Ladies and gentlemen, welcome to the Michelin conference call. I now hand over to Mr. Yves Chapot, General Manager and Group CFO. Mr. Chapot, please go ahead, sir. Thank you. Good morning, everyone. Sorry for waking you up so early on the Monday morning, we wanted to share with you the announcement that we did this morning. Yesterday, we have signed the acquisition of a company called Flex Composite Group, which were currently belonging to IDI, a French private equity company. Through this operation, we are going to create the leader in high tech engineered fabrics and films. I'm not alone this morning. I'm with Maude Portigliatti, our Executive Vice President in charge of High- Tech Materials, we will together share with you some slides before moving to the Q&A session. Maybe some word about the transaction. First, and Maude will enter into the details, Flex Composite Group, FCG at a glance, it's a company. It's a European-based company, mostly located in Belgium and Italy. It's a European leader in high-tech engineered fabrics and films. Its 2022 revenue were at EUR 202 million, with an EBITDA margin over the past years between 25%-30%. It's a company that has constantly grew organically by a compounded average growth of 11% over the past seven years. The transaction is at an enterprise value of EUR 700 million. We are expecting EUR 21 million of annual run rate EBIT synergies by the fifth year. It's a transaction which post synergy can be considered as a multiple of 9x EBITDA. This transaction will be accretive for Michelin High- Tech Materials revenue team, so it will grow the size of this business by 20%, in line with our 2030 ambition. It is relative, in term of growth, in term of EBIT margin, and in term of earnings per share from the year one. Of course, this company will positively contribute to the cash generation of the Group. We are going to finance this operation 100% through the cash available, and it has a very limited impact on our Group leverage as our post-transaction gearing, if we look at the gearing at the January 1st, 2023, will be just increasing by 4 points. We are expecting to close the deal by the end of the third quarter, subject to closing adjustment and merger control clearance in different jurisdictions. I'm now going to hand over the floor to Maude, who is going to present you FCG and the synergies we are expecting to generate from this deal. Good morning, everyone. Let me describe a little bit more this target. Flex Composite Group is a European leader in engineered fabrics and films, active in three main product categories adjacent to Michelin activities. First, resin-impregnated fabrics through the brands Angeloni and Selcom. These activities represent 50% of the total revenue and are mainly based in Northern Italy. Second, flexible coated fabrics through the brand Orca, based in Belgium and representing 29% of the revenues. Third, technical films and membranes through the brand FAIT PLAST, located in Brescia, Italy, and representing 21% of the revenues. FCG has 400 employees and more than 2,000 customers. As shared by Yves, in 2022, the company reported EUR 202 million of growth sales. Over the period 2015, 2022, FCG has demonstrated a high compounded annual growth rate of 11% and has generated an EBITDA margin higher than 25%. Let me now share some products of the company. FCG operates in fast-growing markets with strong demand dynamics and high-end customers. FCG serves the marine professional and leisure markets, which are expected at a high single-digit growth, thanks to the dynamics of the rigid inflatable boats, recreational boats, yachts, and top-class sailboats. Let's have an example of customers, Capelli, for example. The division Angeloni, specialized in carbon fabrics and technical composites, delivers its products to sports cars, supercars, and electric vehicles. Those markets should enjoy a double-digit growth rate based on the rapid electrification of the automotive sector and of the dynamics of sports cars. FCG is a recognized player in technical thermoplastic films for niche applications, such as technical apparel requiring impermeability and breathability. Outdoor leisure and extreme sports are developing at a fast pace. As a last example, FCG is developing its activities in impregnated fabrics for construction. The demand for technical materials is growing fast in this sector, subject to demanding green regulation, especially in Europe. Now about the synergies. FCG products, materials, and processes are adjacent to those already mastered by Michelin, so that we will be able to unlock deep innovation synergies. High-tech engineered fabrics and films range from a thin layer of polymer-based materials to a more heavy matrix coated on fabrics. Those products can be very flexible or rigid, from a monolayer film to combined multilayers. They are designed to meet demanding technical multifunctionalities like strength, lightness, impermeability, breathability, puncture resistance. FCG and Michelin will combine their innovation abilities in those domains, from research to applications development. To complement the deep market knowledge of FCG, Michelin will bring its extensive worldwide manufacturing expertise, its unique know-how in performance innovation, and its leadership in sustainable materials. Those synergies will enable the creation of a leader in engineering fabrics and films in our high-tech material division, alongside with our existing businesses in sealing, belting, and engineered polymers. We estimate the synergies at a run rate EBIT value of EUR 21 million from year five. They will be mainly driven by the product mix enrichments, as I just described, and the geographical expansion eased by Michelin footprint. We will also leverage Michelin market access in defense, aeronautics, and high-end automotive, while developing cross-selling opportunities. Cost synergies will be based on economies of scale in purchasing. Maybe to come back and take a little bit of step back, looking first at Michelin history in High-Tech Materials. It started with the acquisition of Fenner in 2018, in May 2018. Looking at what has happened with Faurecia, you see that in 2018, the Fenner businesses, if we accept Solesis, which was a medical division that was in the meantime bought in a joint venture with Altaris, was at that time generating EUR 800 million of sales. By 2022, it has generated EUR 1.1 billion, which is a compounded average growth of 8.3%. If we take into account that the year 2020 was impacted by the COVID, so if we look only at three years, it's an average growth of 11%. FCG will complement this business, which will represent EUR 1.3 billion in total sales if we look at 2022 pro forma data, and it will increase the share of our High-Tech Material revenue within the Group from 4% - 5%. In complementing what Maude just explained to you about the synergies, FCG is mostly a European company with a marginal commercial presence in the Americas and the Asia Pacific. It will benefit from the strong Michelin presence, including in High-Tech Material, in those area. Actually, we are mostly present in North America through our High-Tech Material activities. I would like also to comment on the quality of the asset, the quality of the team of FCG, which will allow us to create the synergy. The company by itself has a fast-growing pace. It will be margin accretive for the Group and for the specialty segment, and it will of course improve also the cash conversion of the Group, as it's a company which is spending generally 3%-4% of its revenue in CapEx. Of course, it's earning per share accretive from the day one. That acquisition is fitting completely in the strategy that we have shared with you since 2021. It's enhancing our strategy and our business model, which consists to have People, Profit, and talent performance at the heart of our success. We will offer to FCG employees more career opportunities. Actually, we'll probably bring part of our existing High-Tech Material coated fabric businesses within FCG to put them in North America, to allow them to have a foot in North America. We have a leadership model that puts people, teams, and empowerment at the center of our mindset. We believe that FCG being a very decentralized, agile company, they will benefit from the Michelin know-how in this area. We will further enhance the skill management. Of course, FCG will be integrated in our Group ambitions in terms of employee engagement and employee safety. Profit-wise, we already mentioned it, the deal is accretive to all the KPIs. While the Group financial position will remain strong post-acquisition, of course, the real post-acquisition will occur at the end of 2023. Basically, we should expect to have exactly the same gearing at the end of 2033, given the size of this acquisition. In term of Planet, you know that we are committed not only to reduce our CO2 emissions, but also to completely reshape the structure of the materials that we are using. FCG will benefit from Michelin R&D to generate, to discover and develop the new generation of materials, to increase the bio-sourced and recycled materials, particularly in resins, glues, and reinforcements. Of course, to, from our comprehensive approach, to reduce the Volatile Organic Compound emissions and solvents usage in the coating processes. Key takeaways, it's a deal that is creating the leader in the high-tech engineering fabrics and films, enhancing the Michelin High-Tech Material revenue up to 20%. It's an important step for us to develop Michelin beyond mobility, in line with the strategy that we share with you, and with the ambition to position the Group as a key player in the polymer composite solutions. It's unlocking deep innovation synergies in a broad range of products and applications, diversify the Group exposure to different applications and end markets. It's a deal that is, again, accretive, from a growth profile standpoint, EBIT margin percentage, and of course in value, including for the specialty segment, and positive cash generation in EPS. It's a deal that is totally affordable for the Group, given our strong financial position. Of course, we'll have to wait the antitrust clearance, but we will be very happy to welcome the 400 employees of FCG within the Group, in a couple of months or, in few months. Thank you for your attention. I suggest that now we move to the Q&A session. Ladies and gentlemen, if you wish to ask a question, please press star and one on your telephone keypad. Please ask your question in English. The first question is from Thomas Besson of Kepler Cheuvreux. Thank you very much. I have one question on the deal and one question on the M&A strategy, please. Firstly, could you discuss the visibility of FCG's revenue profile? Does it have another intake that effectively will ensure the future revenue growth? The suggestion you make on the different businesses implicitly suggests more like high single-digit organic growth than the double-digit organic growth that has been reported over the last seven years. Second question, shall we assume that it is still the plan for management to spend between EUR 5 billion and EUR 10 billion on different acquisitions, as it's been suggested in various occasions at your CMD or in press articles recently, over the decade, EUR 5 billion-EUR 10 billion to reach your M&A ambitions that have been unveiled in April 2021? And that within that timeframe, you would still aim to at least maintain dividend and reach your minimum Return on Capital Employed target. Okay, thank you, Thomas. I will let Maude answer to the first question, and I will take the second one. Yes. Yeah, the business plan we have for FCG is very promising. We studied it deeply. We think we are able to sustain a CAGR around 8%-10% for the coming years. Maintaining the EBITDA margin above 25%, perhaps even 27%. The business plan is totally in line with the past results, and as shared by Yves, very positive for High-Tech Materials division results. Okay. Regarding your second question, I can confirm you that we intend to allocate around EUR 5 billion-EUR 10 billion to acquisition within the decade to reach our 20%-30% non-tire sales ambitions. These figures has been commensurate viewed from two standpoints. The first one is that given the intrinsic growth, organic growth of these businesses, we know and of course, the multiple, the value of these businesses, we know that it's approximately the sum, it's between EUR 5 billion-EUR 10 billion, that we need to spend to reach at least 20% by 20% of our global sales by 2030. Second, we have always said that we want to keep a sound and robust financial rating. We are currently at A-. We can accept to be downgraded one notch. We know that it's a kind of range within which we can probably at EUR 5 billion we'll be, we'll keep our current rating. Let's say above EUR 7 billion or EUR 8 billion, we'll be degraded by one notch. That's the reasoning. To finish my answer, we intend to keep our dividend policy, which is aiming to increase the payout ratio gradually towards 50% in the coming years. That's totally in consistent with our capital allocation strategy. Thank you. Sorry, and of course, you asked me the question about the Return on Capital Employed. We might have, if we were doing a larger acquisition on a one-year, let's say, an impact on the ROCE, but we are looking at the 10.5% as a threshold. Maybe the year of the acquisition, it might not be possible, but we should come back very quickly to at least 10.5% of ROCE. Thank you. In the case of a larger deal. The next question, sir, is from Ross MacDonald of Morgan Stanley. Yeah, thank you. Good morning, it's Ross MacDonald at Morgan Stanley. Congratulations on the transaction. I guess the first question from me, it would be good or helpful to understand the cash flow impacts from this transaction net of the TBC asset disposal from late May. I hadn't seen a figure on the proceeds from that deal, perhaps you can comment on the net cash impact in the first half. Linked to that, whether you feel that the asset disposals on the retail side are now finished? A second question linked to Thomas's question, is the integration of this FCG deal now the key strategic focus for management for the remainder of this year, or are you focused on further beyond tires M&A in 2023, perhaps something larger? Thank you. Okay, thank you. Thank you, Ross. first, the cash flow impact will be a cash out of roughly EUR 700 million. It's the enterprise value, it will be a mix of equity, and of course, we'll take out the debt, the current debt of FCG. By the way, we'll refinance it probably at a better condition than its current condition. Regarding the TBC asset disposal, the deal has been approved by the antitrust authority in the States. It's a deal which was slightly above $500 million. One of the impact for us on the first half of the year is that we have received, let's say, an exceptional dividend from TBC, which is slightly below EUR 200 million, and which is, of course, a share of 50/50. EUR 200 million is for us, and another EUR 200 million for our partner in the deal. The integration is a key strategic focus, mostly for, that's why I'm with Maud this morning, for our High- Tech Materials division and for our research and development team. As you have seen, we know that probably 70%-80% of the synergies are revenue synergies, and we will organize ourselves in order to support FCG in order to extract these synergies as soon as possible. In parallel, we are constantly looking at opportunities in the market in High- Tech Materials, but maybe also in the other division, which is aiming to go, which is our around tire activity, which is the Michelin Connected Fleet division. Next question? As a reminder, if you wish to register for a question, it's star and one on your telephone. The next question is from Steve Fernandes of Société Générale. Hi there. Thanks for taking my question. The first is, could you just remind us what the criteria is to separate your Beyond tire businesses into RS4? Secondly, could you maybe talk about the market share that FCG has in its different product categories, and maybe the size of its addressable market? Okay, I will take the first question, and I will let Maude answer the second one. In fact, the financial accounting rules are the following: providing we have, of course, the dedicated organization, we can create a separate reporting segment as soon as an activity represent roughly at least 10% of the Group sales. Today, with the FCG deal, you see that we are at 5%. When we reach close to 10%, maybe we can do it when we'll be at 8% or 9%, we can create a specific segment. What I would like to share with you is that first, we take the opportunity of this deal to give you and we take also the opportunity of the two different-... CMD that we have organized in the past three years to give you some idea about the size of this business. That the first, today you see that this business will represent pro forma 2022 around EUR 1.1 billion. Second, this is an activity which represent 90% or 80% of our non-tire businesses. When you look at our half year EBIT bridge, you have the contribution of our non-tire business to our EBIT. You can also so we are already providing information, so you can get an idea of the contribution of this activity. If you look at the three past semesters reporting, you will see that this non-tire activity, for which MHT represent roughly 80%, is positively contributing to is relative for the Group EBIT. Regarding the market share, I think you understood that FCG is exposed to very, very diverse branch of markets, from automotive to marine, medical, construction, and so on. In all those areas, I would say they are targeting very specialized niches, and then they have, I would say, a few percent of market share. If you zoom on very specific high-end markets, let's take as an example, coated fabrics for rigid inflatable boats, Orca has more than 60% of this market. If you zoom on the market of the carbon look composites for high-end cars, we are around 40% of the market share. This is really, the strategy of FCG, being exposed to very, very, very broad and diverse market, but targeting high-end niches in those markets with, for those one, market share. Next, question? Mr. Chapot, at this time there are no questions registered, sir. Okay. No, excuse me. Sorry to interrupt you, sir. We do have a question registered from Martino De Ambroggi of EQUITA. Yeah, good morning, Yves. Thank you. You mentioned the amount of sales for this non-tire division. Could you remind us what is the profitability pro forma for this year? Maybe looking forward, will this business stay inside Michelin or maybe one day, maybe within five years' time, could be separated or will stay forever inside Michelin? Okay. I will start by the first part of your question. The MHT profitability is in line with our SR3 profitability. When you look at the SR3, it's, I mean, MHT is globally consistent, in average, it's rotating around the overall SR3 profitability. It has been rather relative for SR3, for example, two years ago. Now with the mining business coming back at, let's say, standard profitability, it's pretty in line with the, it's very consistent with the SR3. If we are acquiring these businesses, it's not to separate them, because we consider that very in-depth synergy coming from our mastering of the materials, our ability to assemble these materials together. We consider that Michelin, through its very strong knowledge of the materials, will be able to enhance the performance of these companies. It has already translated in some very concrete examples that were shared by Mo during our last CMD with some of the Fenner division. Of course, is what we did for the medical businesses of Fenner. We are open to a deal that will help for first to help this company to grow faster. That's why we brought Solesis to a joint venture with Altaris, and of course, to crystallize the value of this company. To give you, although they will stay within the Michelin Group, to give you a better vision of their performance. Of course, as soon as the SR4 will be created, it will be even easier for you. To come back on the question, because I understand the underlying question about the multiples, we are, the method we are using to valorize this company is the discounted cash flow approach. Looking at the cash generation of the company, which is generating 27%-28% of EBITDA with 3%-4% of CapEx on sales, the cash profile is extremely strong. It's a company with a very strong management, good management, extremely diversified base of customers. It's an asset of extremely good quality. Thank you. The next question is from Christoph Laskawi of Deutsche Bank. Good morning, thank you for taking my question. Just one on the A- Americas expansion for FCG. Could you comment on the market structure there? Is it a very competitive market, like it is in Europe? Or is it easier to penetrate? From the EBIT synergies perspective, do you expect costs for entering that market or broadening the reach there and gaining share, so that the EBIT synergy target is more back-end weighted towards year five? Or should we expect more linear progression of that? Thank you. Thank you, Christoph, for your question. First, we are already present in the North American market through one of the Fenner division, and through a small bolt-on that we did in 2020 in California. It's a company which is called Fabri Cote, and which is partially working, for example, for the aerospace, working with Boeing, Airbus, and very strong market expositions. We have already the market access in North America, and we'll probably in the board share with you the organizational structure of this of entire division. We create a business line around the FCG that will include these activities that are existing already in North America. Competitive barrier are mostly linked to, and that's a characteristic of the company that we acquire in this sector, to a very deep intimacy with its customers. These companies are not in, let's say, commodity segment. They are building customized solutions for their customers. In fact, the, the characteristic of these businesses is a very strong intimacy with its customers, and that's the kind of profile we are looking for. We have already a base in North America, and we intend to grow it with FCG and now. Is there the next question? The next question, sir, is from Sanjay Bhagwani of Citigroup. Hello, thank you very much for taking my question also. Sorry if you already answered this, I joined in a few minutes late. My first question is on the enterprise value. Could you maybe provide some split of what the debt at FCG is? Second question is, when we look at a big deal being EPS accretive from year one, can you please explain some underlying assumptions behind that? This is just simply because the EBITDA margin accretion, or there are any other assumptions regarding synergies being realized in year one, or any financing cost benefits or anything like that? Thank you. That's very helpful. I understood the first question was related to the debt. The enterprise value is EUR 700 million, and it includes the equity that we are going to pay to the existing shareholders, and the debt that is already inside the company, which, if I remember well, around EUR 150 million. And of course, I mentioned previously, FCG, we will refinance this debt, and we will, of course, it will improve the net result, the net contribution of FCG as Michelin has a very strong rating and good financial conditions. The Earnings per share will be accretive relative from year one. If we look just at 2022, it bring EUR 0.05 per share to Michelin earning per share. The synergies, we indicate the run rate synergies for the 5th year, which should amount to EUR 21 million. We, of course, it will be a gradual ramp up over these years. We will for sure follow these synergies very closely, and we'll keep you posted during the next financial publications. Thank you. Great. Thank you, Sanjay. The next question, sir, is from Pierre Quemener of Stifel. Thanks for taking my question. In this slide deck, you have shared the size of the High-Tech business, which was pro forma 2022, EUR 1.3 billion, including the planned acquisition of FCG. I've got two follow-up question on that one. Could we have an idea of the size of your around tire business, connectivity, and telematics? Second, in the future, will the connectivity business remain in the second reporting segment, or could it become part of the future SR4 segment? Thank you. Okay, thank you. Thank you, Pierre. I think during the last CMD, Lorraine Frega has indicated that the MICHELIN Connected Fleet businesses, or telematic businesses, is roughly accounting for around EUR 300 million of sales. It will remain mostly in the SR2. In fact, we allocate these businesses as well as we are allocating, for example, distribution to the different, proportionally to the different, market category they are serving. As this Michelin Connected Fleet is mostly addressing urban and long distance, transportation segments, it's totally normal to allocate it to this business segment. Thanks for the clarification. Have a good one. Bye. Thank you, Pierre. Sir, at this time there are no questions registered. Okay, if there is no question, ladies and gentlemen, thank you very much for your attention and for being with us on the Monday morning at 8:00 A.M. in France and 7:00 A.M. in London. Thank you. Thank you very much. Of course, we are very pleased to have the opportunity to share with you. Again, we are very pleased to welcome FCG employees in a couple of months within the Group. We will, for sure, have another opportunity to exchange at the end of July, when we'll share with you our first half performance. Thank you very much. Have a nice week. Bye-bye. Thank you. Have a good day. Ladies and gentlemen, this concludes today's Michelin conference call. Thank you for your participation. You may now disconnect.