business segment. Okay, thank you. Thank you. Next question from José Asumendi from J.P. Morgan. Sir, please go ahead. Thank you. Good evening. Couple of items, please. Can you talk a little bit around, CapEx and this normalization of CapEx, and how much of that is being dedicated to, capacity expansion across any region? Second, please, can you talk about, mining, sounds very promising. You mentioned robust demand and shipping difficulties. What are you tracking, monitoring, to see an improvement, in earnings in this division in the second half of the year? And then finally, if you could maybe just, maybe, Yves, just give us a bit more color with regards to volume for SR1, SR2, SR3, second half versus the first half, if you could just give us a bit more color around those three divisions. Thank you. Okay. On the volume, I will leave Yves to answer. On CapEx, we have low expansion in capacity, and many of our investment is passed to be able to produce the tires that are successful enough so that we can have the prices in the market. We consider that in the CapEx that we are forecasting for the year, you have the inflation on those CapEx as well, that we are offsetting by making arbitrations on our CapEx portfolio. We don't give too many details about how we spend that, those CapEx. On mining, what we track as we know, the beauty of mining is that we almost can track every tire we produce and sell. We know perfectly how many tires are on boats to be delivered to our customers, and we know that our shipping rate is increasing weeks after weeks. We know our big issue has been not the demand, but our capability to ship the tires. Now we are able to track that we have seen more tires shipped, and those would translate in sales in second semester. Maybe Yves on volume. Regarding the volume, I think you can stick to the hypothesis we took for the guidance. By difference with what happened during the first half, you can guess what are our market expectation for the second half. We are of course betting on a rebound on the original equipment market, which has been particularly penalized during the second half of 2021 with the microchips crisis. Of course, the rebound of China, where the market has been severely impacted by the lockdown during the second half. That's basically the main hypothesis behind this volume effect. Thank you, gents. Thank you. Thank you. Next question from Philippe Houchois from Jefferies. Sir, please go ahead. Yeah, thank you for taking my questions. I just want to come back on the price mix against the inflation. You mentioned in the guidance now that you're expecting to be slightly positive for the year. You already did over EUR 200 million in the first half. Looking out for the second half, do you expect to do the EUR 200 million maybe again in the second half? Or is that sort of maybe rather neutral effect for the second half? Any color there would be helpful. My second question is on the mix. You just pointed out that you're betting on a recovery in the original equipment, which is obviously less profitable for you. Is it fair to say that you potentially could see a negative mix effect in the second half? It was already sort of sequentially lower in the second quarter. Then lastly, it's just a very simple question on the volumes. I know you're sort of saying you want to grow in line with the markets, but do you still believe that group volumes can be up this year on a full year basis? Thank you very much. On the first element of your questions, about the mix effect, we consider that if you take all the mixes together, geo mix, product mix, segment mix, et cetera, we should be slightly positive for the year. It means that in the second semester it should be okay. Now, when you look at the pricing, you also have to consider that we have been able to offset the overall impact of all the inflation, despite the fact that we have a large portion of our business that is with index contracts. Those index contracts have anniversaries that are coming in the second semester. For example, in mining we have price increases that are happening July 1st. In second semester, you will see on the index contract additional price increases due to the anniversaries of the contract and also all the renegotiation we have been undertaking over the past months. That's why we are confident in our price mix scenario for the second semester. Maybe for the volume, Yves? You already answered. Yeah. Also I already answered. Sorry. Thank you. Next question from Christoph Laskawi from Deutsche Bank. Sir, please go ahead. Good evening. Thank you for taking my questions as well. There's actually not a lot left. Coming back to switching the energy source, potentially in a fallback scenario, are you currently already entering into contracts to secure the new energy sources? Did you face any cost related to that at all, or could there be a risk simply because there will be a run of several companies on oil or coal as prices are significantly increasing in H2 again, and there might be a potential shortage for one or the other? Just last point, you have said already that demand hasn't really weakened because of the pricing, and you have been able to conduct the price hike if you have planned to. In the current planning scenario, is there any weakening factored in for Q4 where we might see demand bite a bit more because of the consumer budgets, or are you essentially assuming the situation holds that you've seen in H1? Thank you. On the last part of your question about the demand in the Q4, our assumption is that demand in the Q4 will be mild. We do not right now anticipate drastic scenarios. Of course, many things can happen in the meantime. Regarding the energy situation, we have, as I said earlier, we try to hedge part of our purchase. We are also, by the way, buying energy from sustainable or renewable sources. In some countries we have nearly 100% of the electricity we buy that is so-called green. As Florent said, we have put in place a contingency plan in order particularly to protect the sites that are today mostly relying on Eastern European gas. The past two years has been the demonstration that we have to face any kind of crisis, and agility and let's say ability to weather this crisis is starting to become a strength within the group. Although there is a lot of clouds on the horizon, we remain relatively optimistic. Thank you, Yves. Thank you all for your participation tonight. This is ending our question-and-answer session. Thank you for your commitment to Michelin, and we'll see you soon. Thank you. Yeah. Have a nice vacation. Bye-bye. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect.