Michelin Stock

Ladies and gentlemen, -- welcome to the Michelin 20, 261st half results. I'll now hand over to Mr. Florent Menegaux, Chief Executive Officer; and Ms. Benedicte Bonnechose, Group CFO. Please go ahead.

Ladies and gentlemen, good afternoon and good evening. Thank you for joining us for our Michelin's First half 2026 results presentation. For this presentation and Q&A session, I am pleased to be with Benedicte Bonnechose, our new CFO. In a context, still highly uncertain, shaped by mixed macroeconomic signals, geopolitical tensions, evolving thread dynamics, strong currency headwinds, I am pleased to report that Michelin delivered a solid first half performance.

This performance confirms the strength of our fundamentals, a powerful Michelin brand, the resilience of our business model, our tight operational [indiscernible] in the quality of our business portfolio and the relevance of our long-term strategy, Michelin in Motion 2030.

I will start with some key messages for the first half and our outlook for 2026. Then Benedicte will take you through our markets, our financial performance, our cash generation, our outlook and our guidance. Let me start with our first semester performance. What you see on the screen and if you were to summarize it, I would qualify it as solid. Solid in terms of financial performance as our slight revenue growth translated into a significant segment operating income progression of over EUR 100 million at constant ForEx and scope, versus, of course, the first half 2025.

Solid entire activities as our Michelin brand posted material growth and gained share in most replacement markets. It reflects our customers trust the quality of our product, the strength of our distribution and the relevance of our value proposition. Q2 was marked a turning point. We are back to growing in tires. Solid in Polymer Composite solutions. We are now integrating our 3 acquisitions announced in January, Cooley Group and Flexitalic closed in H1 and Tex Tech closed in July 1.

These transactions are fully aligned with our strategy to build a broader, more diversified and more resilient portfolio of high-value polymer composite activities. Altogether, they will increase polymer composite solutions revenue by 35% on a full year basis. In summary, our first half was marked by solid execution, disciplined steering, continued brand momentum and strategic progress.

Our world, maybe chaotic, our assets are well grounded and grounded and weatherproof. Storm after storm crisis after crisis, our strategy proves to be effective as it increases the resilience of our group. In 2026, we are growing both in tires and in nontire businesses. Operating in an uncertain and chaotic environment has become our new normal. We see uncertainty in demand in global trade, in exchange rates, in cost of raw materials, energy and in geoplogical environment.

In particular, the conflict in the Middle East has created additional risk around energy, logistics, raw materials and demand. In this context, Michelin's ability to deliver is supported by 4 unique and differentiating strengths. First, of course, our teams. Our results are made possible by the engagement, agility and expertise of Michelin's teams all around the world. Their ability to adapt to serve customers and to execute transformation project is a decisive competitive advantage. Second, innovation. Midline's innovation is not limited to tires. We are developing new materials, new polymer technologies, digital twins, data-driven services and solutions to help customers improve their operational performance. Innovation is at the heart of our competitiveness and remains a key driver of our 2030 ambition.

Third, our Michelin brand. Now worth over USD 10 billion is recognized and trusted all around the world. Our first half growth in Michelin brand replacement sales shows that even in uncertain conditions, customers continue to value performance, reliability and trust. And at last, fourth, product and services. Our innovation pipeline remains very strong. We continue to launch products that improve performance for customers with a focus on safety, longevity, energy efficiency and sustainability. This strength enables us to keep moving towards our Michelin Motion 2030 ambitions and to confirm our 2026 guidance.

At Michelin, we assess our performance through a balanced lens people, profit and planet. Let me share with you some examples of our achievements in each of these pillars over the first semester. People, as you can see on the screen, we progressed in recognition and attractiveness. Michelin has been ranked seventh European most innovative company in Fortune's 2026 ranking. We also stood out in inclusion and fairness as we obtained the Universal Fair Paycheck certificate from the Fair Pay Innovation Lab, which recognizes gender equitable compensation on a global scale.

Profit. On top of the segment operating income, I mentioned earlier, our group delivered positive free cash flow of EUR 282 million, a strong improvement compared with the first half of 2025.

Planet. We continued to reduce our environmental footprint. Water withdrawal decreased by 8% compared with the first half 2025 and CO2 emissions on Scope 1 and 2 declined by 9%. These improvements reflect the many initiatives deployed across our sites and operations. In short, Michelin delivered a balanced first half performance, financially resilient, socially responsible and environmentally committed.

I now hand over to Benedicte for more details.

Thank you, Florent, and good evening and good afternoon, ladies and gentlemen. I will have the pleasure to guide you through our H1 results. Starting with the tire market evolution during the first semester. Overall, OE markets remained weak, while replacement was resilient, but the picture was very contrasted between regions. In passenger car, OE market was down 3%, dragged down by China, where domestic demand was less dynamic than in 2025 because incentives for new vehicle purchases have become less generous.

Europe and North America remained stable overall despite pressures from the broader economic environment such as tariffs and the conflict in the Middle East. Replacement market grew by around 1%. On the one hand, it benefited from China with positive macroeconomics and the replacement effect of the many new vehicles delivered over recent years.

On the other hand, the North American market declined, reflecting the progressive reduction of the surplus stock of Asian tires build up in 2025. Europe was slightly down as well, with up and downs due to swings of import flows.

I am taking the opportunity here to remind you that in Europe, antidumping measures on passenger car tires produced in China came into force on July 8 with rates averaging 24% to 45% on the high end.

In trucks, OE market, excluding China, was down 2%. North American demand remained depressed in cumulative terms, but the month of June has turned positive, which is a long expected turning point. After several months of favorable orders for new trucks, production is set to accelerate.

In Europe, demand maintained good momentum on a low comparison base. And in South America, the Brazilian market was penalized by a difficult economic situation, limiting carrier's investment and by competition for truck imports from Asia. In replacement, the market grew by 2% Europe posted an increase reflecting resilient freight demand and stronger imports. In South America, demand rose strongly, driven by the combined effect of high import and mechanical compensation for the decline in the OE market. The North American market fell sharply by 13% due to lower imports, difficult weather conditions early in the year under soft freight demand.

In Specialties, the situation is very contrasted. Mining markets remain well oriented, thanks to solid structural demand. In aircraft, the year started very strongly until the crisis broke out in the Middle East, which limited demand in the commercial segment in the second quarter. But overall, the semester was positive.

Beyond Road showed a very mixed picture. In agriculture, replacement markets grew slightly, but OE remained depressed, especially in the high-power segment in North America. Infrastructure was positive, both OE and replacement in the continuation of 2025. MotoE ending was flat with replacement compensating for the decline in OE. Finally, the demand in defense posted growth.

Moving to group revenue now. We have reached EUR 12.7 billion in the first half. Reported revenue declined by 2.6% due to currency headwinds. At constant exchange rates, revenue was actually up by 0.5%, demonstrating the resilience of our business model in a still challenging market environment. Looking at the bridge, scope contributed positively by EUR 90 million reflecting the acquisition of Cooley Group and Flexitallic , partly offset by the disposal of compact line activities to CEAT completed last year.

Volumes were down 0.9%, mainly reflecting lower original equipment demand and lower sales of Tier 3 brands. This was partly offset by the strong performance of the Michelin brand in replacement. A word about the trend. Along the semester, we saw an improvement in sales momentum in Q2 versus Q1 with June posting significant growth. Price/mix remained a strong contributor, adding EUR 150 million.

Behind this figure, mix was particularly strong at plus 1.8%, driven by continued premiumization, a richer product mix with larger rim size and a favorable channel mix with replacement outperforming OE.

The negative pricing effect mainly reflects the impact of index contracts linked to low raw material costs in 2025 and our dynamic pricing approach. This overshadows price increase implemented in Q2 to offset cost inflators triggered by the Middle East contract. Non tire businesses had a modest negative impact of EUR 21 million, due mainly to big demand in conveyors, partly masking the good performance of other polymer composite solution businesses on a comparable basis.

Finally, currencies had a very significant negative impact of more than EUR 400 million, largely driven by the depreciation of the U.S. dollar against the euro. In summary, H1 revenue growth at constant exchange rates was supported by mix, Michelin brand strength and targeted acquisition with sales gaining momentum over the semester.

Coming now on the detailed view of volume performance. This slide shows how the 0.9% decline results from 2 opposing trends. While replacement outperformed, driven by Michelin bond strength, original equipment remained challenging.

In OE, the group continued to face weaker markets, especially in truck North and South America. In passenger car, sales fell to recover due to weak demand and unfavorable mix of automakers and vehicle models in some regions. In the first half, Michelin brand sales in replacement increased by 5% in tonnage, a strong performance in the context of relatively modest market growth.

This was driven by several factors: the strength of our product offering, the success of recent launches such as Michelin Primacy 5 energy. Continued growth in 18-inch and larger tires, and good momentum in key markets such as Europe, China and North America. Regarding Tier 2 brand sales remained flat, while Tier 3 brand sales declined challenged by strong import flows from Asia, which resulted in high inventory levels in distribution in some regions, particularly in Europe and North America.

Turning now to profitability. Segment operating income reached EUR 1.45 billion, representing an operating margin of 11.4%, an improvement of 0.3 points versus last year.

At constant scope and FX, SOI rose by EUR 103 million or 7%, reflecting strong operational execution. Looking at the bridge. Lower volumes at a limited EUR 38 million drag as improved plant utilization helped contain fixed cost absorption. Price/mix contributed EUR 78 million, driven by premiumization and the favorable shift to replacement and larger rim size.

Raw materials delivered a substantial EUR 199 million tailwind, following the decline in raw material prices during 2025. This was partly offset by EUR 130 million show higher manufacturing and logistics costs, including tariff and inflationary pressures.

Finally, currencies reduced segment operating income by EUR 114 million. Despite the FX headwind, margin improved versus H1 2025, underlining the resilience of our model. Looking now at the business segments. Consumer delivered resilient performance with revenue increasing by 0.7% at constant exchange rates and an operating margin improving to 12.5%. Volumes growth was supported by automotive replacement and to wheel sales.

Michelin brand performance was strong in replacement, notably in Europe and China, and market share improved in North America. Transportation posted a revenue of EUR 2.8 billion. This segment continued to face difficult oil market conditions in the first half leading to lower revenue and margin pressure. However, profitability improved slightly with a gain of 0.3 points, thanks to better fixed cost absorption following the restructuring of our manufacturing footprint.

Specialties revenue reached EUR 2.2 billion, demonstrated continued resilience with a 1.1% increase at constant exchange rates and a solid operating margin of 14.1%. Mining and aircraft delivered strong growth, while agricultural OE remained depressed. Infrastructure and Defense showed encouraging signs of improvement.

Polymer complete solutions maintained strong momentum, posting 16% revenue growth driven by recent acquisition. While operating margin was affected by difficult market condition in conveyors, the segment continued to deliver attractive profitability and remain accretive to the group's overall performance. Overall, the group achieved 0.5% revenue growth at constant exchange rates alongside a 0.3 point increase in margin.

Now I would like to give you more details regarding the performance of our polymer composite solutions business. You probably remember that is made up of 4 main product categories, conveyors that accounted for almost 40% of our revenue this semester, sealing, coated fabrics and films and belting. Out of these 4 categories, 3 posted good performance. Sealing recorded strong growth, supported by momentum in hydraulic gas compression and aerospace applications.

In addition, in integration of Flexitallic, from April has been supporting this positive trend and will be fully visible in the results of the second semester. Coated Fabrics and films growth was driven by the diversification of applications beyond Maritime and the recovery of niche automotive solutions such as impregnated carbon fabrics.

The integration of Cooley Group from February is progressing quickly, which enabled the teams to focus on the business.

Belting posted growth, supported by resilient industrial markets air and food handling solution or bearing liners in aeronautics. On the flip side, conveyors had to cope with a low demand cycle this semester with Australia impacted by weak construction activity in China and North America penalized by destocking and cash management at some distributors and industrial customers.

Overall, we expect a sequential improvement in the operating margin of this segment in the second semester with the rebalancing of our business portfolio resulting from the 3 acquisitions. Moving now to cash generation. You know that in the tire industry, the pattern is very seasonal with most of the cash being generated in the second semester of the year.

In H1, starting from an EBITDA of EUR 2.4 billion, a 19.1 percentage of sales, the group was able to generate a positive free cash flow of EUR 282 million over the period. To do so in an inflationary context, we had to steer very closely our operation, especially on working capital and CapEx. We did not cancel or postpone any major projects and we are maintaining a CapEx ambition of around EUR 2 billion for the year.

M&A accounts for around EUR 600 million over the period with the closing of Cooley and Flexitallic. The closing of Tex Tech will impact the financials of the second semester.

Looking at now the net debt, you can see that our gearing has increased slightly versus last year, going from 22% to 26% at the end of June 2026, reflecting mainly the recent acquisition. This financial strength gives us the flexibility to pursue a balanced capital allocation policy. Investing in a business, financing targeted acquisitions, maintaining an attractive shareholder return and preserving a strong balance sheet.

In 2026, around EUR 1.7 billion will be returned to shareholders, including EUR 944 million of dividends paid in May and around EUR 750 million share buyback of which EUR 300 million were already executed at the end of June. The group continues to benefit from strong long-term credit ratings. All major agencies reaffirm the group rating of A with stable outlook during the first semester.

Now moving to 2026 outlook. I will start first by sharing our vision of the tire market. In passenger car, we see the situation weakening slightly in the second semester. OE market should be more negative in H2 than they were in H1, except China that is expected to remain negative but to a lesser extent than in -- all other regions are showing a downward trend. Replacement markets would be similar to H1 at best. The main change here is China, where the strong growth posted in H1 should normalize.

In trucks, the situation is contrasted. We are confident that OE markets will improve, driven by the recovery in North America. After the strong preorder of the first semester and EPA 27 is still expected to be a catalyst, tire markets should post significant growth in H2. The situation should be more stable in Europe. Replacement markets should be close to H1, maybe slightly below due to some normalization of the demand in Europe.

In specialties, Mining demand is expected to be slightly more supportive sequentially as the inventory situation is very sound. Aircraft markets depend on the geopolitical situation, but the outlook is positive at this stage. And regarding Beyond road, infrastructure and defense should be growing while materials handling and agricultural look contrasted. At Ag OE specially, the market is stuck in a historically long downturn and there are no signs of a short-term rebound.

So before moving to our guidance, I would like to briefly come back to the Middle East situation, as shared in our first quarter release and the way we qualified it. As a reminder, in Q1, we shared a scenario to illustrate the potential impact of a prelaunch conflict. The scenario considered was based on the Brent oil price around USD 100 per barrel for the rest of the year, along with the related effects on raw material, energy and logistic costs.

Looking at the first half actuals, the situation has evolved almost in line with the assumptions. Demand has remained resilient overall and we manage to ensure business continuity toward our customers as well as our supply in raw materials. However, the geopolitical environment remains highly uncertain and triggers high volatility, as illustrated by the swings in Brent price. For this reason, we keep our assumptions broadly unchanged including the brand scenario rather than assuming a normalization that cannot yet be taken for granted.

Based on these assumptions, we continue to estimate that a launch disruption could generate around EUR 400 million of additional cost inflation, mainly through raw materials, energy and logistics. We are steering along this scenario in an agile way in close contact with each of our markets and leveraging our brand premium on a SKU by SKU basis, thanks to our precision pricing approach.

As you are aware, Michelin has a proven track record of performing well in this environment. Our crisis management process remains in place while our vertical integration local for local footprint and disciplined pricing and mix management help mitigate risk and protect profitability.

Finally, based on our solid first half performance and despite the continued uncertainties surrounding currencies and the geopolitical environment, we are confirming our full year guidance. We continue to expect segment operating income at constant exchange rates and scope to exceed 2025 levels.

We also reaffirm our objective of generating more than EUR 1.6 billion in free cash flow before M&A. Looking ahead, we remain committed to delivering attractive shareholder returns through a balanced capital allocation policy, combining a sustainable dividend with the ongoing share buyback program.

Before we get into the Q&A session, I would like to conclude by sharing with you the schedule of our upcoming financial milestone. In particular, I wish to inform you that the date for our next Capital Market Day has been set, it will take place on May 28 in 2027. This concludes the presentation. Thank you for your attention. And together with Florent, we are now ready to take your questions.

[Operator Instructions] The first question is from Martino De Ambroggi with Equita.

My focus is on the free cash flow. Just on the restructuring costs. I know it is difficult to have a precise estimate, but could you quantify what is the cash out that you have in '26 and '27 roughly embedded in current guidance for this year free cash flow.

And the second one is on the volume drop-through, which was particularly low in this semester, you mentioned higher capacity utilization, higher cost absorption. Could you quantify what is the change in the capacity utilization in the first half? And if '31 is achievable also going ahead as a drop-through for volumes?

Okay. So we'll take -- the first element -- sorry, your question about the drop-through and the capacity utilization. Right now, the capacity utilization is slightly overall below 80% and improving month after month. So we are confident that the drop-through will improve due to that.

Now as far as the free cash flow, -- we have -- maybe you want to give a...

Yes, absolutely. So regarding free cash flow. Restructuring costs for the year 2026 will be around EUR 400 million to EUR 400 million. And for 2027, around EUR 150 million at this stage.

The next question comes from Thomas Besson with Kepler Cheuvreux.

Let me to ask the first question about your FCF, please. You don't disclose the organic loss course of that business. Is it possible to have the number for that? And could you also break down the scope effects in revenues and adjusted EBIT between the SRI acquisitions and the top business you sold last year. That's my first question.

And the second is about volume growth by segment and by quarter. Is it right that your Q2 volumes were already positive in the SR2 in Q2, but that they turn back to negative in SR3 is not correct. Can you give us a bit more granularity than the comments you've made to explain specifically the negative figure for SR3 that gave us a surprise that is for me. And is it fair to believe that you could have in the second half of the year, SR2 and SR3 volumes eventually positive, given your comments about mining being sequentially better in the second half.

So it's -- these are 2 loaded questions. So the first one, -- in SR4 revenue, we had basically a 14% increase, but that included 90% on perimeter due to M&A, minus 2% on ForEx. And basically, we did not grow on the rest of the activities, mainly due, as explained by Benedicte to the conveyor situation that we think is temporary, especially for our conveyor North activities.

Australia is -- has been struggling in the first semester, but improving towards the semester. So we -- we are hopeful that the situation will improve in the second semester.

Now the conveyor is the main cause of the operating margin decrease. We grew everywhere else. So we don't disclose the families inside SR4, but we are still on a growth pattern everywhere. Now we have some conveyors have some cycles, and we are in a line cycle right now.

Now for the volume in SR2 and SR3, what your comment about SR2 is true. Yes, we have grown in Q2 in SR2 especially replacement slightly at OE, but mainly on replacement.

Now for SR3, the main issue is concentrated on Ag. We are ramping up production in mining, in infrastructure, in defense, mobility. And so there, we are -- we have a good momentum. Ag, especially OE ag, which accounts for more than 60% of our volume in Ag is still stuck, and therefore, we have not grown in Beyond Road in volume.

Now in the second semester, again, it will depend on for Beyond Road, it will depend on the ag OE and we have to look at John Deere and the other players in that field to understand better. We think we will have slight growth in the second semester. However, we don't know at this stage because the environmental conditions, especially the farmers' net income in the U.S. is not very strong despite the subsidies that went into the market. So we don't know. But we have a very good perspective in mining, aviation and for the rest of Beyond Road, accepting Ag for the second semester.

The next question comes from Michael Foundoukidis with ODDO BHF.

Yes, 2 questions also on my side. So first 1 on raw materials. I have to admit given the full year guidance of tailwind EUR 100 million. I was expecting a higher tailwind in H1.

We can't hear you. Can you speak louder, please?

Okay. Sorry. So what I was saying is on raw materials, given your full year guidance, which was, if I'm correct, around EUR 100 million positive, I was expecting a higher tailwind in H1. So could you explain why it was not higher as you were expecting a EUR 400 million full year tailwind back in February? And what do you expect for H2 as a result at current spot?

And maybe a second question on price/mix, which was lower than expected in Q2 despite the very solid performance of the Michelin brand. It seems that mix was broadly similar in Q2 versus Q1, but price was more negative. There's probably some indexation closes, but would have also expected some initial price increases in the replacement segment. Could you clarify what should we expect on both heading into H2 with pricing likely improving, but mix deteriorating.

So on the prices and then maybe Billy, you can answer on the raw materials. For prices, first, we would not make detailed comments due to what you understand as the situation. So -- but what you should factor in the price mix in Q2, we started to have the index contract to kick in. We had a little effect in Q1, but more effect in Q2. Those effects will fade will be less in the second semester.

Then of course, we had some price investment. And the pricing increases we've announced have an effect towards the second semester, not in the first semester. So that's why you don't see them in the price/mix effect. But the mix has been very strong and slightly above expectation. And for raw mats...

So for raw materials, initially, we were expecting a positive EUR 400 million for the full year. Then after the Middle East crisis, we said that we will have a decrease in the positive element, roughly around EUR 300 million for raw materials, so net for the year of EUR 100 million.

So you need to have in mind that behind this question of brand, and the inflation that we have on all raw materials derivative from oil was much higher than the swings that we have seen an the oil with the barring -- so it is why at the end, we are still expecting a positive around EUR 80, EUR 100 million for the year to less positive than what was initially expected.

The next question comes from Harry Martin with Bernstein.

So the first question I have is on the U.S. market. The replacement market trends have been weak in the first half. But from today, you should outperform on imports and also lap the ATG contract nonrenewal in Q3 as well. So are you preparing the U.S. business for growth in the second half even if the market outlook is fairly flat. And then maybe if you can put the context of the Tuscaloosa plant closure into that outlook as well in terms of the right size of the U.S. business.

And then the second question is on free cash flow. H1 CapEx was quite a bit lower year-over-year, similar to the discipline we saw in H2 last year. So still expecting $2 billion in total for the year is a big ramp in the second half. So can you give a bit of color into what that CapEx is being spent on and sort of the speed of payback of those projects?

Okay. So for the U.S. market, we anticipate the second semester not to be buoyant because the U.S. economy and the real economy is not very strong right now. You have high inflation in the U.S. The income is not very strong revenue. Consumer revenue is not very strong. So we don't anticipate a sharp rebound for the U.S. volume in the second semester. But they should be in line with what we were expecting.

Now with the Tuscaloosa, what we are doing is we had 2 underoptimized plants. We had one in Texas and the other 1 in the Fort Wayne and the other one in Tuscaloosa. So we decided to shut -- gradually shut down to scales to transfer those production into Fort Wayne for the U.S. consumption. And the portion that was exported abroad will be transferred to other plants around the world. We think it's more in line with our local to local policy.

Now in terms of share of market, we don't anticipate market share losses due to this gradual closure. The aim of this consolidation is to improve efficiency and productivity. We're also upgrading the Fort Wayne capabilities so that they can produce the big tires that are required for BFG, especially of road.

Now as far as the CapEx, as you perfectly noted, that the first semester was lower in spending than preceding year. Nothing to read about that. It's more about seasonality of our CapEx and we will have -- our investment policy is not really affected and we don't change anything in the first semester. Maybe you want to add.

Exactly this. When we look at the improvement of the free cash flow, CapEx part is a really timing effect, and the other part is a better management of our working capital, which explains the improvement end of June this year compared to last year.

Next question comes from Jose Asumendi with JPMorgan.

Two questions, please. The first one, can you please quantify roughly how much is the capacity expansion you're doing in China on SR1. When do you expect the capacity to come on stream? And if you could comment broadly on the proportion of revenues that China represents within SR1, as I suspect this region as higher margins than the other regions, if possible to call in. And then the second question on a group level now. I would just -- I wanted to simply just go back again to mix.

So about China, so we are expanding our capacity in Shanghai. Therefore, we're reducing also the imports to China. So this expansion is also due to offset some imports that we are still doing from especially Europe into China to cover our -- the sales we are doing in China. So again, our strategy is mainly local to local.

Now the revenue that China represents overall is at group level is around 6% of our revenue. And China is mainly exposed towards passenger car sales. We have some -- now we have -- you probably remember that we have shut down our production capacity in truck in China, so that we focus more on passenger car. But also we are expanding very fast in 2-wheel and in Ag and somewhat in mining, but less in truck. The capacity expansion we are doing in Shanghai is basically we are doubling the size of our plant in China.

Over time, this capacity is ramping up. It started to ramp up last year, a year ago. So we will still be ramping up for the next at least 24 months. And the mix.

And regarding the mix effect and the split between H2 and H1, yes, we forecast to have a slightly lower mix effect on the H2 due mainly to market mix and with the reward of OEs that we are expecting for H2 this year.

Next question comes from Monica Bosio with Intesa Sanpaolo.

I have to just recap on the volume side, given the different trends by segment. Do you still assume that volumes will turn positive in the second half of the year? And my second question is on the carryover effect of the inflation on raw material and other cost inflation in 2027. I know that it's early to talk about this. But I was wondering if you can give us an indication. And if you are confident to recover part of the cost inflation that we will carry over in 2027.

And if I may, if I can squeeze just a final one. Could you please explain how the introduction of the anti-dumping measures in Europe could benefit the group? And if you see any benefit, if these benefits would be basically transitory.

So the first part of your question, the answer is yes. We are expecting to continue to grow. We had good momentum towards the year. We continue to grow -- we expect to continue to grow. And especially, we are still expecting not a massive rebound but a rebound in OE truck in North America, we should, of course, be beneficial to us.

Now as far as 2027, let's make a deal. If you can predict to me what is going to happen in the Middle East for 2027, I can probably forecast you what the underlying raw material costs and inflation would be in 2027.

What we see today is that because of what is happening, the inflation is going to be according to what we were expecting. We will have EUR 400 million additional costs compared to what we were forecasting when we entered the year in 2026 because of what has happened now. We have to -- right now, it's too soon to make any prediction about 2027.

And perhaps in addition, what we said regarding 2026, we will protect our margin and 20% of costs related to this situation will be covered, thanks to growth that we have in the contract in 2027.

Now your question about what the antidumping measures for Europe. We have seen already the effect since they have been enforced, they have been put in place with an effective date the volume of imports has sharply declined in Europe. However, the level of inventory of these tires in Europe is still very, very high, and it will take many, many months before it's flushed out.

So us, we are not that impacted by this because we play on the top of the Tier 1 market. And therefore, what is happening below is less affecting us than others.

The next question comes from Christoph Laskawi with Deutsche Bank.

The first one would be on your comment that June saw quite strong momentum in volume terms. Could you comment what was driving that, in particular? Was it comp-based potentially a pre buy with all your hike, the prices for the raw mat mitigation or any comment really if it was basically strengthening some of the end markets.

And then you mentioned also for price in Q2, price investments that you did -- could you comment on in which region or division you did that mostly?

And then the last question, if I may, just on how you're purchasing now with the significant raw mat volatility. Have you, in any way, changed the approach a bit in purchasing your raw materials moving forward? Did you leave some exposure more open or than you would usually do, considering the volatility? Or is it essentially unchanged in business as usual?

Okay. So regarding the volume impact in the first half, yes, there was a small prebuy in the volume we've seen in June, but it was small. So we are more capitalizing on the fact that we are rightly priced in the market now. The fact that we have excellent product, we have launched very well-received new products in every product line. So it's not only passenger car, but it's also in truck. It's also in material handling and so we have a big portfolio of launches that have helped.

2025, we had almost 0 launches during that year, which also is penalizing our activities. Now as far as pricing, pricing is still very volatile. And we anticipate that we -- basically, we adapt our pricing to the circumstances, of course, and to the market conditions.

So we constantly watch what is happening, and we see and then we had a tonne. And of course, I cannot make too many comments on this. We were agile and we will continue to be agile.

In every business segment.

In every business segment. Now your question about did we change anything in our purchasing policies. The answer is no. We are -- we have a very strict business continuity management where we balance the risk of our sourcing all the time. So we reassess the situation so we play more on long-term relationship with our suppliers than on short-term opportunities.

So we think it's more -- it's better for our brand, especially for Michelin brand. For Tier 3 product, sometimes we do spot purchases, but we think we want to capitalize more on long-term relationship. As far as balancing the risk on a worldwide basis, of course, we observe what is happening in geopolitics, and we adapt in due course.

The next question comes from Ross MacDonald with Citi.

I just have 3 questions, I'll keep them brief. The first one from investors actually just looking at EPA tariff rebates. So question is, just to be clear, that you haven't released any EPA rebates year-to-date, and perhaps you can quantify if you were to do so, what the magnitude could be to the group on a full year basis.

My second question is on raw materials. I noticed a lot of your assumption seems to be around the conflict and Brent prices specifically. But looking at the natural rubber prices, there seems to be something else happening and quite a big surge in natural rubber specifically.

So I'd be interested just if you think that's maybe being driven by the El Nino concern and how Michelin as a group can defend themselves against any potential weather-related shortages for natural rubber. And more comments would be appreciated just on how you're thinking about navigating the natural rubber position specifically?

And then my final one, just a quick bridge question. You show very good discipline on SG&A in the first half. How should I think about the SG&A and manufacturing headwinds for the full year now given that first half performance?

Okay. So -- so about the tariff rebates. So we have enjoyed the double impact of tariffs in North America and the retaliated activities from other countries. So we -- we have had some rebates due to the Supreme Court ruling in the U.S., we had a waiver. We have got back exactly $28 million. So we have made claims for more. We don't disclose that information, but we have made claims for more. But we -- and there is nothing in our accounts because we don't book. We don't book any provision for positive rebates coming from something that is not in our cash. So we wait for the cash.

I have a very demanding CFO, and we have to be very careful on this. So now on raw materials, natural rubber and El Nino. First, it's very -- today, natural rubber is growing on a band of 200 kilometers north and 200 kilometers south of the equator.

So it means that it is already hot climates. So I don't perceive -- I am not an economist, but I have not read anything saying that the natural rubber price is affected by El Nino. Other things may be affected, but not natural rubber as far as I know. So at this stage, we have seen natural rubber to get back up because it's more the fact that the you have trees that have been cut down our inventories movements that happened on a worldwide basis. And on the SG&A.

So regarding first manufacturing cost, we plan for deliver a good performance in addition of the restructuring, so slightly better situation in H2 regarding manufacturing. While in SG&A, part of what we had in H1 was a bit of timing but the magnitude of H2 will be not very high, and it's quite a normal trend in terms of SG&A. So as you know, we are steering carefully our operations.

I have 2 questions. The first 1 is a follow-up regarding what you mentioned for the manufacturing and logistics costs. If I'm not mistaken, last time you were mentioning a gross headwind of around EUR 300 million for the full year. So just like you've mentioned for the raw mat, this assumptions still valid? And if not, what's your latest view on the impact for the full year?

And the last question is regarding the line orders in the EBIT bridge. It's a kind of a black box for me at least and if I'm not mistaken, many corresponds to bonus payments. So how we should look at this line for H2, please? Given the fact that you've confirmed the guidance, so I would assume that this line should turn negative in H2.

Okay. So the -- let me start with your second question first. On the bonus, the target we fixed for the bonus is different from the guidance. We want to outperform the guidance. And we -- on the -- we are more challenging for our teams, for bonus. So what you have seen in the P&L in the first semester is we have adjusted the bonus to what we think can be achieved versus the goal we have fixed to our teams, which are higher than the guidance you have.

So -- and you cannot read from the bonus provision, what targets we had for our teams. Now for manufacturing and logistics, it's EUR 400 million. Our estimate is still EUR 400 million, EUR 300 million in manufacturing and EUR 100 million in logistics.

To compare on what we are seeing, Florent, regarding manufacturing and logistic costs compared to the initial headwind of EUR 300 million the full year, we are now slightly below around EUR 230 million, meaning that we have been -- we think we will be able to deliver more savings from restructuring for the second part of the year that was initially planned.

Okay. So the -- let me start with your second question first. On the bonus, the target we fixed for the bonus is different from the guidance. We want to outperform the guidance. And we -- the -- we are more challenging for our teams, for bonus. So what you have seen in the P&L in the first semester is we have adjusted the bonus to what we think can be achieved versus the goal we have fixed to our teams, which are higher than the guidance you have.

So -- and you cannot read from the bonus provision, what targets we had for our teams. Now for manufacturing and logistics, it's EUR 400 million. Our estimate is still EUR 400 million, EUR 300 million in manufacturing and EUR 100 million in logistics.

To compare on what we are seeing, Florent, regarding manufacturing and logistic costs compared to the initial headwind of EUR 300 million the full year, we are now slightly below around EUR 230 million, meaning that we have been -- we think we will be able to deliver more savings from restructuring for the second part of the year that was initially planned.

But bear in mind that we still have 2 open conflict of high intensity in the world today, especially the one in Middle East, and we are far from understanding the ramification of that especially in terms of supply. I think we are less concerned about the price of raw materials, but more concerned about the availability of supply. And we have visibility towards end of September, but that's it.

Just to make it clear, can you please repeat the number for the manufacturing and logistics cost. You said EUR 230 million net impact for 2026.

Yes. So this concludes our call. Thank you very much for being with us. And we wish us a very good second semester. Thank you.

Thank you.

Ladies and gentlemen, dear shareholders, hello to everybody. It's a real pleasure for me and for all the Michelin teams to be here with you for our Annual Shareholders' Meeting. I would like to extend a warm welcome to everyone following us remotely via the live stream on our website. Like every year, we will ensure that this meeting is an opportunity for information, dialogue and decision-making as well centered on what brings us together, your group, Michelin. On this stage, you can see the full scope of Michelin's expertise in composites, in truck, aircraft and car tires, lunar wheel for NASA's Rover and some of composite polymer solutions. These are all applications that demonstrate our dynamic innovative power.

So without further ado, I hereby declare our 2026 combined General Meeting open. So I don't really need to introduce him. That's Yves Chapot, General Manager and Chief Financial Officer; and Benoit Balmary, who is our Group General Counsel. In the front row, we have Ms. Itto El Hariri and Mr. Frederic Gourd, who represent the auditors, PricewaterhouseCoopers and Deloitte & Associates, respectively. We have members of the company's Supervisory Board with the exception of Mr. Wolf-Henning Schneider and Ms. Monique Leroux, who are unable to be with us. And we also have Mr. Vincent Montagne, who is Chairman of the SAGES, the non-managing general partner. The members of the Executive Committee are here as well and the members of the Michelin Shareholders Committee.

We will now proceed to the election of the presiding officers as Chair of the meeting, I hereby appoint as scrutineers the 2 shareholders who hold -- each hold and represent the largest number of votes and who have accepted this role. There's Mr. Pierre Michelin, Chairman of Mage-Invest and [ Mr. Marc Donne ], representative of the Supervisory Board of the Michelin BIB Primaute Employee Savings Fund. The Board thus constitutes appoints Benoit Balmary as Secretary of the meeting. The attendance sheet shows that the quorum requirements have been met. The final tally will be provided just before the vote on our resolutions. The meeting may therefore validly deliberate on the items on the agenda listed in the notice of meeting, which was available on the website.

This general meeting, which is both ordinary and extraordinary, is convening on first call. I would now like to present a summary of the group's activities in 2025 and our outlook for 2026, and I'm going to give the floor to Yves Chapot.

Ladies and gentlemen, dear shareholders, I'd like to review Michelin Group's 2025 results as well as the outlook for 2026. And these are fully in line with the rollout in Motion 2030 strategy. So let's turn to the group's performance in 2025. The first area concerns the human dimension. Our team's commitment is a key driver of performance that enables the group to adapt to changes in our environment. In 2025, the engagement rate reached 84.4%, so up more than 4 points since 2019 and remains close to the 85% target set for 2030. This level places Michelin in the top quartile of the best performing companies in this field according to the Gallup study. In addition, the global employee stock ownership plan, BIB'Action, launched in 2025 has proved extremely popular. Employees subscribed to 20% more shares compared to 2024, bringing the proportion of active employee shareholders to over 65% of the workforce and their ownership stake to 3% as of end of December '25. So our goal is to keep up this momentum to reach 4% by 2030.

And finally, health and safety remain at the heart of our efforts as they contribute to everyone's well-being and performance. Thanks to in-depth work on prevention and behavioral change, this commitment resulted in an improvement in the group's total recordable injury rate, TRIR, which decreased by 0.53 points compared to 2024. These indicators reflect the global commitment of our employees, which drives the group's attractiveness, talent retention and sustainable performance. On the environmental front, we place innovation at the heart of our approach to reduce the environmental impact of our operations to enhance the environmental performance of our products and make this a key differentiator and to increase the use of renewable or recycled materials.

Furthermore, the group's climate strategy centers on reducing its carbon footprint and anticipating climate risks. Regarding the reduction of CO2 emissions from its direct operations, what we call Scopes 1 and 2, it's based on targets validated by the science-based targets initiative, SBTi. And by 2025, the group has already achieved its 2030 target with a 48% reduction in emissions compared to 2019, and we're maintaining our goal of net zero emissions by 2050. Michelin is also making progress in the energy efficiency of its products. For example, in specialty tires. Crane trucks equipped with the X-Crane 2 are achieving fuel savings of around 15% compared to the main competitor, a result validated by DEKRA. The group confirms its goal of reducing the rolling resistance of its tires by 10% by 2030 compared to 2019.

Now regarding abrasion performance. The group is continuing to make progress in reducing particulate emissions, and it's strengthening its leadership. In 2025, a study by the German Automobile Association, the ADAC, reveals that the particle emission of Michelin tires is 27% lower than the average among premium competitors, and that is huge. And finally, Michelin fully embraces its environmental responsibility by reducing its footprint and the use of natural resources through the Avoid plus 4R approach, avoid, reduce, reuse, recycle and renew. This approach results in a continuous increase in the proportion of renewable or recycled materials in our tires. The group is thus continuing on its path towards 40% renewable or recycled materials by 2030.

Now I'd like to present the group's financial performance and start with a bit of context. The year 2025 unfolded in a challenging environment. Certain markets were affected by increased competition, fluctuating customs policies and restrictive regulatory changes. These factors weighed on our volumes. To address this, Michelin's teams have demonstrated agility, ensuring effective operational management and aligning our industrial capacity with market expectations. Furthermore, sustained growth in Polymer Composite Solutions, bolstered by our recent acquisitions, confirms our ability to develop high value-added businesses, and we'll return to this later.

In this context, Michelin's 2025 revenue amounted to EUR 26 billion, down 4.4% at current exchange rates. These results reflect a 4.7% decline in volumes, largely due to weak original equipment business, particularly in the truck, tire and agricultural tire segments in North America. These volume declines were partially offset by a very favorable product mix driven by high value-added products, notably the Michelin brand and passenger car tires in sizes 18 inches and larger, a positive geographic mix and a better balance between the replacement and original equipment markets.

Segment operating income totaled EUR 2.7 billion. This decline is primarily due to low activity levels in the original equipment markets, particularly in the truck and Beyond-road segments. The group continues to strengthen its financial position with free cash flow before acquisitions, that's available cash flow before, which is EUR 2.1 billion, reflecting the quality of Michelin's operational management and the structural improvement in our cash generation capacity. Return on capital employed reached 9.2%, in line with our value creation requirements. So in addition, I'd like to mention the group's excellent debt ratio, which stands at 13% end of 2025 compared to 16.7% at the end of 2024, thanks to the reduction in net debt supported by very favorable free cash flow.

So in summary, despite an unstable economic and geopolitical environment, the group's financial results remain solid and demonstrate the group's resilience and ability to overcome difficult conditions and invest in its future with confidence and determination. The Polymer Composite Solutions business leverages Michelin's long-standing expertise in materials, processes and industrialization, which it is now extending to composite solutions beyond tires. This expansion is accompanied by a policy of targeted acquisitions aligned with the Michelin in Motion 2030 strategy, which supports both our ambition for external growth and our leadership in innovation. Following the acquisition of 2 companies, Pronal and Aston Seals in 2025, Michelin announced in early 2026, the acquisition of 3 U.S.-based companies: Cooley Group, specialized in high-performance polymer coated fabrics, Flexitallic specialized in seals and sealing solutions for the energy and industrial sectors and Tex Tech Industries specialized in technical textiles and high-performance materials.

These 3 acquisitions will increase the revenue of our Polymer Composite Solutions business by 35%. So consequently, the dynamic growth of the Polymer Composite Solutions business has led the group to create a new reporting segment, which will be integrated into our financial reporting starting in 2026. This fourth segment will provide clear dedicated visibility to these activities and will complement the 3 existing segments of tires and services, consumer, transport and specialties. And we are pleased to present, as Florent said, on the occasion of this Annual General Meeting, to present products that represent each of these segments. The group's 2025 results are presented here by segment. And as you can see, the Polymer Composite Solutions business accounts for a significant portion of 2025 revenue. It's EUR 1.2 million and an operating revenue of EUR 186 million.

And finally, the operating margin for these sectors confirms the strong performance of this segment, which delivers a margin near to 15% of revenue. As you can see, alongside tires, which remain the core of the group's business, we firmly believe in the development of polymer composite solutions to support the group's future growth.

I'd now like to discuss the Michelin brand. For over 130 years, it has embodied our values and commitments around the world. Its reputation and credibility are a true strategic asset. It contributes to the group's sustainable economic success. And in 2025, the Michelin brand broke 2 historic records. joining the top 10 of the world's strongest brands for all sectors, and its financial value exceeded $10 billion. So for the ninth year running, it has ramped up its undisputed leadership in terms of both brand strength and financial value. The Michelin brand is thus a strategic asset that embodies the group's identity and supports the implementation of the Michelin in Motion 2030 strategy.

Now in terms of shareholder policy, the group aims to offer its shareholders a fair return. Thus, with net income of EUR 1.7 billion, the group here at this meeting is proposing a stable dividend of EUR 1.38 per share for the fiscal year, representing a payout ratio of 57% of consolidated net income, up 5% points. Our cash generation also enables us to carry out share buybacks, which help return liquidity to the market that investors can then allocate to companies in the cash-consuming phase. And between 2026 and 2028, the group plans to repurchase up to EUR 2 billion in shares.

I'd like to present the breakdown of the value created by the group in 2025. In 2025, the group generated EUR 12 billion in economic value added compared to EUR 12.9 billion in 2024. Now this EUR 900 million decrease is primarily due to the decline in the group's earnings, of which more than EUR 300 million is due to the higher customs duties paid in 2025. So when considering the amount collected by or paid to governments and public administrations, it takes 2 forms. On the one hand, customs duties reduce the group's value -- added value. And on the other hand, taxes and other levies paid in the countries where we operate. So in total, in 2025, this amounts to EUR 1.1 billion.

And bearing this in mind, it's the breakdown of added value as we are telling it to you, 65% was paid to employees in the form of salaries and benefits. 14% was reinvested into the company through capital expenditure, 8% was distributed to the shareholders as dividends and 6% was allocated to share buybacks, including buybacks related to employee share ownership plans and long-term incentive plans. And finally, 5% was paid in taxes and duties in the countries where we operate. These changes are primarily due to the share buyback program deployed in 2025.

Now let's take a look at 2026, where we must prepare to adjust our management approach in response to an uncertain geopolitical environment and leveraging our agility. The conflict in the Middle East has primarily created a risk for our employees in the region and their safety has been our top priority. On the global economic front, this conflict poses significant risks to energy supply and raw materials. So this leads to higher costs for those raw materials and energy, and we are assessing that at minimum EUR 400 million for 2026. For Michelin, this requires strengthening risk management, diversifying transport modes and routes, optimizing inventory and revising supply scenarios to ensure industrial continuity and cost control as well as adjusting sales management. Furthermore, we remain very attentive to changes in our customers' behavior in this complex environment.

For 2026 and in this volatile context, Michelin aims to improve its operating profit for the sectors at constant exchange rates compared to 2025 and to generate free cash flow before acquisitions of more than EUR 1.6 billion in 2026. Our results in terms of people, planet and economic performance confirm the relevance of our Michelin in Motion 2030 strategy and the group's ability to balance sustainable performance, responsibility and value creation. This assessment strengthens our confidence in the future.

Dear shareholders, thank you for your attention.

Thank you, Yves, for this presentation, which was extremely clear. I now give the floor to Mr. Frederic Gourd, who represents the statutory auditors.

Ladies and gentlemen, shareholders, good morning. On behalf of the Board of Statutory Auditors, I'm going to present the report we have prepared for your consideration. We've issued several reports in fulfillment of our engagement for 2025 fiscal year. First of all, our report certifying sustainability disclosures. Next, our reports on the annual financial statements and consolidated financial statements as well as our report on your company's regulated agreements and commitments. We have also issued 4 reports regarding the extraordinary resolutions on which you are being asked to vote. These reports are included in the universal registration document, which has been available on the company website since April 7, 2026. So I'm now going to give you a summary of these reports, and I will start with our sustainability report, which was issued on the 16th of February.

Our engagement consisted of performing the work necessary to issue an opinion expressing limited assurance regarding the group's conformity process for determining the information disclosed and its compliance with ESRS, but also the sustainability-related information in compliance with the ESRS and compliance with the disclosure requirements regarding the green taxonomy. Concerning the process with the ESRS, we have not found any material errors, omissions or inconsistencies, and we have looked closely at the double materiality analysis. Concerning the sustainability disclosures with the ESRS, we have not identified any material errors, omissions or inconsistencies. And we focused, in particular, on the greenhouse gas emissions inventory and the transition plan for climate change mitigation. Regarding the disclosure requirements laid out in the articles of green taxonomy, we did not identify any errors, omissions or inconsistencies.

I'm now going to move on to our reports on the consolidated financial statements issued on February 16. These led to an unqualified opinion on the financial statements with respect to the IFRS standards as adopted by the EU for consolidated financial statements and French accounting rules for the annual financial statements. We based our opinion on the work conducted or coordinated by the Board of statutory auditors, which provides us with reasonable assurance that the financial statements and financial information are true and fair. Our work is tailored to the characteristics of your group. It covers routine operations and also significant events taking place during the year. We rely on internal control procedures and systems and apply audit teams under our own responsibility to the group's subsidiaries worldwide. The findings have been presented to your group's management and also to the Audit Committee.

We state that in our reports, there are no observations regarding the accuracy of the information provided in the group management report by the Management Chairman and the accuracy and fairness of the information provided regarding compensation paid to corporate officers. Our reports also include a description of key audit matters. That's those matters relating to the risks of material misstatement that we consider the most significant for the audit of the financial statements for 2025. The main topics of discussion with management and Audit Committee were concerned here. For each of these, we gave the reasons which led us to identify them, the nature of the risk identified and the audit response we provided.

So for the fiscal year ended December 31, 2025, these key audit matters are for consolidated financial statements, the valuation of goodwill and for the separate financial statements, the valuation of equity securities. We'll now look at the special report on related party transactions. We state here that we were not notified of any authorized arrangement during the past fiscal year or in prior fiscal years that might have continued into fiscal year 2025. As I mentioned in my opening remarks, we've issued 4 reports regarding extraordinary resolutions.

First report regarding the 17th, 18th, 19th, 20th and 21st resolutions on the proposals to delegate to the managers or one of them, various issuances of shares and/or securities. This report is on Page 540 of the universal registration document and contains no specific notes or comments. We have issued a second report pursuant to the 24th resolution on the proposal to delegate to the managers or one of them the authority to decide on a capital increase through the issuance of common shares with the cancellation of preemptive subscription rights reserved for participants in a company savings plan. This report is on Page 542 of the universal registration document and contains no specific notes or comments.

We've issued a third report regarding the 26th resolution on the proposed authorization to allocate existing or to be issued bonus shares. This report is on Page 543 of the universal registration document and contains no specific notes or comments. Finally, we've issued a fourth report regarding the 27th resolution on the proposal to delegate authority to the managers or one of them for a period of 24 months to reduce the capital by canceling shares of the company purchased up to a limit of 10% of the capital. This report is on Page 544 of the universal registration document and contains no specific notes or comments.

So ladies and gentlemen, this concludes the presentation of our reports. On behalf of the Board of Statutory Auditors, I thank you for your attention.

So thank you, Frederic Gourd, for your presentation. And I would now like to give the floor to Ms. Barbara Dalibard, who's the Chair of the Supervisory Board, and she will now present the Board's report.

Ladies and gentlemen, dear shareholders, it's both an honor and a great responsibility to present to you the work of the Supervisory Board, whose mission is to oversee the management of the company on behalf of the shareholders. And in this capacity, the Board evaluates the implementation of the strategy, reviews major transactions such as acquisitions and is involved in preparing for the succession of the managers. So as Chair of the Board, I ensure the proper functioning of this governance structure, maintaining close and regular contact with managing directors. We work in coordination with SAGES, the non-managing general partner, which contributes to the balance of governance as well as with its Chairman, Vincent Montagne, whom I'd like to acknowledge here.

Now before detailing our activities in 2025, I'd like to point out that you can find all of this information in the universal registration document on the michelin.com website. I'm very pleased to be able to count on a team that is fully committed and dedicated to carrying out all of the task I have mentioned. The Board has 11 members, all present here today. Thank you very much to them for their work. The members met 11 times in 2025 in plenary session, including 4 times to review major investment projects. The 100% attendance rate reflects their availability and their dedication. The Board's composition and the diversity of its member skills and experience are crucial for conducting a comprehensive and informed analysis of the group's management. The Board is thus composed of 33% non-French members and 45% women. You can find a complete overview of the areas of expertise in this universal registration document.

We pay particular attention to updating and anticipating our skills to best assess the quality of the group's management. And to this end, we undertake training initiatives, including one this very afternoon on the topic of AI. We've also verified the independence of Board members in accordance with the recommendations of the AFEP-MEDEF Corporate Governance Code with the exception, of course, of the Board members representing employees whose valuable contribution to our discussions, I would like to acknowledge. I'd also like to thank Thierry Le Henaff, the Board's lead member, who is responsible for chairing the meetings of the independent members and reporting back to the Board on the areas for improvement identified during these executive sessions. The work carried out in this context and the annual evaluation of the Board's functioning enable us to continuously improve.

Following our review on the activities carried out in 2025, I can attest on behalf of the Board that your company benefits from management of the highest quality. This solid and agile management is all the more commendable given the geopolitical and economic context, which is marked globally by an extremely high level of volatility and uncertainty. This assessment stems both from the review sessions dedicated to the Michelin in Motion 2030 strategy and from our discussions with Michelin's teams. In particular, we examined the strategy for Beyond the Road and Polymer Composite Solutions businesses, 2 segments that are critical to your group's future profitability and growth. A day at the Ladoux Research and Innovation Center allowed us to appreciate how the group creates synergies in R&D that benefit newly acquired companies. Throughout our meetings, we carefully examined the strength of the group's financial management while thoroughly analyzing its social and environmental commitments.

And once again, this year, Michelin has ensured a coherent balance between human factors, economic and financial performance and environmental imperatives. Significant work in close collaboration with SAGES has been carried out regarding the succession plans for the group's managers. Vincent Montagne, Chairman of SAGES, will present this to you. We initiated a rigorous and in-depth selection process well in advance in full cooperation with the Chairman of the Management Board and our Board working closely with the Appointments Committee and its Chairman. The smooth flow of communication on this matter is a key indicator of stability for the group and its stakeholders. As part of this process, after duly consulting the Supervisory Board, which issued a unanimous positive opinion, SAGES decided to propose the appointment of Philippe Jacquin as General Manager. Philippe Jacquard has extensive and long-standing knowledge of the group, which he joined in 1998.

He has held positions, including Technical Director, Development Director and Marketing Director for various business lines and geographic regions as well as a group level. He joined the group's Executive Committee in 2024 as Executive Vice President of Research Development, supervising the innovation partnerships and his extensive experience and personal qualities are clear assets. I'd like to take this opportunity to thank Yves Chapot with whom I've had the privilege of collaborating in my current role since 2018. I'd like to highlight his commitment to Michelin, to its customers, to its employees and to you, its shareholders, and the personal qualities he's consistently demonstrated in his role as General Manager. Yves, on behalf of the entire Board, a huge thank you for all you've contributed to the company. Thank you.

I would also like to highlight the competence, determination and commitment of the teams, which are essential drivers for your company's success. I wish to express our gratitude to them for our valuable discussions on behalf of the Board. And I will now go into a little more detail regarding the work of the Board's 3 committees. The Audit Committee successfully carried out its mission of internal control and risk management. The raw materials procurement program received particular attention given the international context. Work was also undertaken to strengthen the Board's review and oversight of acquisitions. Indeed, the issue is becoming increasingly important with the development of polymer composites activities. In close consultation with the CSR Committee, the Audit Committee reviewed the sustainability report and particularly the double materiality analysis.

Finally, against the backdrop of rapid growth in the use of artificial intelligence, part of the discussions focused on the ethical aspects of these technologies as well as their impact on cybersecurity risks. Jean-Michel Severino will shortly give us an insight into the work of the Compensation and Nominating Committee. But allow me, however, to address a few key points. As it does every year, the committee reviewed the compensation of the executive officers and the members of the Supervisory Board. The compensation policy was adjusted to better align with the existing practices of major publicly traded companies. The total maximum amount, the committee also devoted a significant portion of its work to identifying talent within the group and establishing various succession plans. Now this work is essential for Michelin's stability and continuity at all levels of the company. And as I mentioned, we carried out work by the Appointments Committee in collaboration with SAGES on succession plans for managing directors.

And I'd like to warmly thank Jean-Michel Severino for his unwavering commitment to this process. This Board led to the decision made in -- on the 12th of January to renew the mandate of Jean-Michel Severino. So I would like to thank the Board and Jean-Michel for what he's done and the courage that he's shown in overcoming the crisis that the group has had to face, and we trust him completely. Thank you.

So the council has also had to renew 3 members as well as Jean-Michel Severino, who's been a member since 2020 and Remuneration Committee. He is a key actor of the committee player on the Board and his wide-ranging expertise, particularly in finance as well as his deep understanding of geopolitical issues, greatly contribute to informing our work. I hope to be able to count on his commitment once again. We're also pleased to propose the appointment of the Board of Anne-Sophie Lotgering, whom Jean-Michel Severino will introduce to you.

The Corporate Social Responsibility Committee provides essential insight into our work while coordinating with the other committees in addition to reviewing the sustainability report and monitoring regulatory developments. It's focused on analyzing the group's decarbonation plan on water and tires and has really noted great efforts made there. And I want to make sure that your group continues to emphasize the efforts. The committee's discussions with Michelin's teams highlighted the group's deep understanding of these issues and the sense of responsibility that guides it in considering its impacts.

So having concluded my remarks, I now turn to the resolutions that will be put to a vote shortly and for which I invite you, obviously, to vote in favor. Regarding the financial resolutions, the Board has been able to appreciate the excellence of the group's management and the strength of its financial results. Jean-Michel Severino will shortly present the resolutions regarding the compensation policy for the Executive Directors and members of the Supervisory Board as well as the changes planned for 2026.

So dear shareholders, I would like to conclude by reminding you that reaffirming the Board's confidence in your company's management team, your group is delivering solid performance in the current environment, meeting its commitments and continuing to execute its strategy. On behalf of the Board, I'd like to express our deepest gratitude to Michelin's employees who can take credit for these results.

Thank you for your attention. I'll now give the floor to Vincent Montagne, Chairman of SAGES. He will present the work concluded -- conducted by SAGES as part of the succession process for the Managing Directors and the appointment being put to your vote today. Thank you very much.

Ladies and gentlemen, dear shareholders, I'm pleased to address you on the occasion of this Annual Shareholders' Meeting. I would first of all like to join Barbara Dalibard in expressing our deepest gratitude to Yves Chapot for his remarkable work in the service of your company over the past 34 years. Today, you're being asked to vote on the appointment of Philippe Jacquin as Joint General Manager of your company, reporting to Florent Menegaux, Managing Chairman. As you know, as Michelin's non-managing general partner, SAGES is responsible for selection and continuity of your group's management. In particular, it initiates the selection process for candidates for management in which the Supervisory Board and the Managing General Partner also participate. Following a highly structured and comprehensive process that we've conducted over the past 3 years, it's my pleasure to present the candidate who has been unanimously selected.

Philippe Jacquin, an engineer by training, embodies a leadership figure deeply aligned with Michelin values and perfectly prepared for his new challenges. With 25 years of experience at Michelin in a variety of roles, both in France and internationally, he has acquired a solid understanding of the group, its products, its expertise, its balance and its culture. Philippe Jacquin fully embodies Michelin's core values, a sense of responsibility, the pursuit of sustainable performance, respect for facts, which is so important, the humility to acknowledge areas of doubt and a particular focus on the development of each individual. This is Michelin's DNA. It's inseparable from the leadership style based on a high degree of freedom of speech and action. He speaks his mind and walks the talk with candor and courage. This authenticity fosters trust and brings clarity to decision-making.

Finally, I'm very impressed by this. He's a great athlete. He demonstrates tenacity and endurance that enable him to carry out transformable projects over the long term. That's why we unanimously agreed that Philippe Jacquin possesses the necessary qualities to become a general partner. It is now up to this general meeting to vote on this choice, which will be included in the 12th resolution.

Thank you for your attention. I now turn the floor to Jean-Michel Severino, Chairman of the Compensation and Appointments Committee.

Ladies and gentlemen, dear shareholders, I'm pleased and honored to address you in my capacity as Chair of the Compensation and Appointments Committee. I will elaborate on certain aspects of the committee's work, which concern compensation and also the resolutions to which you'll be asked to vote on. I would also like to note that you may refer to the universal registration document, and you will find this on the michelin.com website. So the details are on Pages 116 to 128 of this universal registration document. You can see on the screen, hopefully. The compensation for the last fiscal year for the Managing Directors, the Chair of the Supervisory Board and the Supervisory Board as a whole. This results from the application of the compensation policy adopted last year. The multiyear variable component corresponds to the allocation of performance shares. This is a maximum amount that may be awarded, the attainment of which depends on criteria aligned with the success of your group strategy, operational performance, performance in social and environmental responsibility and the relative change in the share price.

The committee has reviewed all of these compensation components for 2025, and I therefore invite you to vote in favor of resolutions 8 to 11. You will also be asked to vote on resolutions regarding the 2026 compensation policy for executive directors and members of the Supervisory Board. We ensure the alignment between the proposed compensation policy and the best interest of your company as well as those of the shareholder. This involves taking into account the group's results when determining fixed and variable compensation and designing such compensation in line with the group's strategy.

Now with regard to the managers, the Board recommends maintaining the current compensation policy, making just a few adjustments in the criteria used to calculate variable compensation. The idea is to reflect the objectives of Michelin in Motion 2030. Thierry suggested that it should remain 5% of the total figure, but we should then have a new criteria. This reflects the effects of the polymer solutions business, this means there was a weighting on -- related to the deployment of the group's transformations and CO2 emissions. So obviously, these are just as critical as they were in the past. So the long-term variable compensation will continue to take the form of performance shares under the same terms as criteria, those applicable to eligible employees of group companies.

Two adjustments have been made to the structure of this compensation plan approved in 2023. The first is the adaptation of stock market criteria to incorporate total shareholder return considerations. The second is the adjustment of operational performance criteria with a dual indicator relating to revenue growth, revenue growth for the Polymer Composite Solutions business and revenue growth for Tires and Services. So this performance shares is capped at 140% of the fixed compensation for the Managing Chairman and 120% for the General Manager. These levels are at the median for executives in the top 40 companies on the stock market index in France with equivalent responsibilities. Now for members of the Supervisory Board, we propose maintaining the cap on the total budget at EUR 1,150,000. This excludes the specific compensation of the Chair, which we suggest should remain unchanged compared to last year. However, we do propose new rules for individual allocation to better reflect best practices in place in publicly traded companies.

In France, this amended system allows for differentiated accounting of Board members and committee meetings in meeting -- in-person and remote meetings as well as participation of members residing in France and Europe and outside Europe, in fact. All of these recommendations regarding the compensation policy will be put to a vote shortly. These will be resolutions 6 and 7. The committee also worked on succession planning for members of the group's Executive Committee and managers, as mentioned, this will now lead -- this is not addition, we ask to vote on proposed appointments, which we have not yet mentioned. So we have 4 and 2 years in the case of Thierry Le Henaff and Monique Leroux.

So Thierry Le Henaff brings a keen insight to all of the Board's work. His career has enabled him to develop solid expertise in international corporate management and skills across all social and governance issues. His knowledge of the world of industry, in particular, high-tech materials and polymers are fantastic assets for the execution of the tasks you entrust to your Board. Now Monique Leroux has been a Board member since 2015, is Chair of the CSR Committee. She plays an essential role in analyzing sustainability and environmental protection issues. Given the cross-counting nature of the topics addressed, her leadership has greatly contributed to establishing it as a pivotal committee within the Board. She also brings valuable financial insights. I therefore -- furthermore, the Board has decided to recommend the candidacy of Anne-Sophie Lotgering as a new member of the Supervisory Board.

In accordance with the methodology, it applies for selection of new Board members the -- we were able to see the complementary expertise to be brought by Anne-Sophie Lotgering. In attention to these skills as a dual -- Dutch and French national, she will add international diversity to the Board. She wasn't able to be with us today, but she is going to talk to us via video.

[Presentation]

So I really hope that her skills will be convincing and that we will be able to count on her in our Board. Dear shareholders, I'm coming to the end of my presentation. I'd like to thank my colleagues on the Compensation and Nominating Committee. We've carried out the work I just reported to you guided by the long-term interest of your group and ensuring that we fully fulfill the mission that you have entrusted to the Board trying to really respond to your requirements. Thank you for your attention.

Thank you, Barbara. Thank you, Jean-Michel. Thank you, Vincent, for all your contributions. Now before we continue, I'd like to say a few words to Yves. I have known him for over 25 years in Michelin. I'm a baby at Michelin compared to Yves. I mean I've only been here for 30 years. He's been here for 34 years. So I just wanted to say how amazing his contribution has been. And I have really been able to see his values, his humility, his integrity, his rigor, his reliability, his humanity, all of these qualities that are totally in line with Michelin's DNA. You are the perfect person to really show that respect for people. You always pay attention to the smallest detail regarding people.

You respect the facts. And there is no room for mistakes. It's true. You have to be extremely precise in what you do when working with you. And that is a great thing. We really appreciate that. And of course, you respect our customers. Everywhere that you have been, you have always tried to implement these criteria. And our client satisfaction criteria is something that you set up with the LPS measure, and I wanted to thank you specifically for that.

And then in respect for the environment. Well, you come from a specific place where the earth is important to you as is the environment, as is society. You are really the embodiment of a society that promotes that special effort and care and individual progress. So that's a great thing that you've brought to us. And of course, respect for our shareholders. You've always paid attention to the result, of course. And in the last 8 years, you have really set your mind to making sure that you, as shareholders were treated fairly and well. So for all of this, Yves, I want to thank you from the bottom of my heart for everything you've done for Michelin, and we're going to miss you.

Thank you, Florent. I want to thank you first, shareholders, dear shareholders, for the trust that you have shown me over the last 8 years. I also want to thank all of the governance actors who play a key role in how your company functions, the Supervisory Board representing you with whom we have had this rich and demanding exchanges over the last 8 years and also the SAGES company that plays an important role in the company's governance. Barbara, Vincent, I'd like to thank you for your touching words. I also want to thank Florent. First of all, for the trust that you've shown in me. I've tried to live up to your expectations and be a very strong partner, and I'm happy to have worked alongside you managing this company for the last 8 years.

I am fully convinced that you will have a fantastic governance with Philippe. I would also like to thank all the members of the Executive Committee who are present. They are not here on stage, but they play a key role in how your company functions. But I also want to thank all of the employees of Michelin, without whom everything that you are seeing and hearing today, this couple of hours would not exist. I always have been extremely proud to represent the work of 130,000 people before you and before the different stakeholders that we present our results to. I'd also like to thank more specifically, my assistants [indiscernible], who is here today; and [ Margo, ] who have really provided fantastic support. Thank you.

That's so you, Yves. Thank you. Now these Annual General Meetings provide a unique opportunity to highlight your group's distinctive strengths as well as the challenges it faces. For over 130 years now, certain things have remained unchanged in the way our group operates every day. And it is the Michelin teams who can best say that. I'd like to invite Nicolas Seeboth, who's VP, Innovation for the Group's Polymer Composite Solutions Director to join us on stage. He's going to talk about this fantastic adventure.

Hello, everybody. I'm delighted to address you on the occasion of this Annual Shareholders' Meeting. I'm Nicolas Seeboth, and I am Vice President, Innovation for the Michelin Group's new composite business. And for this 10 minutes, I've set myself a challenge to make the invisible visible to you. Now you can see nothing or hardly anything, yet lots of things continue to exist. You can hear my voice, thanks to electricity, to wiring, to speakers, an entire invisible chain of technologies and skills that keeps this room running. When everything works, we don't think about it. We take it for granted. But if one of these elements is missing or fails, the whole chain grinds to a halt. That's what we can call the critical invisible. It's the invisible that keeps complex systems running smoothly. The invisible that suddenly becomes visible to everyone when a grain of sand turns the machine off a track because behind an invisible, there's a critical element.

And behind the critical element, there's often Michelin. The tire is also invisible in its own way. It's rather boring. It's round, it's black, but it's deceptively simple. And you all know behind this lies a complex and fascinating world of composites, hundreds of materials, just as many different types and ways of assembling them, hundreds of different chemical reactions related to temperature, pressure and various processes, millions of different interactions between these materials, thousands of experts to understand them, thousands of patents to protect them, but only one company which masters all these components. And that's us, Michelin.

So there was a question for us. If we have this technological gold mine in our hands, if we know how to design materials capable of functioning in extreme environments, if we know how to industrialize and produce them, market them and offer innovative solutions to our customers, then why limit this expertise to tires? Why not put it to work for other products, other customers, other markets, other critical situations. And that's what we've chosen to do. And this can be resumed in 3 letters: PCS, polymer, composite, solutions. Let me reveal what lies behind these 3 letters. First of all, and you probably guess this, it's our commitment to apply our innovations and expertise in materials to new products and markets, but not just any old product, products that are quite close to our tires because they share the same technical properties, the same demand for compromising high performance and the same critical role in people's lives. But I'm going to give you 3 examples of this if I say wear resistance.

You're probably thinking straightaway about tires. Well, that's quite normal. But let's think about something else, an iron mine in the Australian desert, the nearest settlement, hundreds of miles away, overwhelming heat. The soil is so rich in iron that it colors everything, even the horizon looks red. We're at the end of the world. In the middle of it all, a conveyor belt, a huge conveyor belt that can be up to 25 kilometers long. Just think about that, 25 kilometers.

This conveyor belt transport tens of thousands of tonnes of ore out of the mines hour after hour, day after day without stopping. But if it stops, everything else stops with it. For a client, a conveyor belt that breaks down can take -- it can take up to 20 days to repair, and that's $50,000 an hour. If you think of the number of hours, just work that out. And here, wear and tear is no longer just a technical matter. It's an industrial issue. It's an economic issue. It's a critical issue, thanks to the technology Michelin uses for its conveyors and thanks to the service we provide to our customers, we're not just selling a component, we're providing a solution to a critical problem.

Now if I say puncture resistant, Thinking about tires, aren't you? But you could think about life boats at sea. Imagine it's the dead of night. It's raining, the wind is howling, the sea is rough. And there you are with your crewmates on a boat with a rescue mission, saving lives and protecting others. That's your only priority at that time. These semi-rigid boats have inflatable tubes. These tubes are made from coated fabrics that have to be lightweight and flexible for quick deployment, yet resistant to impacts, all types of impacts to ensure the best possible navigation. Today, Michelin manufactures and sells these coated fabrics to its highly demanding customers who rely on the reliability of their equipment in a situation where lives are at stake.

Finally, what if I talked about composites, a material that can be used from minus 170 to plus 120 degrees C. You might think of the lunar wheel. It's here on the stage, in fact. And you -- so the materials of this wheel are designed to perform under extreme temperatures, nearly 300 degrees. And there are other applications for the same materials. Now imagine a rocket or the bottom section of the rocket, the part that generates millions of pounds of thrust for takeoff. Our technical fabrics are clearly visible if you know where to look. They're located at the junction between the nozzles and the body of the rocket. They protect this section from fire and heat and at the same time, from the extreme cold of the cryogenic engines powered mixture of liquid hydrogen and oxygen. A temperature range of several thousand degrees, condition amongst the most extreme known to man.

Once the rocket is launched, Michelin is there once again, right alongside the astronauts in the materials of their space boots. Each layer is vital in providing protection while allowing freedom of movement needed for the precise maneuvers of this extraordinary journey. From the beginning to the end of the space mission, Michelin plays a decisive role in supporting man's space flight. And this is a source of immense pride, conveyor belts in the desert, lifeboats, rockets, space suits. These examples illustrate the same principle where failure is not an option, Michelin is there. And that's our entire strategy, in fact, building step-by-step a portfolio of critical and proprietary components that no one else can supply to the same exacting standards. We have 2 important pillars, speeding up organic growth by acquisitions. And so targeted acquisitions for small companies, 12 in less than 10 years, including 3 this year, Cooley Group, Flexitallic and Tex Tech Industries. These bring us a distinctive industrial footprint with small sites.

We produce products close to our customers while mitigating our exposure to geopolitical tensions, and it's paying off this strategy, more than 60 patents filed in 2025, and our average annual growth is 6% since 2018. And if we add our most recent acquisitions, we could reach annual revenue of EUR 1.7 billion. But we're not doing this on our own behind these ambitions. There are committed people find PCS today, 6,800 employees spread across more than 70 sites worldwide. In fact, that nearly doubles the number of group sites. 8 years after its inception, Polymer Composite Solutions is now a very visible reality, and we're proud to bring it to life every day with the goal as always as offering everyone a better way forward. Thank you.

Thank you, Nicolas. So now you can better understand why we always feel good at Michelin because when we don't feel good we don't see people like that. And it's amazing how good he makes you feel. So thank you. Thank you, Nicolas, for having taken us on that journey. We've gone from materials, the decimally small to the desert to the moon. I mean, let's have a chat at the end to see what the next trip is. So thank you, Nicolas. But it's my turn to take the floor now. Okay. So after this special trip, let's just get back down to. So ladies and gentlemen, dear shareholders, it's a pleasure always to be here before you at this Annual Shareholders' Meeting. And I want to begin by thanking SAGES, the Supervisory Board for their renewed confidence because it's a great source of pride to be and a great responsibility to represent and guide Michelin on a daily basis.

Now as you're aware, this term will mark a shift in governance from the perspective of the management. Yves Chapot did not wish to have his term as General Manager renewed. The partnership we've formed over the past 8 years is coming to an end. And we are going to begin now after your vote, a new mandate. And I would like to thank the nomination of Philippe Jacquin, apart from his very human qualities and his expertise, I've known him for a while. Philippe has excellent expertise in innovation, and I think that will be precious to us for our future developments. Now this new mandate is a term that will see the rollout of our Michelin in Motion 2030 strategy brought to a conclusion. We launched this ambition strategy in 2021 in a context that was very different from today's. We were emerging from the COVID-19 crisis. The world was anticipating a dynamic and sustainable economic recovery and greater attention to environmental issues.

The reality is, unfortunately, very different and still is. The crisis have continued to multiply and they're more and more complex. And each year, that creates an increasingly unpredictable and turbulent world. We're witnessing a real and profound upheaval of the economic and geopolitical order. We once knew, as we have heard this morning and new societal shifts. The resurgence of tariffs and protectionism is disrupting global trade. The emergence of new conflicts and the indefinite time line for their resolution had a great deal of uncertainty. In the case of the Middle East, the effects of the crisis in Iran as well are unfortunately going to persist even after the end of the conflict. So beyond rising energy costs, and we've talked about that this morning and logistical disruptions that, that triggers, the consequences are spreading to industries and markets linked to petroleum-derived products. And unfortunately, we will have to face problems, but we don't exactly know where exactly they will take place.

So this crisis serves as yet another reminder to reduce as quickly as we can our reliance on petroleum-based products. Now the environment in which we operate has changed significantly. But Michelin will always be Michelin, always caring for people, always tech-driven and always pioneering. Every crisis we face makes us stronger. Day after day, we learn to absorb those shocks and manage tensions with greater agility. I was talking about the fact that we're now in this permacrisis. I mean, it's the new normal, isn't it? And I want to take this opportunity to commend the work of all our teams in steering our actions to ensure we are constantly adapting our local, local approach makes our international footprint the strongest of France's top companies and an advantage for picking up on early warning signs. These crises mean that Michelin is continuing to transform. The 6 major transformations initiated by the group are being rolled out in accordance with the road map. They make us more innovative, more agile and more efficient.

I am convinced that the Michelin in Motion strategy is the right path to build the leading manufacturer of composites and experiences that transform everyday life. Our strategy capitalizes on Michelin's distinctive strengths, our new composite activities that are expanding, and Nicolas mentioned them. The 3 acquisitions pay homage to that. But beyond those acquisitions, it's also about building this demonstrator in France dedicated to producing the new generation or the buy up company to develop a precision business, this company with DMC, with Credit Agricole and Danone. We will always use these developments to capitalize on Michelin's distinctive strengths, our unique talent. We have excellent high-quality products and services, and we have a strong brand, a brand that we are boosting. We have R&D industrial capacities that are unique. And again, Nicolas mentioned these. But amongst these strengths, I would like to highlight our industrial capabilities because thanks to that, our industry plays a critical role in providing everyone with a better way forward.

Products that are increasingly sustainable, more efficient, safer and have a constantly improving environmental impact. Our industrial teams make this accessible to as many as possible to our innovation. And I think you should take a look at this video because it was designed by our Polish teams and really demonstrates what I've been talking about.

[Presentation]

So this video, this symphony of matter takes form in each of our plants and reminds us that above all, a plant is a human environment. Everyone has a role to play, a place, responsibilities. But above all, every person can grow there. And that is what our purpose reminds us of to offer everyone a better way forward. All these people, all of the make this human fabric that strengthened day by day through commitment and collective effort. The dense of this fabric, the more robust our group is and the more harmoniously it functions. This social cohesion has been built and continues to be built day by day without ceasing through the respect we have for one another and by empowering everyone. So at a time when our societies are becoming more fragmented, Michelin is strengthening its cohesion. And that is one of our standout strengths. It's the more -- all the more valuable and central to our focus given the upheavals the world is experiencing. And among these upheavals are, in particular, all the technological transformations already underway, especially those related to AI and robotics and humanoid robotics.

Now Michelin has always embraced technology throughout its history, science and progress. We've always been pioneers in adopting and driving innovation. This trait is part of our DNA and has been central to our longevity over the past 137 years. And we will -- it's always very -- it's always amazing to see how our teams are ingenious at every level. Innovation is an opportunity because we choose to put it at the service of humans. If we've been using robotic and AI for a while, we're now deploying all of their development, and we're deploying them to all departments of our company. And we have 2 objectives. First of all, we want to help humans not have to do those hard tasks anymore. But we also want to help us save time for activities that really take a lot of time. But we want to keep people available to do what they do best, creativity, discernment, et cetera. And at the same time, we're working to strengthen people's skills, particularly their analytical abilities and critical thinking because these skills combined with empowerment are essential for everyone to enable them to make informed decisions.

AI is not the truth. For instance, the talent campus located within the Michelin Innovation Park at Cataroux, the plant just near here, offers everyone opportunities to train and adapt to these changes in an ongoing way. And our capacity to innovate and integrate these new technologies is very important for Michelin's performance. And talking about performance, high performance is a prerequisite for making a difference in the world and contributing to human progress. And when I say performance, I mean competitiveness. It is a driving force that pushes us to surpass ourselves. It encourages us to doubt and question our way of doing things to challenge ourselves. That's difficult and often uncomfortable, but it's an exercise in collective clarity and drives us forward as a group. And it's all the more essential in a world where everything is accelerating. We might be tempted to clean to our achievements and maintain a sense of control. But no, on the contrary, we use them as a springboard to strengthen our capabilities and staying the course on our Michelin in Motion 2030 strategy.

Competitiveness is a healthy driver provided we understand all its dimensions because viewing competitiveness solely through the lens of cost control is reductive. You Can be much more competitive when your employees are more committed, better trained and find meaning in their work on a day-to-day basis. You can be more competitive when you offer higher quality, superior products and services where your customers are willing to buy and recognize when we differentiate ourselves through the services we provide and personalization of our offer. So in short, when we create more value for them. We are more competitive when we have dynamic high-quality innovation when this innovation constantly seeks to better meet our customers' current and future needs. We're more competitive when our brand is strong, and it's already strong, but it has to remain strong. It has to be top of mind for consumers. It showcases Michelin around the world and embodies our core values and our uniqueness.

And finally, we're more competitive when our activities have a positive impact on society and on the planet. Taking care of our environment means that we are building the conditions for our future performance today. No organization can succeed in the long term in a society that it weakens or on a planet that it depletes. So you can see at Michelin, we view competitiveness as a multifaceted concept. We are trying to grow in the future. And we have all the assets necessary to succeed in the future. Every day, people at Michelin demonstrate their commitment, their inventiveness and their determination to transform the group to achieve success. And we will succeed because we share a corporate vision for future generations to bring critical innovations to the world by 2050 so that humanity can meet its greatest challenges in the development, in health, in protection of the planet and its resources. So this dream together with you I think we can make it a reality. So thank you for your trust, and thank you for your attention.

And I now give the floor to Benoit Balmary, who will remind you of the resolutions that are put to a vote.

Thank you, Florent. Ladies and gentlemen, shareholders, we would like to inform you that the documentation relating to the draft resolutions on the agenda of our combined Annual and Special Extraordinary General Meeting has been published within the legal deadlines. In particular, the annual report of your Supervisory Board, which includes detailed information on the Board's activities and the compensation of corporate offers was posted on our website on the 7th of April as part of the universal registration document for 2025. It also contains reports issued by the statutory auditors. Furthermore, the notice of meeting, including the full text of the draft resolutions and the corresponding reports from the Managing Chairman and Supervisory Board was made available on michelin.com on April 24, 2026, in accordance with regulations.

Consequently, in order to allow sufficient time for your questions, these draft resolutions will not be presented during the meeting. The full text of these 30 resolutions was published on April 6. The list of these resolutions is shown on the visuals displayed behind me. In line with the regulations, we collected your paper ballots until May 19 at midnight and electronic votes until yesterday, May 21 at 3:00 p.m. Thank you. That's the most exciting bit, wasn't it, of the meeting. So the general discussion is now open. So the law makes it possible for us to publish the answers to certain questions on the website, but we can have some questions from people here, and we will also then deal with questions which were sent remotely. And I would like to say that Michelin experts from Euromaster and [ Alo Puno ] will be able to answer questions about your own tires. They will be in the lobby as they were last year. So please ask them any questions you might have.

So I think we're kicking off with the shareholders' committee questions. So please go ahead.

Thank you for your presentations. and your engagement. I'm [ Lau Tankal ] So there's been extensive development in composite solutions. What are the levers that we have to penetrate these composite markets and the recent acquisitions and patents in what way will they make a difference.

So I suggest that Maude Portigliatti takes the floor. She's in charge of this division. So she's the best person to answer.

So hello, everybody. I think Nicolas has shared lots of our secrets, and I haven't that much more to reveal, but I'm going to talk about some of the most important drivers to help grow PCS. We need to really promote our technical difference. That's not unusual at Michelin, but we can use our materials, our membranes and elastomers. And we can also use our performance in terms of lifespan reliability and our compliance with regulations and also our environmental responsibilities. That's something we do apply to PCS as well.

The second lever is more -- is targeting growth sectors and applications which really are in line with the quality of our products that can be health care, aerospace, defense and other critical applications. And the third driver is to the fact they belong -- we belong to the Michelin Group with our stability. That is important for our customers. They really believe and rely on our reliability over time. So Nicolas talked about 60 patents in 2025. That's 1/3 of the group's patents, in fact, so lots of energy. Everybody is very busy in the research centers. So -- and there are also 30 patents in the pipeline for specific health care applications and materials and also all the intellectual property -- proprieties, which are related to the specific expertise of our teams.

Thank you very much. Next question.

Hello, everybody. Laurent Moity, I'm part of the Shareholders Committee as well. We're going through difficult times. There's lots of volatility as we've seen this morning, the company has -- how is the company really ramped up to be more resilient for the future?

So I can answer that one. So we have a certain degree of expertise in crisis management. We have permanent task forces on different issues. The current crisis linked to the closure of the Strait of Hormuz and the conflict in Iran will have impacts in terms of inflation. We're prepared for that. We're much more agile in the way we deal with pricing. For example, we can also adapt our supply chain. We are capable of finding other sourcing quite quickly. And as I was saying earlier on, our local-to-local approach is also beneficial when we are dealing with our suppliers.

So we really do try and have primary and secondary and even tertiary sourcing circuits for our supply chain, and that is linked to business continuity management, which we're actually quite good at. So the group's core values are quite simple. Whatever happens, we continue to respect these values. We're more agile. We are more cost effective, but we still produce top quality projects, and we can keep moving even throughout stormy weather. And none of the crisis, which started in 2019 has actually stopped. They really are all accumulating and there's more and more. So that is how our group is adapting to this situation.

Any further questions?

Hello, everybody. I'm Eve Maudoux. I'm in charge of trucks in [indiscernible], and I'm also on the Shareholders' Committee. So thank you very much for sharing this information. I wanted to ask you a question about the increase in Tier 3 truck tires in France. What's Michelin doing to defend its market share? And how does the group remain competitive to deal with these low-cost Tier 3 players?

Yes, there's really tough competition coming from the East and moving into the West. Perhaps Pierre-Louis Dubourdeau can answer that one.

So thank you, Eve, for your question. So the transport sector in France and Europe is suffering lots of fluctuations, lots of pressure in cost. The haulage companies need to make changes in terms of the environment for their fleets. Yet you know that for the past 20 years, there has been competition from imported tires that's putting a lot of pressure on us, but it's making us be better. We have to continue producing offers to our customers, which really stand out. If we do the same thing, then we won't help our customers solve their problems. So our current strategy is to bring different standout solutions to our highly demanding customers. These might be top quality, high-performance products, and we're actually changing our product portfolio and then 80% of our tires are being renewed with better fuel efficiency and other technical qualities. But a product isn't enough.

We also need to offer services. And today, we have these fleet management systems, which have been on the market for a while. We can now make them digital to reduce operating costs but also invest in preventive maintenance so that we have really a different relationship based on partnership. It's not just TCO. It's -- we help the haulage companies improve their turnover and also really reduce the mental load of our customers for these issues. So I think the key message to share is that when you do business with Michelin, you're not just buying a tire, you really are in a relationship based on trust. So lots of things are in the pipeline this year, in fact, and the teams in R&D are thinking about how we can keep moving the goalposts.

So thank you, Pierre-Louis. So we're now going to open questions to the public. Please raise your hand if you would like to ask a question, then someone will come with a number. I'll note them down and then we can take people in turn. So I'm going to tell you something about this actually. Last year, I couldn't see anybody, and I couldn't see who wanted to ask a question. And somebody who will be joining us later on developed this illuminated tablets in their garage. You did it last weekend, and that is so much a Michelin thing to do. So we'll take a photo later on. So this is a great innovation. So now I can see who's asking questions. So we'll start off with #2.

So hello, Laurent Bador on behalf of the employees of the CFDT Union, I wanted to come back to a question we asked last year. We said how tough it was with the Cholet plant was closed and so that we don't keep having the same problem time after time. We would like the company to have innovative dialogue with the social partners. We see that the Michelin 2030 approach is positive, and we did -- we should underline how we managed to collaborate and absorbing Pneu Laurent when everybody acts with respect and integrity. However, despite all the good work done together, industrial management and unions, we still can't manage to reverse the trend if we don't manage to get additional volumes in our plants.

Now my question is for you, what are the assets of our plants in France? And can you -- are you experiencing a positive benefit from this new dialogue and what needs to be done to safeguard our industrial footprint.

So thank you for pointing out that we are trying to make progress in terms of social dialogue, co-development with the unions is absolutely vital. We work in the same company. We share the same goals. We don't necessarily see things from the same perspective, but we are in the same company. So thank you for pointing that out. Now the market situation is highly complicated, particular for OEMs. So I think we've reversed the trend in replacement. But for OE, we are gaining market share, but the market is -- has slumped. That's true for passenger cars. That's true for trucks. So that has an impact on volumes, and we think that the situation is likely to improve and I have to be a bit careful because every time I announce something, then a new crisis turns up. But in theory, from the second half year of 2026, we think there could be a pickup if we're not impacted by the shortages I mentioned earlier on, but we don't know quite where they will impact us.

So we might end up, in fact, with demand that we can't meet. So it's early days, but we have set up action plans, highly ambitious action plans with our teams. We've adapted our pricing strategy accordingly and the volumes are getting better and the markets have responded positively to our actions, but we do depend on the global market. And since the 28th of February, in fact, the markets are not booming, shall we say, except China, who is actually doing best and our activities -- our business in China is doing well, actually, which is particularly good news for France, but they are -- but.

So question number three, I believe now.

Mr. [ Peroni ] I'm a shareholder from [indiscernible]. So Michelin passenger car tires, winter and all season are no longer ranked at the top when ADAC carries out tests and UFC in France and also ranking organizations in Switzerland.

So Jean-Claude Pats is going to share some insights into this issue, which is something we're actually quite concerned about ourselves.

So hello, everybody. So thank you for your question because it's something that we've been -- is top of the mind for us. So lots of consumers are asking this same question. What's the best tire to buy? What should I choose? And when they ask this question, they have various sources of information to help them reply. Some of them are those you mentioned, those are the reliable test organizations and their job is to test new tires on circuits on tracks over a very short period of time. So obviously, as far as possible, we do want to be ranked well or even be in top position in these tests, but not under any conditions. So what I want to say is that if in order to be in top place, you have to manufacture tires with a shorter lifespan. If you have to agree to make tires, which will be great when they're new, but don't perform very well when worn, then that's just not acceptable for Michelin.

And that's the dilemma that faces us, but we do know what is the impact of these tests for consumers who know nothing about tires, but we have to be careful in our approach, and we're constantly trying to find the best compromise between the expectations of the various stakeholders. But the priority #1 is our consumers' need from the first mile until the last. So you're perfectly right. ADAC and the other organizations haven't been given us the best score recently. But I'm more interested in what consumers say when we ask them shortly after having bought a tire 6 months afterwards, several years afterwards. For example, -- so there's a site called DriverReviews, which has collected more than 560,000 customer reviews in 11 different categories of vehicle. So out of these 11 categories, 7 out of 11 Michelin comes top. So Michelin is #1, and that is the priority. It's the opinion of our consumers.

Thank you, Jean-Claude.

[ Kristia Acastia ] I'm an individual shareholder. So last year, the Senate -- French Senate, you demonstrated clearly that companies were facing lots of constraints regarding international competitivity. So the restrictions that they faced, I'd like you to ask you how can we explain in Valenciennes, an automobile manufacturer for more than 20 years, manages to produce millions of cars with taxes, reduced working time, strict regulations. Is there a magic secret that only the Japanese have?

Well, we can continue producing products in France. Michelin still has 11 plants in France. Let's not forget that. Of course, we can still continue producing products in France, but we can't manufacture everything simply. We are running a race with shackles. So it's much harder in France because of all the constraints that we face. I didn't say it was impossible to manufacture products in France. I said that it was becoming more and more difficult today to export products from France because our costs are not competitive when compared to other countries. Of course, you can still make products in France, and we are still doing so, in fact. So I don't know very much about Valenciennes. I'm not quite sure who the manufacturer is. Oh, it's Toyota in Valenciennes. Thank you. Well, Toyota is -- have great cars and Michelin tires are great as well, which is why we'll continue producing them in France.

So I think we have something -- I think we have something new now. So 2 and 12. There was there a third one over there, #5 as well. So 2, 5, 12. Those are the questions.

[indiscernible] I'm a Michelin employee. So first of all, thank you for your presentation, and thanks to Mr. Chapot for all his efforts over the years, and I wish him well for the future. We don't often have a chance to ask your boss a question directly. So I'm going to go for it. I wanted to talk to you about buybacks and which I think are a good thing. And I wanted to understand the group policy to encourage engagement in these buybacks and how you in the company plan to improve contact with these new entrants, the new people arriving and how we can extract value from that.

The acquisitions and have -- that Nicolas brilliantly illustrated, they are in our Polymer Composite Solutions branch. It works on the principle that we have expertise in mass production, which we can replicate outside the world of tires, but they are areas where we don't have much marketing experience. We have always specialized in tires in the past 40 years. That's -- we're really familiar with transport or mobility markets. If we want to move into other sectors, for example, health care or energy or other forms of mobility such as aerospace, rockets, well, we really need to acquire companies which can bring us this market access, then we integrate them.

They become fully fledged Michelin companies with they are subjected to the same type of reporting. We deal with the health and safety of their employees to developing their activities and then to complying with rules and regulations. That's laws and it's also the rules in our own code of ethics. So we have this acquisition and integration process and it's [ moats ] teams, which are involved in this, and we place great importance on the first 3 or 4 years to ensure that there is enough value created with these companies that they fit the bill.

So [ Christine Blanchet ] I'm retired and I worked for Michelin for 42 years. on the Cataroux site, lots of changes are taking place with the Peak Hall 32, and it's ongoing. And I wanted to know about the involvement of the Michelin Group. And I wanted to talk to you as well about Lafont Michelin apparently it's going to move. So I wanted to know a little bit more about that.

So Adeline will be able to tell you about that. It's not going to move very far. Don't worry. It's only a short distance. And while Adeline comes and joins me, I would like to say that Michelin is that working for Michelin obviously has seen you well because if you worked for the company for 42 years and retired for 7, well, you're looking very good on it. So we have great plans for L'Aventure. We've called it a venture 2 with a specific area to our brand -- for our brand heritage that will be twice as big as the current space, and that will open in 2028 or early 2029 in the new Michelin Innovation Park. It will be an opportunity to present heritage -- we have more space to do so, but it will also be the possibility to share the power of our brand for our visitors, and there'll be lots more of them.

So what we do -- I need to say is that L'Aventure 1 is a fantastic success. It was meant to have -- we have meant to have 50,000 visitors. We've had 150,000 visitors. It's we haven't got enough space. We haven't got enough room to showcase everything we would like about Michelin's heritage. So there are 4 elements. There's a talent campus. There's the peak, there's a sustainable materials center, and there will also be a community area, which is near the historic test run. So it's an amazing project.

Patrick Raison, representing the ANAF, the National Association of Shareholders in France. I have 2 questions. The first is about Symbio of the Stellantis' retraction who is a shareholder and a client. Are you ready to finance Symbio alone if the hydrogen market is going to be slow to take off for another few years? And the second question on strategy in this geopolitical unstable world. What is the biggest priority, strategic priority for you now? Thank you.

Now for Symbio, I might just quickly answer then it is a fantastic adventure, technical adventure. Hydrogen will be a part of the future and will complement the other kinds of energy. It's a shame that in Europe, we are having trouble understanding that. Japan is continuing China, Korea is on that pathway. But in Europe, we cannot agree apparently, we have been let down by our clients. So it's a difficult decision to make, but we continue to believe in hydrogen and that fuel cells will be part of mobility in the future, but not all of it, but part of it. So we are continuing to invest, and we have rescaled Symbio to be more realistic. We are working with FORVIA still. And we have rescaled Symbio to a size where we can afford to wait, wait for the market to take off. But what's frustrating is that China, Korea and Japan are forging ahead and that in Europe, we still don't have a clear priority or strategic vision.

On the second question, so my main strategic priority today is the fragmentation of the company. That is the #1 problem. It's not very visible today, but we will feel the consequences. They will be social, economic, societal and they will destroy a lot of things because the extreme individualization will mean that companies implode. So companies who have understood that will be more robust than those that haven't. And today, I think it's a huge challenge. And it might be strange to hear that kind of an answer. You might be expecting an economic reason. But no, social fragmentation, I would say, is our #1 challenge.

Okay. So 12, #12, do we have several panels up? Because now I can see them. It's fun. 9 -- 12, 9. Okay 12 and then 9. First of all, the 12. Yes. It's -- there's a lot of questions in front, but not so many at the back. Okay. #12.

[ Paul Stephani ] Individual shareholder. I have a question on the future. We hear a lot about competitors from competitors that research -- about research into connected tires that could be valid on all types of road service. Are you working on that? And I have another question on automobiles sports cars. Where are you on the -- the project that you seem to have moved back from?

Thank you. So on connected tires, I want Philippe Jacquin to maybe answer that question. And then on Motorsports, Alexis Garcin.

Thank you. So connected tires exists, and we already have it for sale, but the future holds a broader offer. I might call it tire intelligence. If you understand how cars move and how they are made, I mean, the Tesla might be a good way of saying you have a chassis, the wheels and then the intelligence for the car to drive itself. And so for the car to behave healthily, safely, that intelligence needs to know about tires. It needs tire intelligence, and we are working on that information. We have just said that we would bring out a tire digital twin. That will be the intelligence that we embark in cars. We have the assets to succeed. You talked about our competitors. Competitors have developed digital models of tire performance. We think we're the only ones who can bring that digital twin to tires for the future. Okay? So that's my answer to your first question.

But for the second question, maybe I can hand the mic to my colleague.

Thank you, Philippe. Well, Michelin was born in the field of competition. There are 2 things that really set us apart. Every time that we have entered a competition, we have come out of that competition as well. We were in Formula 1. We were in MotoGP and prepared to exit. But we always come back. That's the first thing to say. We never leave for good because it's really at the heart of our DNA. And the second thing is that when we leave behind a sport, we leave a string of records behind us because when we saw that video on materials, it really shows it's worth in extreme conditions, and that's fantastic. This world of motorsports is fantastic with that. We're leaving MotoGP, and we will have left behind us more than 500 wins. Each record that has been beaten in time is fantastic. And having done that, we've done that with tires that contain more than 50% of recycled reuse materials. And that is really the challenge you have to rise to. That is what being a pioneer is about. We want more performance and use less material.

You talked about the WRC, the Rally Champion. We don't take part in that. Take a look at the different comments on social media for the tires currently being used and not everybody can perform in all conditions. And the video that you saw earlier with Miko Marchick, who's the European champion. He said that after he won his last race, he said it wasn't me. It was Michelin. Thanks, Michelin. And I think that speaks volumes. It really tells everyone about the quality of the engineers. We have the quality of the brand each and every day for each competition, we can push back the boundaries and each start is an invitation to return.

Thank you, Alexis. #9 and then 7.

I import Chinese scooters. And 2 years ago, I asked this question. And it was nice to hear that Michelin was developing a machine. Do you believe that we will have Michelin tires on scooters? Because last time I asked the question, they said, no, they're cheapskate. Well, yes, but they're not stupid. They know exactly that to export something with a Michelin tire is much better. So we have great market shares in scooters, and Jean-Claude will answer that question. But for the Chinese, I don't know, but he will tell us about that.

Thank you very much for your question because 3 or 4 weeks ago, I was actually in China, and I met the top manufacturer of Chinese scooters. And they don't just manufacture scooters, there are also other kinds of scooters such as Segway. They bought Segway, the American company. So we are closely exchanging with them, and we hope that maybe we might have quite a good significant business flow coming from there. So we're working on that right now. But what's interesting is to see, of course, and we are really monitoring all opportunities. But when I met the boss of this company, he told me that he wanted to work with Michelin. So I think that was recognition, very clear recognition of the quality of our products. And for scooters, I can confirm that everywhere throughout the world, we have market shares that are very encouraging. We are really making a difference on these products in relation to our competitors. And if you've already bought a Chinese scooter, you can change the tires because they're already available.

Great. Number 7.

Good morning, [indiscernible]. I've spent 40 years working for Michelin and 17 years retired now. Another great example. Fantastic. I want to go back to the tourism vehicles. I often help my friends fix their cars and get them Michelin tires. And recently, with the latest tires, I went to see, and there's a choice between 2 with a speed at 240 or 210. But you are competing. No, no, no, HEV. But the H210 tire is more expensive than the V. And the second surprising thing is that the QV tire, which is sold next to it, has the Kleber tire has the same shape. So it's not easy to make the distinction. It's not easy to get to that speed in France, maybe in Germany, but here, it's not good. Bridgestone, it's worth noting because, of course, we look at everybody is 2% to 3% higher than RV. The basic Michelin price, whereas Kleber is 20% cheaper. So it's not easy to make a choice.

I get it. I get it. And Citroen has Kleber tires. Okay. So we have the expert here, Jean-Claude, who will answer your question because I don't think I'm in any position to do that, but I certainly understand that it is a complicated and complex situation. But I might talk to you about the shape of the tire, the tread design.

Okay. Well, maybe I won't answer every single point that you have mentioned. However, I have taken on board your comment. And I think it shows that when you know nothing about tires, but you do, but a lot of people don't. And when you need to get tires for your vehicle, then you're facing a whole series of questions and you don't know the answers. It's difficult to find answers. And that is a challenge that we have to overcome, make our consumer experience easier, streamline it, make it less worrying than people find it today. And the different things you've mentioned, and of course, you are an expert in the field, I think most people have no idea about all of that. So that would be my first part of the answer.

Now maybe on the speed, Yes, of course, there is a speed component for a tire, but according to the couple, the power of the engine, the tire needs to behave in line with that. So we translate that into a speed index, but that's not just because the tire can be used at 210 kilometers now for a long time. Sometimes it is oversimplified. It's not just speed behind that. It's also about the talk and the speed. I mean, I won't go into more detail, more technical detail, but we need to make our consumer experience much more streamlined and pleasant. Thank you.

Thank you, Jean-Claude. And maybe on the tread, design, the cross climate completely changed everything for all weather tires because for the first time, we didn't start with a winter tire to have one that works in summer too or doesn't -- kind of half works in summer. We did something saying, what could this tire -- what could we add to this tire to make it work in the winter as well. And Philippe, correct me if I'm wrong. What we have done, a real revolution is that we have put the special mix into the rubber to make it more supple. But then it becomes more rigid because of the tread, the shape of the tread. So all competitors have done the same things. All of our competitors have done the same things. If you want an all-season that works, you have to have that kind of tread. And we couldn't patent that. So everyone was able to copy it. That shape will therefore be used for all-season tires, whether they're Kleber or others. And unfortunately, that's life.

Sorry, the 9 sorry, the 7, but it's not the same shape. It's exactly the same tread design. Yes, it looks like it is, but actually, it isn't. I know that we have a lot of experts who can explain -- come and have a chat with them, and they'll tell you it's not exactly the same tread design.

There's a question online. Let's take that. Michelin brand is strong and recognized, reliable. But as far as innovation goes, speed is important to be successful. So at the beginning of innovation, we are not necessarily up to standard. How do you see that duality, the strength of the brand, less robustness in innovation? Philippe, I think that's a question for you.

It's a good question. And that's the constant challenge that we have as innovation teams, knowing what to -- when to offer new technologies, new materials for something that is essential. That's the case for a tire, but not just a tire. That's what Nicolas described as well. And that's why we have a test protocol for our trial centers that is very well equipped so that right from the get-go when a client uses that innovation, they can use it safely. Now of course, that takes time to roll out, to deploy. The first tire needs to be used safely, then we have to run that several times, and it takes time. And we take the time that we need. But then you have to be able to scale up in the industry, and that can take time. But rest assured, the first time a tire hits the road used by our client, the client is safe.

Second thing, -- we say that in today's world, everything is going fast, but each industry has its own time scale. So AI doesn't go at the same speed that our molecules are transformed and change within our tires. And we need to understand that. We have fast cycles when we bring in a new technology in 5 to 10 years. We have normal cycles when we bring a technology in 10 to 15 years for tires. And our competitors are not going any faster. Nobody has found a way of going even faster. So rest assured, we are watching them like hawks. We want to be the fastest, of course. Thank you.

Thank you very much. Now unfortunately, we have to stop the questions because we need to finish and continue our meeting. So for those of you who still have questions, I suggest that you come and speak to us in person because we will be around. The members of the Executive Committee will stay around and we'll take time to answer them. So now that this question-and-answer session is over, I'd like to hand the floor to Benoit Balmary, who will announce the final quorum count, another exciting moment in this meeting.

Thank you, Florent. In order to validly deliberate, our Ordinary General Meeting must reach the legally right quorum of 1/5 of the voting shares. According to the counts provided to me, a quorum is present since out of 681 million tires (sic) [ shares ] we have 471 million. So we have the required quorum by over 136 million shares. So for our extraordinary general meeting, it has to be 1/4 of the voting shares is a quorum. This gives us a threshold of over 170 million, which is well exceeded since we have 471,710,510. Under these circumstances, both our ordinary and special meetings are validly constituted. I would like to remind you that voting will take place via electronic tablet, the operation of which will be demonstrated in an instructional video.

[Presentation]

If your tablet doesn't work, please raise your hand and [indiscernible] will come and help you. We're now going to vote on the resolutions. We're starting with ordinary resolutions, which must obtain a majority of the votes, i.e., 50% of votes plus 1 vote. The first resolution, approval of the annual financial statements for the 2025 fiscal year. Voting is now open. Don't forget to confirm your vote by pressing okay.

[Voting]

Voting is closed. Make sure you press okay. For 99.99% of votes, the final resolution for -- the first resolution is adopted. The second, appropriation of net income for the year ended December 31, 2025, and approval of the recommended dividend. Voting is now open.

[Voting]

Voting is closed. 99.93% for, the second resolution is adopted. Third resolution, approval of the consolidated financial statements. Voting is now open.

[Voting]

So the voting is closed. So the number of votes for. So in favor, 99.98%. So the third resolution is adopted. Fourth resolution, related party agreements. Voting is now open.

[Voting]

Voting is closed. So the number of votes in favor, 99.99%. So the fourth resolution is adopted. Fifth resolution, authorization for the managers or either of them to put in place a share buyback program, except during a public offer period based on a maximum purchase price of EUR 55 per share. Voting is now open.

[Voting]

Voting is now closed. So in favor, 99.75%. So the Fifth resolution is adopted. Sixth resolution, approval of the compensation policy applicable to the managers. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor, 92.48%. The sixth resolution is adopted. Seventh resolution, approval of the compensation policy applicable to members of the Supervisory Board. Voting is now open.

[Voting]

Voting is closed. The number of votes in favor 99.73%. The seventh resolution is adopted. Eighth resolution, approval of the disclosures concerning the compensation packages of the corporate officers. Voting is now open.

[Voting]

Voting is closed. The number of votes in favor, 98.10%. The eighth resolution is adopted. Ninth resolution, approval of the components of the compensation paid or awarded to Florent Menegaux for the year ended December 31, 2025. Voting is now open.

[Voting]

Voting is closed. The number of votes in favor stands at 95.98%. So the ninth resolution is adopted. The 10th resolution, approval of the components of the compensation paid or awarded to Yves Chapot for the year ended December 31, 2025. Voting is now open.

[Voting]

Voting is closed. So 96.14% in favor. The resolution is adopted. Approval of the components of the compensation paid or awarded to Barbara Dalibard for the year ended December 31, 2025. That's 11th resolution and voting is now open. Yes.

[Voting]

So voting is closed. The number of votes in favor stands at 99.87%. So the 11th resolution is adopted. The 12th resolution, election of Philippe Jacquin as General Manager. Voting is now open.

[Voting]

Voting is closed. The number of votes in favor 99.66%. So the 12th resolution is adopted. I'm pleased with the adoption of this vote of this resolution. Perhaps, Philippe, you would like to say a few words.

Well, I'm a little bit emotional. But yes, thank you. Firstly, dear shareholders, a few words for you. I wanted to say thank you. Thank you for that vote in favor. And thank you and also respect for those who voted against. Dear members of the Board, dear Florent, when we were preparing this nomination, we met several times. And I saw the trust that you put in me, and I want to thank you for that. I want to say that I will draw strength from it, courage, determination when I carry out my responsibilities. And I know how important that is. Dear Florent, thank you for your leadership, the strategy that you have taken us towards. And I'm really pleased to be joining the Board. And I will work by your side with discernment, with enthusiasm.

Dear colleagues here and those listening to us online, sometimes very far away. For now 28 years that I've been with Michelin, I've been fortunate to really experience that Michelin world and its values. I want to say thank you. Thank you for that because that human -- those human values have allowed me to develop. And I want to tell you that I want that human model to really remain at the heart of our strategy. And of course, I would like to congratulate you, Yves, and say a personal thank you to you for the last few months and this transition -- time of transition that we've had together. I also want to wish you every success for the future. Good luck.

I give the floor back now to Benoit for the remainder of the vote on the resolutions.

Thank you, Florent. So vote on the 13th resolution, the reelection of Thierry Le Henaff as a member of the Supervisory Board. The vote is now open.

[Voting]

Voting is closed. The number of votes in favor is 98.93%. The 13th resolution is adopted. 14th resolution, the reelection of Monique Leroux as a member of the Supervisory Board. The voting is now open.

[Voting]

Voting is closed. Number of votes in favor. 98.01%. The 14th resolution is adopted. 15th resolution, reelection of Jean-Michel Severino as a member of the Supervisory Board. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor. 96.53%. The 15th resolution is adopted. 16th resolution, election of Anne-Sophie Lotgering as a member of the Supervisory Board. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor. 99.58%. The 16th resolution is adopted. So we're now going to proceed to the vote on the extraordinary resolutions, which, as I remind you, must obtain 2/3 of the votes. 17th resolution, authorization for the managers or either of them to issue shares and/or equity securities carrying rights to other equity securities and/or securities carrying rights to shares with preemptive subscription rights for existing shareholders. The voting is now open.

[Voting]

Voting is closed. Number of votes in favor. 93.22%. The 17th resolution is adopted. 18th resolution, authorization for the managers or either of them to issue shares and/or equity securities carrying rights to other equity securities and/or securities carrying rights to shares through an offer governed by Article L. 4412, Paragraph 1 of the French Monetary and Financial Code without preemptive subscription rights for existing shareholders. Voting is now open.

[Voting]

The vote is closed. Number of votes in favor. 94.56%. The 18th resolution is adopted. 19th resolution. Authorization for the managers or either of them to issue shares and/or equity securities carrying rights to other securities and/or other securities carrying rights to shares through public offer not governed by Article L. 4112 Paragraph 1 of the French Monetary and Financial Code without preemptive subscription rights for existing shareholders. The vote is now open.

[Voting]

Voting is closed. number of votes in favor. 92.53%. The 19th resolution is adopted. 20th resolution, authorization for the managers or either of them for issues of shares and/or securities carrying rights to shares representing up to 10% of the capital in any 12-month period without preemptive subscription rights pursuant to the 18th and 19th resolutions to set the issue price by the method decided by the shareholders' meeting. Voting is now open.

[Voting]

Voting has closed. Number of votes in favor. 94.27%. The 20th resolution is adopted. 21st resolution, authorization for the managers or either of them to increase the number of securities to be issued in the event that an issue with or without preemptive subscription rights is oversubscribed. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 89.84%. The 21st resolution is adopted. 22nd resolution, authorization for the managers or either of them to increase the company's capital by capitalizing reserves, income or additional paid-in capital. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor. 99.81%. The 22nd resolution is adopted. 23rd resolution, authorization for the managers or either of them to increase the company's capital by issuing ordinary shares without preemptive subscription rights for existing shareholders in connection with a stock-for-stock offer or in payment of contributed assets. The voting is now open.

[Voting]

Voting is closed. Number of votes in favor 94.43%. The 23rd resolution is adopted. 24th resolution, authorization for the managers or either of them to carry out a rights issue for members of a group employee shareholder plan and/or restricted share issues without preemptive subscription rights for existing shareholders. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 99.14%. The 24th resolution is adopted. 25th resolution, blanket ceilings on issues of shares, securities carrying rights to shares or debt securities. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 94.01%. The 25th resolution is adopted. 26th resolution, authorization to grant new or existing bonus shares to the employees and the managers of the company and the employees of group subsidiaries without preemptive subscription rights for existing shareholders. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 94.9%. The 26th resolution is adopted. 27th resolution, authorization for the managers to reduce the company's capital by canceling shares. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 99.61%. The 27th resolution is adopted. 28th resolution, alignment of the bylaws with government order 2024-934 October 15, 2024. The vote is now open.

[Voting]

Voting is closed. Number of votes in favor 99.99%. The 28th resolution is adopted. 29th resolution, alignment of the bylaws with Decree No. 2026-94 of February 13, 2026. Voting is now open.

[Voting]

Voting is closed. Number of votes in favor 99.98%. The 29th resolution is adopted. And final resolution, the 30th resolution, powers to carry out formalities. The voting is now open.

[Voting]

Voting is closed. Number of votes in favor 99.99%. The 29th resolution -- the 30th resolution is adopted. Well done.

Thank you. Thank you very much, Benoit. And I talked about the symphony of materials, but the symphony of resolutions, that's another kind of symphony, isn't it? Thank you very much, Benoit. It's amazing to watch you real off those resolutions. It's amazing. We want more complex resolutions actually to hear you say those. Okay. Well, thank you, Benoit.

Now there's no being further business on the agenda, I hereby adjourn the meeting. Thank you for your presence today, your loyalty and your trust. And you're invited to enjoy refreshments in the lobby shortly. And I hope to see you again next year. Thank you again. Thank you for your commitment, and thank you for standing by us.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, welcome to the Michelin conference call.

I now hand you over to Mr. Yves Chapot, General Manager and Group CFO. Please go ahead, sir.

Thank you very much. Good evening, ladies and gentlemen. So I will have the pleasure to share with you our sales figures for the first quarter of 2026 and try to give a little bit of color about our business going forward. For this meeting, I am accompanied by Benedicte Bonnechose, who is going to take over as the Group CFO from June 1, but I will handle the presentation.

So first, the quarter -- the first quarter of 2026 have started slightly better than what we were expecting. The group is posting stable revenue at ISO ForEx. We have 3% growth in the volumes sold at the Michelin brand in all our replacement markets across all our business segments. The 3 M&A operations that we have announced at the end of 2025, early 2026 are going well on completion and 2 acquisitions has been already closed at the moment I'm speaking. The Cooley Group is integrated for 2 months over the first quarter and Flexitallic will be integrated in the group figures from the 1st of April.

Nevertheless, the context in the Middle East has dispelled a shadow over the year to go. And at this stage, it is very difficult for us to assess the precise impact on our businesses, except one certainty, which is the increasing cost of energy and raw material, which is going to impact our costs. But in this context, we have not changed our guidance for the full year. And I will come back at the end of the meeting over the elements that lead us to maintain this guidance.

Looking first at the market, the market in the first quarter of 2026 were negative as expected, particularly the original equipment market. The passenger car tire market overall is negative, OE being down by 4%, mostly driven by the scale down of incentive in China and a market which is as well decreasing in North America, stable in Europe, but with a mix which is positive in terms of electrification as the European market is posting positive growth in OE for electric vehicles.

The replacement market is stable overall. We have nevertheless to keep in mind that the minus 3% in Europe and the minus 7% in North America are mostly driven by 2025 Q1 and Q2 anticipated from importers in the respective areas in Europe due to the antidumping inquiries made by the European Commission and in North America due to the perspective of the tariff. So 2025 figures have been, as you know, very distorted by the non-pool businesses. And that's why these 2 markets are posting negative figures. On the other hand, the Chinese market is growing by 9% over the first quarter. I do not mention it, but the 2-wheel market is slightly growing as well in most of the areas.

Regarding transportation, so truck and buses businesses, as expected, the original equipment market is negative, minus 3% mostly driven by North America, where the market is at minus 19%. It is in the continuation of what has happened during the last half of 2025. And when we look forward, although we see that the orders of new vehicles have started to increase in North America, there is still a quite important backlog of inventories of tractor inventories at the dealership that will take a few months to be fully absorbed by the market. So for the time being, the growth of sell-out of vehicle is absorbed not by the production of new vehicles, but mostly by construction of already vehicles that are already in that. North America -- South American market is as well highly impacted, minus 16% over the quarter.

On the replacement side, plus 3% overall, plus 7% in Europe, minus 12% in North America. In North America, it's mostly the consequence of the tariff that has led to a surge in import during the first 2 quarter of 2025. In Europe, the market is quite segregated between the pool and non-pool market. The growth of 7% is mostly triggered by the non-pool market or the import. We have as well to keep in mind that Jan and February was flagged with some difficult weather condition in North America that has impacted, by the way, both passenger car, light truck and tire market.

On the specialty side, Beyond Road, so agro, we see a recovery in small machine segment, particularly in Europe and North America. But high-power tractors market is still depressed at OE. Replacement market is recovering slightly in the different zones. The infrastructure market is posting more favorable trend. Material handling is stable. Mining market is growing at a modest pace, but with a slight decrease in inventory of mining companies, but still growing. And the aircraft market was positive over the quarter.

So having this element in mind, as I mentioned, the group posted a stable revenue at a constant exchange rate, but the exchange rate is weighting heavily on our top line, minus EUR 355 million or minus 5.4% of which 70% is coming from the U.S. dollar. Volume. So first, in terms of scope, we have the positive effect of the integration of the Cooley Group for 2 months, which is offset by the impact of the disposal of our compact line activities to the CEAT group, which explains a very, let's say, small scope effect over the first quarter.

Our volumes have lost 1.4% over the quarter and taking into account the strong growth in the replacement market for the Michelin brand at plus 3%. And it's mostly triggered, and we will see the detail later on by the original equipment market, both in transportation and consumer businesses. Price/mix is positive 1.1% as planned the mix -- the price effect is minus 0.8%. It's mostly due to the effect of raw material prices adjustments as raw material prices have started to decrease during the second half of 2025.

Mechanically, we have the adjustments for around 30% of our revenue and as well some measures that were taken that have started already during the second half of 2025 in order to adjust our competitivity. The mix is positive, plus 1.9%. It includes both the very positive -- the constant effect of our growth in 18-inch and above at the Michelin brand, which now represents 69% of our global volumes at the Michelin brand, both OE and RT for the consumer segment as well as a positive mix effect between original equipment and replacement market. Non-tire sales are stable at ISO scope and currency and the ForEx have been already commented.

So that's the first time that we are presenting our actual figures through our new reporting segment. So the first time that you see the Polymer Composite Solutions segment published separately. And I will start by this segment, which is posting 5.1% growth overall, which is basically the only segment posting positive revenue over the quarter, which demonstrates the relevance of our strategy, of course, with the help of the inclusion of the Cooley Group plus which contribute 10 points to the revenue growth. And I will later on do a zoom on this business segment.

Consumer volume are growing by 1.3% with a contrasted situation between original equipment where our volume have globally decreased in line with the market, probably less than the market in China, a little bit more than the market in North America due to the different fitment and the segment of vehicles where we are present. The replacement market on the other hand are very positive, particularly at the Michelin brand. But at the same time, we are still losing ground on the Tier 3 segment, both in Europe and North America and in some elements as well in Asia. 2-wheel post strong growth over different geographies, including China.

The Transportation segment is showing, it's not a surprise, the strongest decline in volume due to the contraction of our sales in the original equipment, particularly in North and South America. Replacement sales are positive in Europe and decreasing in North America and South America. In the specialties, you see a volume growth of 2.5%, thanks to mining and aircraft, but as well stabilizing Beyond Road activity at ISO Scope as the disposal of our compact line business is in the scope effect. Despite -- so Beyond Road is stabilizing the situation despite a challenging situation in agro trucks and material handling.

Moving now on the higher performance overall at the group level. So you see that most of the 100% of the volume lost is coming from original equipment, mostly equally shared between truck and bus and passenger cars with a slight decrease in agro. And on the other hand, the replacement volumes are stable with growth of 3% in Michelin brand and volume lost in the Tier 2 and partly Tier 3 brands over the quarter.

So as far as the Polymer Composite Solutions is concerned, so we have -- we will share with you the situation of the market, not by end market, but by product. In the Sealing business, we recorded a very strong performance and particularly in hydraulic applications. The coated fabrics and films are growing as well, thanks to business development Beyond the Marine application, which was the main -- which is still the main destination market for this product. And the belting market is posting a slight growth particularly in general industrial and aeronautics applications.

On the other hand, the conveyor belt market or heavy conveyor belt, particularly the one that are servicing the mining market are declining, particularly in Australia. And on top of that, we have an industrial maintenance in a site that takes 3 months instead of 1, and that has weighted on the performance of this division in this geography. But overall, we are seeing a solid growth in Sealing and Coated Fabrics with a slight setback in Conveyors.

As we are coming -- we are zooming on this -- on the PCS activity, I just would like to remind you the figure that was shared during the last Capital Markets Day in 2024 and that we have updated at that time, it was a comparison between 2018 and 2025 -- 2023, though it's updated with 2025. So basically, you can see 2 things on this graph. First, 2028 (sic) [2018], which was the first year of integration of Fenner. So it's Fenner joined the Michelin Group in May 2028 (sic) [2018]. The Fenner activities were generating EUR 820 million of sales, not including Solesis the medical application activity that has been later on sold and put in a joint venture with the North American private equity company. And this activity should in the 2025 pro forma represent EUR 1.7 billion. So it's a compounded organic growth of 3% and, let's say, growth generated by acquisition, which is of a similar order of magnitude.

At the same time, in 2018, the operating margin of this activity was 11.5%, and it would have been 15% in 2025. You see as well that the portfolio of activity has evolved over the period in 2018, 2/3 of the businesses was mostly conveyors, 1/3 is ceiling, 30% or 25% ceiling and the rest was belting. We have now an activity which is much more balanced. Conveyor belt is still a very important activity, but it has been balanced with the growth of the ceiling and mostly the coated fabrics and films, thanks to the different acquisition that has been done in the past years. We are still expecting to close the last of the 3 deals announced earlier, the TexTech company, let's say, during around midyear.

So now looking forward for the full year of 2026. At this stage and being after 1 quarter, we did not change the outlook for the full year tire market, which is basically stable market, softer in H1 than in H2 and particularly softer in original equipment, both, by the way, for passenger car and light truck and trucks during the first half of the year versus the second half. And for the specialties so we think that the market should be around 0 both for consumers and transportation overall OE plus RT. Specialties should post a slight growth given the positive trend of mining and aircraft. Again, this outlook has been -- is the same that the one we shared with you at the end of -- at the beginning mid-February and excluding a potential systemic impact on the demand following the conflict in the Middle East.

So now looking to the situation in the Middle East. First, in the areas, we have mostly commercial operations. We employ around 100 -- a little bit less than 100 employees in sales. We don't have any tire manufacturing activity in the regions. And we operate 2 joint venture in Saudi Arabia, one in -- which is the machine commercial operation and one which is in the sealing activity of our Polymer Composite Solution, which is servicing the oil and gas industry. Altogether, the region represents less than 1% of the group sales. And we have set up crisis sales very quickly at the end of very early March in order to monitor the situation, follow potential disruption for regional customer deliveries look for alternative commercial routes to serve these customers and of course, monitor our upstream supply chain resilience.

So as I mentioned earlier, at this stage, it's very difficult to predict precisely the consequence of the conflict. It will depend on the duration and the extent of the conflict. But for the time being, we are working on an assumption which is translate in oil price at around $100 per barrel for -- till the end of the year. So with this assumption in mind, we know one thing for sure is that we'll have to face inflation.

You remember that when we start the year, we were expecting a tailwind of EUR 400 million on the raw material. This tailwind will be at least -- probably at least completely wipe out by inflation in raw material and energy and logistics. So we estimate that with the scenario that I'm sharing with you, we should have to be around at least EUR 400 million of additional cost, of which 3/4 are related to raw material and 25% related to energy and logistics. Why only 25% of energy? Because half of our energy cost energy purchase are already secured since the beginning of the year.

So that what we know for sure. What is much more difficult to assess is the potential impact on the demand, on the tire demand, maybe first on original equipment and maybe then on replacement. Today, we don't have any sign of slowdown in many markets. But the more we will progress during the year, the more we'll see risk, particularly if the conflict is not stopping at any moment. The other element, which is as well difficult to anticipate, although we are monitoring very closely with our crisis sales is the potential disruption of raw material supply.

Again, at this stage, we have a reasonable visibility of our supply till the end of June. But beyond that, it's extremely difficult given the fact that nobody knows how long and how far this conflict will continue. So obviously, it will -- all these elements will have an impact on, let's say, put some pressure on our margin and our free cash flow. The free cash flow is both for the margin, but as well inflation is contributing to, let's say, the ballooning of our working capital.

But at this stage, with the structural levers, so the way we manage the operations, the fact that we are vertically integrated in some areas, particularly in synthetic rubber in some other products as well, the localization of our operations and our proven margin resilience in, let's say, recent similar or very volatile environment, all that lead us to maintain our guidance. So our guidance, I remind to generate segment operating income at ISO scope and ISO ForEx above the one we generated in 2025 and free cash flow above EUR 1.6 billion.

In this highly volatile and unpredictable environment, I would like as well to insist on the strength of the group and the fact that we are holding the cap on our strategy. First, we continue in 2026 to launch a new product to further enhance our innovation leadership. Second, we continue as well to work and to improve our efficiency. In Europe, we have recently announced that we have sold and closed the remaining of our U.K. retail distribution operations for light vehicles. And we have recently announced the consolidation of our agriculture track activity factories from 2 factories to 1 factory in North America, which lead to the close of one of the factory in order to improve the competitiveness of our operation.

And last, I remind that we have maintained our dividend per share for 2025 versus 2024, which lead to a dividend yield of 4.9%. And the group has started with the help of banks to complete EUR 750 million share buyback program that has been launched in the second half of February and that should be executed by the end of November.

So having shared all these elements, I think it's time now to open the Q&A session.

[Operator Instructions] First question is from Stephen Benhamou, Bank of America.

I have 2 questions. The first one is regarding your pricing. Can you please give us more color regarding your pricing strategy? And so I understand that you basically adopted a more aggressive pricing strategy to boost market share gains, notably in the U.S. So do you expect overall a negative pricing for the year? And if not, how do you intend to increase prices without weighing on volumes? So this is my first question.

The second question is regarding your expectation for the cost inflation. So you indicate at least EUR 400 million that includes raw mat, energy and logistics. But what about wage inflation? And is it a gross or net impact post mitigation measures? And basically, what's the phasing of those EUR 400 million cost inflation between H1 and H2?

Okay. So thank you, Stephen, for your question. So regarding the pricing strategy, as you know, I'm not going to comment our forward pricing strategy as there is currently an investigation from the European Commission on that topic. What I can simply tell you is that we have on one side, the index business, and I will not comment on it because it's quite mechanical. But it has an impact, and I will come back on that. And on the other hand, we are -- we have implemented a transformation within the group in order to manage our pricing in a more and more agile manner, which lead us sometimes to -- even in the same category to adjust the price at some SKUs upward and some other SKUs on board.

What I can already tell you is that there was already some price increase announced and implemented, for example, in Europe 1st of May, it has been communicated on the market recently because we are still -- we are already seeing some element of inflation, particularly the energy or the transportation cost, maritime shipping, just to mention it or even in non-transportation. And so we -- the answer regarding the balance between price and market share and competitivity, let's say, is all is in the quality of the execution by the team. And I believe that since the last quarter of 2025, our team have demonstrated their ability to grow in our market share in -- particularly in the replacement market, thanks to a very agile pricing strategy.

Regarding inflation, for the time being, it's mostly energy and raw material that are impacting us. We have not computed any wage inflation at this stage. But it's something that might happen in the second half if the situation is worsening. Nevertheless, and regarding the phasing, most of the phasing, of course, will be on H2. But we are still seeing -- we are already seeing actually an element that are going directly in the P&L, such as transportation, the impact of inflation.

Of course, all the elements that are contributing to the production cost, so either raw materials or energy in the production cost. Energy represents 2.5% of our group sales overall will be -- will impact our P&L probably most in the second half we have 4 months of inventory between raw materials, semifinished and finished products. So generally, you can count on 4 to 6 months lag between the increase of these costs and the inflation in our cost of goods sold.

And regarding the gross or net impact?

It's a gross impact. It's a gross impact.

Okay. And did you quantify your mitigation measures?

Of course, we quantify it. But what I can tell you is that we are -- as I said, you can classify our business into 2 categories. The business which is midterm contract with an index, indexation clauses, there will be a mechanical lag effect between the inflation, the increase of cost of goods sold and the increase of price. So this part will not probably be fully hedged over 2026. For the rest, it's a journey. We have demonstrated our ability in the past to hedge our cost.

Next question is from Akshat Kacker, JPMorgan.

Akshat from JPMorgan. I have 3 questions, please. The first one on volumes, a very good beat in Q1 versus expectations. Could you just tell us if you're already seeing signs of prebuys, specifically in March? We have seen some very strong industry data coming out from March. Have you seen any signs of strong dealer buying ahead of those price increases? Or are there any signs of sell-in activity looking different at the start of Q2? That's the first question.

The second question is on the trucks business. We can clearly see that the truck market in North America could be inflecting from very low levels and the comparables look very easy starting from Q2. But on the other side, replacement volumes have been at high levels. You have high inventories. So how are you thinking about overall truck volumes from here for the rest of the year in 2026, please?

And the last one, coming back to cost sensitivity of the conflict. Is the EUR 400 million number a second half impact for this year? Is that how we should think about it? And what have you really built into that EUR 400 million? Is it only the direct impact from synthetic rubber and carbon black and you haven't considered broader inflation in steel, chemicals, supply chain, et cetera? Just trying to understand the big buckets within that EUR 400 million, please.

So thank you, Akshat. For the time being, we have not seen any significant prebuy over the first quarter in any of the regions where we are operating. So we have not, let's say, meaningful volumes that can be interpreted as a prebuy from distributors. But that's something that we are obviously monitoring very closely as we are monitoring every month the sell-in and the sell-out as well the sale of our product to end users by distributors.

For the truck market, it's a bit reflected in the slide that I present for the full year market. Of course, we are starting -- we will start partly on OE to compare ourselves with data that were, let's say, at historical low level, particularly on the original equipment since the month of April, May 2025. As I mentioned, I will comment mostly the original equipment market and particularly the North American, which is weighting heavily on our OE performance because we have seen the European market slightly rebounding since the last quarter of 2025.

In OE, we consider that although we have seen an increase in the order of new vehicles, we consider that the market will probably need another 3 to 4 months to flush out the over inventory of vehicles that has been built up by the OEMs in the past 2 years. So it's very probable that over Q2 and even early Q3, we are not going to see a sharp increase in order of tire by OEMs because they are still selling vehicles that have been produced earlier.

As far as the cost and the duration of the conflict, the EUR 400 million are obviously mostly on H2. But as I mentioned, we are already seeing some very concrete inflation measures, for example, in transportation. And we have -- the assessment we did was so at least EUR 400 million, probably EUR 300 million on raw material, EUR 100 million shared between energy and transportation. And on the EUR 400 million of raw material, we are looking at all raw materials. So of course, it's synthetic rubbers, a lot of chemicals products, resins, but you can -- if you look at the SICOM data, you will see that the natural rubber price as well started to slightly increase. So we take in consideration all the elements of the different raw materials that we are acquiring.

Next question is from Harry Martin, Bernstein.

Harry, are you online?

Harry Martin, your line is open.

So maybe we can switch to the next one and eventually call Harry later on.

Next question is from Thomas Besson, Kepler Cheuvreux.

I have a few questions as well, if that's okay, I'll ask them one by one. First is, could you say a few words about your North American business? Last year, you had a horrific Q3, then a much better Q4. In Q1, there's been a lot of weather-related elements or one-off things. Do you see the state of your North American business in the first half of 2026 more aligned with Q4 or Q3 on an underlying basis, please?

So do you want to answer question by question. No, no, but I can answer to this one first. So I will say that Q1 2026 was a little bit in between Q3 and Q4 2025. The -- all the OE markets are negative in the U.S. and in North America, both for consumer vehicles or professional vehicles. And I remind that the replacement market in 2025 was boosted by the anticipation of the tariff. So it's still a market which is, let's say, in between the 2 quarters -- last quarter of 2025.

To follow up a bit on Akshat's question earlier. Could you talk about the April trading? I understand March has been a very strong month after a relatively soft start of the year. Do we continue to see a dynamic momentum in April? Or do you now see any anticipation from dealers of future price increases? Or is it still -- are they still pretending nothing is happening?

As far as I know, I don't see -- we have not seen a huge anticipation of dealers on future price increase, if price are -- now if price increases are announced. The magnitude of the price increase is not huge for what have been announced in Europe, for example. And I think I will not comment in April on the -- when we look at our own figures, we have as well to be careful because 2025 in April, we have a difficult momentum in Europe.

Do you have any update to give us on the European Commission China treatment that was delayed from December? Is it still expected for Q2? Do you expect any retroactive action?

So we expect the antidumping measures to be announced at the end of the quarter -- of this quarter, so the Q2 quarter. We do not expect any retroactive implementation. And that's at this stage is the information that we have in hand, yes. The tariff on the -- due to antidumping in Europe for passenger car tire probably from July or the end of June onward.

Next question is from Harry Martin, Bernstein.

Can you hear me now?

Yes, better Harry. Yes, we hear you clearly.

Great. The first one, as you mentioned, historically, Michelin has been able to pass on raw material costs without major EBIT impact. So I wondered why this time would be any different. I'm thinking if you see any differences in price premiums, market positions, mix that we need to be aware of or whether it all goes well, you should at least be able to recover a good amount of the inflation over time.

And then the second question I had, in the release, you talked about expanding market share in the 18-inch and above segment. I'd like to hear some more color on which markets you see those share gains coming in which vehicle types, what price points within 18-inch and above, you're having the most success there would be useful.

Okay. So regarding our ability to pass the raw material effect in the EBIT, we have as always to keep in mind that we have this lag effect for the index business, which play negatively when raw material prices are increasing and positively when it's stabilizing or decreasing. That's the first element that you have to keep in mind. And so we will not -- probably not fully compensate the full effect of inflation in at least on raw material in 2026 some part of it at least for the index business will be to recover in 2027.

The difference versus the past -- if you mentioned, for example, what happened after the war in Ukraine or the start of the war in Ukraine is probably that we are now already at a high level of raw material prices versus the situation we had before -- I remember after 2020, price went down. There will be -- there was some cooling down of prices in the end of 2024, 2025. But the question is the ability of the market to accept the level of price that this kind of inflation may come in. So that's the question more on the affordability side.

Regarding our market share, our market share gain in the consumer segment, particularly in the 18-inch tires. But on the replacement tires, I want as well to share with you that we have as well gained market share in some segments below 18-inch. So in terms of market, it cover, let's say, mostly all the markets in Asia, in Europe, maybe in a lesser extent in North America. And when you speak about the vehicle, if I take the Chinese market, it happened that I was in China last week. We are quite successful with local OEMs and partly with electric vehicles. So that's where we are gaining market share, particularly in -- for the OE market.

Next question is from Monica Bosio, Intesa Sanpaolo.

I have 2 questions. The first is, I know it's difficult to answer, but during the last call, the company anticipated a slightly positive volumes trend overall in the second quarter and still a light growth for 2026. I know it's difficult to answer as the macro scenario is evolving, but are you still confirming a positive volumes trend for the second quarter? And if yes, maybe if you can give us some flavor across consumers, transportation and specialties and if you are still confirming positive growth in volumes in 2026.

My second question is on polymer composites. I admit I do not very well the segment, but what is the company ability in passing through the raw material cost increases in these divisions? Any insights could be helpful. And the very last is just a check. Can you split again the EUR 400 million of growth headwinds between raw mat, energy and other items?

Okay. Thank you very much, Monica. I will take your question in the last order. So the EUR 400 million of headwind following the war in the Middle East is 75%, so around EUR 300 million in raw material and EUR 100 million between energy and transportation costs. Regarding Polymer Composite Solutions, we are in businesses except for the conveyor belt where the weight of the raw material in the production cost is far lower than the weight of raw material in the production cost of tires. So of course, if there is inflators, the companies that are operating this different business will -- depending on the respective weight because it can be very different between Sealing small belt or heavy conveyor belt, they will have to adjust their strategy. But it's really local and, let's say, local product-related operations.

Regarding volumes, so of course, the beginning of the year and after the 2 first months, we were on track to deliver a slightly positive volume in 2026. We have announced that Q1 will be negative. Q2 probably around flat, flattish and Q3 positive. There is -- you mentioned it in your question, it's very difficult to answer. But on one side, there is element that are in favor of, let's say, confirming potential volume growth over the year. It's the fact that in Q2 and Q3 last year, we have suffered particularly Q2 in Europe, Q3 in North America. So we are going to have the basis for comparison, which will be more favorable.

On the other hand, nobody knows at the moment I'm speaking, what will be the impact on the final demand, transportation, mileage driven by consumers when they are -- they have the sticker shock of the price of gas oil at the station or even the impact that the price of kerosene can have on the -- and even the availability potentially. So at this stage, I'm not in position to comment the impact of any of these elements on the final demand.

Next question is from Martino De Ambroggi, Equita.

The first question is on the supply chain, the raw mat and so on. What are -- where do you see the main risks for your supply chain today? And could you remind us what is the updated sensitivity to oil price, butadiene and natural rubber? And I have another follow-up later.

So I will probably give you a very, let's say, generic information. Geographically speaking, we are expecting more tense situation of the supply chain in Asia than in Europe and then in North America. So it's rather in this order. But as I said, it's very difficult to decipher where rupture can occur and how. Now looking at our -- so last year, we buy around more than EUR 5 billion of raw materials, of which 29% is natural rubber, 22% synthetic rubber and 21% fillers. So fillers is black carbon and silica. And the rest is shared between chemicals products, around 15%, steel coils 9% and textile. So that's basically the different source of our raw materials.

So of course, there is some -- there is a direct sensitivity on the oil price. But some of the products we are using are just derivated from the long oil transformation value chain. So that's probably where it's most difficult to assess. And we know that when the butadiene price is increasing or the synthetic rubber prices are increasing, there is an indirect effect on the natural rubber because some manufacturers might switch from one nature of rubber to another, depending on the prices.

So I will not try to give you a magic formula of translating with -- starting with dollar per barrel and translating million of euro of raw material costs. Keep in mind as well that we are a global company. All the raw materials are priced in dollars in USD, the underlying currency in the USD. And we are purchasing in euro, renminbi, Thai baht and as well Brazilian real and USD. So there is as well an effect on the currencies in our acquisition cost.

Okay. Okay. Rather complicated. One housekeeping question because I remember in the previous call, you mentioned raw mat tailwind of EUR 400 million that today you are telling us they are erased by inflation -- cost inflation. But in the previous call, you also mentioned that the cost inflation was in the region of EUR 200 million. So I'm unable to match the figures if probably the cost inflation is much higher than EUR 400 million starting from the EUR 200 million that you commented or I don't know if I remember correctly, the EUR 200 million at the beginning of the year.

No. At the beginning of the year, the assumption was the following. We were expecting a EUR 400 million tailwind from raw mat and EUR 200 million headwind from other inflators. So everything, including salaries in some regions, energy, transportation. And now we are -- so these assumptions are still valid. But on top of that, we are going to get EUR 400 million tailwind -- headwind, of which EUR 300 million is coming from raw materials. So you can say that if it's confirmed, the net effect on raw material will be EUR 100 million versus last year and another EUR 100 million on energy and transportation. So the net effect of cost inflation outside raw material should be around EUR 300 million.

Next question is from Michael Foundoukidis, ODDO BHF.

A few questions also on my side. I will ask them one by one as well. Maybe first on the volumes, some clarification because I'm not sure I understood correctly what you said. You don't change your market scenarios versus what you indicated at the beginning of the year. Even you kind of upgrade them when we look at the charts. I mean some of the charts, both in OE and replacement seem a bit higher than where they were in February. which is a bit puzzling me, especially on the OE with S&P cutting estimates from flattish in February to minus 2 now. So how to reconciliate that? And how to reconciliate also the view that you're saying in the Middle East slide that you expect more negative -- I mean, negative tire demand, but still you don't change your market scenario? That's the first question.

Yes. Michael, we have not changed our outlook globally in terms of market, both for consumer and transportation.

I see the minus 2, plus 2 are the same, but some of the charts, I mean, where the points are higher. But even if we say that it didn't change, why doesn't it change despite you indicating that the Middle East issue will have a negative impact on volumes. And you're also saying that you cannot commit any more on the Q2 volumes improvement.

So what I said is that the hypothesis that we share with you in detail, the one that is in the Slide 13 is -- has been built without taking into account the potential systemic effect on the Middle East conflict on the final demand because for the time being, till the month of March, we have not seen a very different market picture than the one that we described at the 2025 yearly disclosure.

Okay. So guidance still embeds a slight volume growth?

Yes.

Okay. Then maybe a question on pricing and for Q2, probably indexation clauses will remain negative. in Q2. Do you think that replacement prices increase that you mentioned in the call are sufficient to, let's say, offset them and lead to breakeven on the pricing side? And second question on that side, too. On the mix side, do you expect to maintain this around, let's say, 2% for the full year?

So on the indexation clause, I will not mix the indexation clause that we have seen in Q1 that we've seen in Q2 that are due to the price of raw material of the second half of 2025 with the fact that we are going to probably see indexation clause playing in the other way in the very late part of the year because of raw material price increasing now, but that will translate later on in our cost of goods sold. And I will not mix that with the increase on the replacement market because again, we try to have a fair price policy. So we don't -- I'm not trying to overcompensate one market by the other.

I mentioned very clearly that the over inflation triggered by the situation in the Middle East that is impacted -- that will impact our cost of goods sold on our index business in the second half will not be fully recovered by price adjustments because there is a time lag in the application or the tools. And regarding the mix, the mix was quite strong in the first half. It will depend on the, let's say, the weight of the recovery of the original equipment volumes. But as we can expect a slight rebalance between OE and RT, maybe we'll have a slightly lower mix effect in the second half.

Okay. Maybe a last one, more general to better understand your guidance. Since February, I would say that volumes are probably more negative than you assumed. Costs obviously are also. So how do you offset that in your guidance? I mean, probably pricing, of course, that's the number one. But is it only that? Is there anything else that we should have in mind to offset all those incremental headwinds that you have? Or was 2026 guidance in February very, very cautious? That's the last one.

Well, so your assumption is that, of course, the volume can be, let's say, less positive in the second half than what we were expecting in February. As well, we are going as well to offset that by the strong cost discipline. And as I mentioned at the end of the presentation, you know that we have implemented in the past 2 years, one of the largest restructuring plan that the group has ever implemented. We continue to work on our cost structure. We have downsized our distribution retail operations in the second -- in the U.K. for light vehicles in February. And we continue to work on improving our footprint. What we can say as well is that probably in this.

Any additional restructuring since February or any measures that you would add?

We announced, as I said, in February, we announced the closure of the sales and the closure of our retail distribution network in the U.K. for light vehicles, more than 100 point of sales. And we recently announced 2 weeks ago the closure of one factory for agro trucks in the U.S. and the merger of this factory with another one, transfer of the activity to another one, which is in a nearby area. On top of that, what we can say as well is that our volumes and our mix have been better in Q1 than what we were expecting early February.

Last question is from Ross MacDonald, Citi.

The first question, just on the mix benefits, obviously, quite strong in Q1 at plus 1.9%. Do you have any guide, Yves, you can give on the overall mix contribution for the full year 2026? And what sort of drop-through we should assume for that? It looks like on channel mix, tier mix and obviously, segment mix are all positive here. So how should we think about the overall mix benefit to revenues this year?

The next question, and sorry to come back to the net price versus raw mats. But if I take a step back and just look at the bridge from last year, basically, the headwind was really on the raw mat and logistics side and obviously, price mix and volume kind of offset each other. If I think about my bridge for '26, and let's leave price mix and volume to one side, what is the message here even in terms of the aggregate raw mat headwind and the manufacturing and logistics headwind, i.e., how much do price mix and volume need to be positive to offset that to hit your guidance?

If I understood correctly, we're basically wiping out the raw mat benefit for '26, and we have roughly EUR 300 million of manufacturing and logistics. But maybe if you could just split both of those buckets in terms of your assumptions for 2026, and then I can work back how much price mix and volume need to be to offset that.

And then a final question. Obviously, oil is continuing to rise. We have the tariffs in the U.S. It sounds like industry pricing isn't moving up too much. How do you think about value over volume strategy in that context? Is there a benefit to Michelin going after some of the lower-end volume in the U.S. to protect volumes and fixed cost absorption this year? I'd just be curious how you think about leaning on your budget brands to maybe shore up some of the volume this year.

Maybe I will take your question in the reverse order, Ross. Starting with the last one. Overall, you know that the weight of the raw material and the energy cost and the transportation cost is respectively lower in premium brands or premium products than on entry product in budget product. So except if there was a massive, let's say, tier down market effect, generally, this kind of situation is more favorable for premium manufacturers like us. So that's what I can -- because the cheaper brands that are mostly imported from Asia will have to be first being in Asia, they could be impacted by inflation faster than in North America and Europe. And on top of that, they have to bear the extra cost of the transportation. So that's my first answer.

Regarding the net -- assumed net price raw material versus in your bridge of 2026, as I said, we start the year -- at the start of the year, we're expecting the EUR 400 million tailwind on raw mat. And now we know that we have at least a EUR 300 million headwind, which is coming from the event in the Middle East. So net, it's still EUR 100 million tailwind. And on the loss of energy and other inflators, we are betting on EUR 200 million of inflation, on which we will have to wind the EUR 100 million coming from the impact of the Middle East country. Last, regarding the mix. So we have a strong mix. But if you look over the past years, we have a mix effect that continually translated around 1.5% which has moved around 1.5%, we are at 1.9% in the first quarter. I believe that's a reasonable assumption for the full year at 1.5% is probably the most relevant assumption that you can take.

Maybe if I can squeeze one more in just on the cost inflation point. Obviously, your analysis, it looks like the chart begins sort of late March, which would make sense. But would that imply there's maybe a further EUR 150 million, let's say, cost headwind into early 2027. How should we think -- I know it's still very early in 2026, but how should we think about the cost inflation that carries over into 2027 based on your analysis?

For sure, right. If the situation is lasting further, there will be a carryover in 2027. But let's take the situation quarter-by-quarter. Nobody knows, I have not looked at the news today when the almost straight to will be fully reopened. So I think I will not make any speculation, let's say, beyond one quarter.

Thank you, Ross. And I believe it's the last question. So ladies and gentlemen, thank you very much for your attention. Our next meeting is scheduled with the Shareholders' Meeting on the 22nd of May. And I would like to take this opportunity of this last quarterly call on my side to thank you for your attention and to thank you for the very stimulating exchange we had in the past 8 years. So thank you very much, and I wish you a good evening. Bye-bye.

Ladies and gentlemen, this concludes today's Michelin conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, welcome to the Michelin conference call. I now hand over to Mr. Florent Menegaux, Chief Executive Officer; and Mr. Yves Chapot, General Manager and Group CFO. Gentlemen, please go ahead.

Good evening, good afternoon and good morning to all of you. Thank you for joining us, Yves Chapot and myself, for 2025 results call.

I would like to start by summarizing our 2030 Michelin in Motion strategy. What you see on your screen is The Group relies on 4 strong and clear distinctive assets. Our Michelin's way of managing based on empowerment, autonomy and responsibility. Our company's resilience comes from team cohesion and shared values.

Number two, we have a strong and well-recognized brand. Our MICHELIN brand is now worth more than $10 billion, and it is the ninth strongest brand in the world across all categories, not only in tires. We capitalize on a powerful innovation with deep expertise in complex materials assembly. And finally, we sell best-in-class products and services with long-term value delivered to our customers.

Our group operates, and that's in the middle of your screen in 2 complementary fields: Tires and Mobility on historic Core business and Polymer Composite Solutions in which our group is leveraging its material expertise acquired in tires and where we are accelerating our growth.

In 2025, and that's the right of your screen. Our group achieved the following performance. An engagement rate at 84.4%, high and stable, close to our 2030 target of 85%. A segment operating income of EUR 2.9 billion at iso-FX. This is, of course, disappointing performance as we did not reach our initial 2025 guidance. I am sure, however, you have noticed that we have reached the upper part of our revised guidance. It shows that we were able to turn things around in the last quarter.

Our free cash flow before M&A reached EUR 2.1 billion, reinforcing our financial strength and our ability to generate cash. Our renewable and recycled material rates stands at 32%, 1 point better than last year. The road ahead to our 2030 ambition is long, but we make strides.

Regarding the shareholder return, we are proposing a stable EUR 1.38 per share dividend, which corresponds to a 57% payout ratio. Confident in our future, we intend to launch a new share buyback program of up to EUR 2 billion over the next 3 years, 2026-2028 period.

Here, I would like to reemphasize to all of you that M&A is still a priority as we are deploying our Michelin in Motion 2030 strategy. Our structurally strong cash generation allows us to finance both CapEx, dividends and share buyback programs in a flexible way. Regarding our financial guidance for 2026, our ambition is to progress in terms of segment operating income at iso-scope iso-parity, which we want to make clear that our ambition is to progress at 2025 perimeter. On the cash side, we intend to generate at least EUR 1.6 billion in free cash flow before M&A.

Now I would like to take a few minutes to come back on our Polymer Composite Solutions development. Aside from our Core business in Tires and Mobility, where our ambitions remain intact as being the world leader, we are determined to grow our PCS Polymer Composite Solutions businesses. By doing so, we will improve the resilience of our group and its profitability.

Michelin's approach in PCS is based on 3 pillars: leveraging group R&D. Michelin leverages over 100 years of experience in developing the best tires. Our deep science in material and unrivaled ability to industrialize and produce at scale provide us with a unique opportunity to access several very attractive adjacent categories. We are building a diversified portfolio of independent businesses targeting Michelin critical applications.

Within our group, we manage our Polymer Composites business with a specific operating model. We developed strong synergies in terms of R&D, and we operate in a much more decentralized way than in tires. The destination markets represent an addressable market of more than EUR 70 billion organized around 6 main product categories, as you can see on the bottom left of your screen. Since we acquired Fenner in 2019, we have grown at a CAGR of around 7% with a balanced mix of organic and external growth. And with the latest 3 acquisitions we have announced, we could reach pro forma 2025 sales of around EUR 1.7 billion with an operating margin of more than 15%.

Our Polymer Composite Solutions business, including our recently announced acquisitions show a good balance, both in terms of market verticals and geographies, that's on the right, and market verticals are on the left. And what you can see is North America becomes our largest regions after the 3 latest acquisitions, and it will enable cross-selling synergies and contribute to the upcoming growth in PCS.

Now I'll hand over to Yves for the rest of our presentation.

Thank you, Florent. So I'm going to lead you through our performance in our key performance indicators over regarding People, Profit and Planet. Regarding People, the group has shown very strong improvement in terms of safety. Our TRIR is now at 4 -- below 4.5 which is an improvement of 53 basis points versus 2024. And our Net Promoter Score with our partner customers has improved by 5.3 points versus '24. We are on track for both indicators on our 2030 ambitions. I will come back on the Profit more in detail afterwards.

And regarding the Planet, versus 2019, we have already achieved 48% CO2 emission reductions versus 2019, which was nearly the objective we intend to reach by 2030. So we are far ahead, thanks to a lot of levers including purchasing of green electricity, but as well transiting from more carbon-intensive energy to less carbon-intensive energies.

And last, I would like to comment the Abrasion performance. If you compare the set of offers of Michelin in 2025 versus 2020, in average, the performance of our Tires in Abrasion has improved by 8.4%, which translates in less material for the same usage, but as well as an improvement and competitive advantage in terms of total cost of ownership for our customers. It makes us the undisputed leader in this area.

Now coming back more to the economic situation, I would like first to comment the market. The market has shown very contrasted pictures over the world and over the different segments. But overall, there were marginally soft versus 2024. Very tough in original equipment, particularly in B2B applications. If you look at regional equipment and if you set apart passenger car tire in China and truck and bus in Europe, all the markets were down versus 2024 with even minus 20% for the heavy-duty vehicles in North America.

The replacement market if you look at the figures, seems to post a more positive picture, but in reality, we should not ignore that this trend was triggered by the inflow of Asian tires in anticipation of the tariff in North America and the antidumping measures that the European Union is intending to implement versus passenger car tires coming from China.

So overall, at the end of the year, when we look at the inventory of our wholesalers, they are pretty heavy loaded with these tires and we estimate that it will take probably another semester to flesh out these tires from the distribution channel.

On the other hand, when we look at our own inventory, they are at a quite healthy level in all channels of distribution. Regarding Specialties, Mining, Aircraft are posting positive growth. Beyond-road is still plagued by the regional equipment cycle and that we'll have the opportunity to come back on the situation of Beyond-road, particularly in OE. Replacement has shown some signs of recovery, particularly in Europe. And the Polymer Composite Solutions are posting low single-digit growth over the year.

Regarding our sales, so 2025 has seen very strong headwinds, first one being the volumes. Our volumes were down by 4.7%, mostly driven by original equipment and I will have the opportunity to come back on that. The situation of volume has improved over the year. Volume in H1 were at minus 6.1%, in H2 at minus 3.4%.

Price/mix is still positive over the year, 3%. The Non-Tire activity are contributing to 0.3%. So you have seen the weight of Polymer Composite Solutions, but this activity grew in itself by 3.4% during the year. And of course, we have been severely impacted by the currency effect, EUR 800 million, 3% of which half is coming from the U.S. dollar and 2/3 in the second half, 1/3 in the first half. Overall, our sales, including ForEx has decreased by 4.4% over the year.

Now zooming on the volume. So volume decreased by 4.7%, so nearly 5% of which 80% is coming from our Regional Equipment businesses, half from the Truck Tire businesses with a strong drop, particularly in the North American, which is a very important market for us. And the rest is shared between Passenger Car and Agriculture, all across the regions. Passenger Car Tires have grown in China, but the market and our volumes have decreased in the other regions.

Our overall replacement sales were posting a slight negative, so one point volume contribution overall. But with a very diverse situation between MICHELIN brand, which is growing across practically all the business segments and our Tier 2 and Tier 3 brand that has been probably more impacted by the inflows of budget tires, both in our North American and European core markets.

Our operating margin. So the margin land at EUR 2.7 billion or 10.5%, including ForEx. I will start with the ForEx because half of this EUR 200 million is coming from the USD and 3/4 of the ForEx effect is coming in the second half of the year. Before the month of April, the USD tend to be more resilient versus the euro. But if you look across the full year, the euro has revaluated against nearly all currencies and particularly the USD. Volume is down by EUR 700 million, of which share between the margin effect and the lack of fixed cost absorption from our factory due to the very low level of factory loading.

We have a very positive price/mix. We nearly hedge the volume effect. Raw material is negative for the full year, but has a positive effect on the second half, which was mostly concentrated on the last quarter. Manufacturing and low costs are as well negative, but impacted by EUR 235 million due to the tariffs, mostly in the second half. So if you take out this effect, our manufacturing cost -- in fact, our maturing performance have been improving despite a very low factory loading during the second half of the year.

SG&A, which were slightly increasing at the end of the first half of the year, land EUR 5 million below 2024. And thanks to a strong reaction and around EUR 28 million improvement in savings during the second half. We have a positive contribution from Non-Tire business. And the other effects are mainly due to our group businesses. As in 2024, we have updated our businesses in November when in 2025, we did it in June with a last adjustment in December due to a better free cash flow performance than expected.

Now looking at the picture by business segment. You see that our segments, the most impacted segment are SR2 and SR3 in terms of volumes. SR1 volume loss is mostly coming from original equipment in Europe and North America and our Tier 2 and Tier 3 brand. But the MICHELIN brand in SR1 has been very resilient and has grown over the year. The SR2 is suffering obviously from the 9% volume decrease that I have already detailed. And the SR3 has been impacted as well by a strong volume decrease, which as is during the second half of the year at the end of June, we were posting a 6.8% volume decrease in SR3 versus 3.1% for the full year.

I would like now to come back on SR2 performance and our plan to recover and to come back to a healthier financial performance on this segment. Here, you will see on the right part of the slide, 2 charts: one which is showing you the market fluctuation within dark blue, original equipment; and in green, replacement for truck and bus tires over the past 10 years. So we know and it's particularly exacerbated for original equipment that this market is cyclical with roughly a market that can fluctuate around 30% below or above its average depending on the cycle. And you see below with the operating margin, the strong correlation between the operating margin and the cycles.

So our strategy is consisting now in trying to desensitize our SR2 margin to this cyclicality. First, by rebalancing the respective weight of our original equipment and replacement volume, rightsizing our manufacturing capacity and it's all the effort that has been done by the teams in the past 2 years, improving our local to local sourcing, accelerating our product plan renewal, increasing the share of services through our Michelin Connected Fleet activity and re-emphasizing reaching the importance of retreading to extract the full value of the machine technology. And with all these levers, we believe that we can try to have a less exposure to these fluctuations in the years to come.

Positive results in 2025 is coming from our cash flow generation. So despite a drop in EBITDA, we have been able to generate EUR 2.1 billion of free cash flow before acquisition. After acquisition, it's even better because we have made some disinvestments in 2025. Thanks to a huge effort in working capital despite some inflationary pressures coming from the North American tariff. We spent less in taxes and interest than in 2024. Our restructuring costs have increased versus 2024 by EUR 180 million. You see that our CapEx has slightly decreased as well, around EUR 100 million.

And we have a very positive contribution from our Joint Venture and Associates and from our assets -- some asset disposals that we did, real estate in Euromaster or in China.

Last, our ROCE has been impacted by a weaker segment operating income in 2025 despite EUR 550 million less capital employed in average in 2025 versus 2024.

These cash generations -- thanks to this cash generation, it provides us some headroom to deploy our strategy, as Florent highlighted. But we have been able, in 2025 to further deleverage our balance sheet with gearing, which land at 13% at the end of the year. It gives us -- gives to the group the flexibility to finance both the growth of its Polymer Composite Solutions and to increase its share buyback programs.

In terms of shareholder return, so our net results has decreased by EUR 230 million versus 2024, thanks to better contribution of JV and Associates versus the impact of the segment operating income, less restructuring costs and despite as well an effective tax rate, which has increased from 22% to 26%. We will propose to our shareholder meeting in May, a stable dividend per share of EUR 1.38 per share, which represents a payout ratio of 57%.

The idea is being that our payout ratio should fluctuate around 50%. And given the strength of our balance sheet, we will propose up to EUR 2 billion share buyback program in the next 3 years between 2026 and 2028, of which we will implement EUR 750 million in 2026.

Now moving to 2026. I would like first to come back on our future segment reporting, which is aiming to provide to our shareholders and to all of you a better understanding of our different activity. In this slide, you will see a pro forma 2025 segment reporting that will allow you in the next quarters to compare our 2026 financial reporting, so with 2025 actual performance.

I would like to highlight 4 points on this slide. First, you have probably observed that we have decided to rename our reporting segments to better translate as much as possible the nature of our customers. So the first segment, which is Automotive and Tools is mostly addressing consumers, even it's through distributors or OEMs.

The second segment has not changed. It's about Transportation, goods and people transportation. Specialties, it speaks by itself. And Polymer Composite Solutions, it's the name that we have shared with you since our last Capital Market Day in 2024. So what you will observe is that Consumer and Transportation segments performance has not changed.

Specialties now is made of 3 business lines: Mining, which represents 40% in terms of sales; Aircraft, 10%; and Beyond-road, 50%. Although Specialties are relative for the group with a 13.1% operating margin, this segment is clearly underperforming due to the weight and the performance of our beyond-road activity, which is impacted by the cyclicality of the Agro and the Construction businesses. And it's clearly, along with SR2 priority to -- the recovery of the performance of this subsegment is clearly a priority for the management of the company.

And you see that the Polymer Composite Solutions represents 4.7% of the group sales and nearly 7% of the segment operating income, and it's the most profitable segment in terms of operating margin with nearly 15%.

Florent mentioned earlier, the acquisition that we have announced in the past weeks, and that will be closed during 2026. In reality, the Cooley Group, the first acquisition has been closed on the second of February, and we expect TexTech and Flexitallic to close during the first half of the year.

If you take all these activities, they are all North American company, bringing nearly 2,000 new employees within the group, headquartered in different regions. And with an aggregate turnover of EUR 450 million, which is an increase of 35% for PCS, an average operating margin of 17%, so which is accretive and relative versus the existing Polymer Composite Solutions business for an enterprise value of around EUR 1 billion, which translates in a ratio of 11.5% EV/EBITDA and even 9.7% if we take the EBITDA of 2025 plus the synergies that we are expecting to extract in the coming 4 years. So not taking into account the growth potential -- the intrinsic growth potential of these activities.

So in terms of markets, coming back on -- particularly on the tire market, we are expecting a rather soft market over 2026 with probably balanced market between regional equipment and replacement, both for Truck and Passenger Car and probably a more optimistic picture for Specialties. In Original Equipment in Passenger Car, due to the fact that the incentive that has been implemented in China will have probably less effect in 2026, we expect the market not to grow at least in the first half and to be close to 0 in the second half.

So overall, a market that will probably be slightly decreasing versus 2025. And on the replacement market, we are confident that the market should slightly grow and particularly in the second half of the year. The 2-wheel markets should as well post a positive trend.

In the Truck and Bus, you see a very constructed situation on Original Equipment with still depressed H1, particularly in the North American market. We expect the OE truck market to decrease by 11% over the year and with the depressed first half and a slight recovery in the second half. And the replacement market should be more resilient over the year.

Mining should continue to grow at a mid-single-digit pace. We expect on Beyond-road to stabilize and start to rebound with the replacement market that should further increase. And we have a positive orientation for Aircraft as well as for Polymer Composite Solutions.

So in terms of guidance, as Florent shared already, we expect to deliver segment operating income at iso-scope and ForEx above 2025 and the free cash flow above EUR 1.6 billion before acquisitions. This guidance is relying on some key assumptions. We expect overall for the year to recover our growth in volume, probably with a flat H1 and a slight growth in H2 with a gradual recovery of Original Equipment market, particularly in B2B, and we expect this growth, thanks to an increased differentiation from innovation, both in terms of product and data.

We should have the tailwind of the raw material that will play for the full year. And we expect with the assumptions we have in terms of tariff and ForEx, and I might come back on that. We expect that we build our forecast on the ForEx situation at the end of 2025. So a USD 118 per euro and a stable tariff situation.

The tariff has impacted us at around EUR 250 million on the -- EUR 230 million in 2025 and should have an impact of around EUR 120 million in 2026. So taking into account all these assumptions and the levers and the willingness of the group to recover the growth path during that year, we believe that we can achieve these ambitions.

Thank you very much. And I think now we can open the Q&A session.

[Operator Instructions]

The first question is from The first question is from Akshat Kacker, JPMorgan.

Akshat from JPMorgan. I have 2 questions, please. The first one on capital allocation. Clearly, a greater intent from your side to give back cash to shareholders, almost allocating 100% of free cash flow between dividends and share buybacks. And you also mentioned in your prepared remarks about M&A still being a priority. So could you just remind us how you're thinking about your balance sheet going forward and leverage targets over the cycle, please? That's the first question.

And the second one is on your EBIT development in 2025. Now when I think about the 2 halves, clearly very different from each other, EUR 1.45 billion SOI in the first half, EUR 1.25 billion roughly in the second half. And I remember you telling us that second half seasonality is for better profits. And you talked about a large element of one-offs based on lower capacity utilization in the second half. So are you in a position to tell us what was the real underlying earnings of the business in the second half excluded for those one-offs? And how should we extrapolate that going into 2026?

So I will start with a few elements and Yves will complement. So on the -- first, on the EBIT development and the seasonality, sometimes H2 is better than H1 and sometimes it's the reverse. Now 2025 has been really special because of huge movements of inventories across the globe due to the situation in the U.S. And therefore, this has perturbated the normal cyclicality of markets.

So today, we don't anticipate the situation to improve in the market in the first semester. But we have already signals that it will be gradually improving. Based on the circumstances we see now, of course, it will be gradually improving. So we are confident, plus the fact that we have been very reassured by what happened in the fourth quarter of 2025, where we adjusted -- it took us some time to realign and readjust what we had to do. But all the strong assets of Michelin are still there and transformations are still ongoing and our capacity to grow is still there.

So we have tuned and we have adapted to the market conditions, and it has paid a dividend in the fourth quarter. So we are confident in our ability to deliver what Yves just said.

In terms of capital allocation, we have decided to say that our balance sheet is too deleveraged. And at 13%, we have a lot of flexibility. So of course, we anticipate the interest rates to decrease in the coming years. We have today debts that are at a very advantageous rate. So basically, we said, okay, we can use our balance sheet that we have generated today to distribute our dividends according to what we have said, plus to buy back shares because that is in the past. In the future, our balance sheet is still strong and is very low -- has very low leverage. So that's why we have said we can do everything without compromising our strategy. Maybe Yves, if you want to add.

And maybe to focus on this capital allocation, before the COVID, we used to land the year with a cash of around EUR 2.5 billion. With the COVID, with the huge inflationary pressure that we get in 2022, which was nearly EUR 2 billion on our working capital, we end with a much bigger cash at the end of the year. And we consider that it's not optimized to keep this level of cash. So that's why we need as well to come back to a more healthier level.

And of course, we are at 13% gearing. If I take the assumption of at least EUR 1.6 billion of free cash flow and I had the dividend of a little bit more than EUR 900 million plus the EUR 750 million of share buyback. It means that we'll increase at the end of the year, the debt by nearly EUR 1 billion, which is basically the enterprise value of the acquisition we just announced, which is not -- which will probably lead us to still land in the round of 20% or below 20% gearing. So we are still in a very healthy and solid situation.

And sorry, and to come back on the market situation, I forgot to mention that the fundamentals of passenger car, the mileage driven all across the world is very stable. So it means that the OE being down in most mature markets, what happens is the vehicle park is aging very fast actually. And it's the same situation in Truck despite the fact that the freight cash index in the U.S. is sharply down. But the vehicle park is still very much aging. So it cannot age forever. So at some point, the market will have to recover, and that's what we start to anticipate.

Should we think about any extraordinary costs in the second half result of what you reported in the second half in terms of sharp adjustments to capacity? Or do you think that second half result is a good number to look at when we think about what carries over to the first half of this year?

No, because you -- the second half, we had a very contrasted picture between Q3 and Q4. We have a very bad Q3, particularly in North America, which lead us to the profit warning in October. And we have a far stronger and far healthier situation in Q4. So when we look at the trend of Q4 and projecting Q4 in Q1, it makes us relatively optimistic on our ability to improve our operating margin in 2026, starting in the first half.

The next question is from Harry Martin, Bernstein.

The first question I have is on the price/mix performance. When we spoke at Q3, you didn't have a lot of confidence in Q4 price/mix, guided it to slow sequentially driven by what competitors were doing with discounting and imports. In the end, price/mix accelerated in Q4. So how did you achieve that? Which markets were better than the expectations? And how do you feel about the price premium for your products in the key segments?

And then I'd like to ask about the non-tire M&A as well. It would be good to hear some more of the rationale and how you go about choosing targets. Of the 3 acquisitions in the U.S., some seem to be more in quite technical products, specialty fabrics and coatings. Some you could say are a little bit more simple type products, seals and gaskets. So help us understand where in this very [ disparate ] industry, the real value creation opportunity is and where that genuine underlying demand growth is for these products?

So on the price mix, what happened during the 2025 was very stressful because we had -- Q1, we had to fix China; Q2, we had to fix Europe; and Q3, we had to fix the U.S. And so it moved around, and it put us in a very stressful situation. Basically, the tariff situation led us to -- as we are the leader in price, led us to adapt to the market conditions and to the tariff situation, which put us out of the market basically. So we were not according to the market situation -- to the market conditions. So we have adapted.

And as soon as we have adapted, immediately, the good strong fundamentals of Michelin came back. And that's why we have seen the price/mix came back. So when we are -- you're slightly depositioned, of course, we've lost share during those moments in the various regions. We lost share, but we recaptured those lost share very quickly towards the end of the year because we came back to what is acceptable by the market. And of course, now we have -- we are much more agile, and we can adapt to any market conditions and any market situation much more quickly than what we were able to do in the past. So we have done a lot of work on this subject. So we are now much more agile. And maybe Yves, on the Non-Tire.

On the Non-Tire activity. So how do we choose the targets? We have a team in Polymer Composite Solutions, which is dedicated to this segment. First, some targets can come from the business units we have already in our portfolio and who has a very strong knowledge of their ecosystem. But we are as well studying potential targets that are offered to us or that we identify.

The criteria have not changed versus what we shared with you during the May 2024 Capital Market Day. We look at critical applications where generally the value of the product offered by these companies is relatively small versus the value of the entire system, they contribute to move or to make functioning. Then we look at companies or activities where we consider that we have a parental advantage in terms of research and development.

As Florent shared at the beginning, we look at are we able with our capabilities in terms of material science to enhance the performance, to reduce the cost, to improve the sustainability of the product that these companies are offering. And then, of course, we look at the financials. We look at the growth also potential. Are these businesses, these companies in segments that are at risk of commoditization or not? What are the underlying growth levers?

So that's why we look at that very carefully. It took us 2 years basically. In 2023 and 2024, we did not achieve -- 2023, we did the FCG. But 2024 and 2025, we did not achieve any major acquisition. It's just at the very end of the year and early 2026 that we are able to communicate. So it shows that we are both prudent, but as well, we want to invest where we can really bring value to the customers and, of course, to the company and our shareholders.

The next question is from Martino de Ambroggi, Equita.

Two more questions on the Polymers division. So what's your best case scenario in 2, 3 years' time? And under the current perimeter, you used to provide a medium, long-term target in terms of profitability for your divisions. Now we have a split of the specialty. So could you provide any target for the stand-alone Polymers division in the current perimeter?

And the second question is on the financial leverage because you mentioned we have low leverage. But what is the maximum amount of cash out or debt to EBITDA? I don't know, just to understand what is the firepower you are available, you are comfortable with in case of additional M&A?

First question, and Yves will probably take the second question. So on the first one is -- so in terms of profitability, the Specialties today is way below where it should be because of the weight of our Beyond-road activities that are having a tough time. So we are confident that the Specialties business should be at a much higher rate because Mining and Aircraft are showing that it's very strong.

And if we look at the Polymer Composite Solutions, what I've said in my introduction was it is -- it should be in excess of 15%. So like the Specialties, this should be highly relative in terms of operating income and even also in cash flow generation because they are light -- the Polymer Composite Solutions are light in assets, compared to the Tire activities. So that's why we have chosen to get there.

Now also the part of the synergies, we have most of the time, small cost synergies, but high -- and we have demonstrated that with Fenner and also we are demonstrating that with the FCG, we have high revenue synergies related to the technology we can bring in the market we get in, like Yves just mentioned. So in terms of profitability, we have said PCS should be at minimum 15% and giving us growth for the group, and we intend to grow that share.

So in terms of leverage, first, I did not comment it, but all the rating agencies have confirmed our rating, which is basically A with a stable outlook. And we know basically that we can increase our debt by a few billion, EUR 3 billion to EUR 4 billion without impacting our rating. So it's the first answer. We have the room to stay strong investment grade with a strong investment-grade rating while spending -- increasing by EUR 3 billion to EUR 4 billion our net debt.

And I think we have demonstrated so far that we make moves that are interesting for the shareholders in the long run.

The next question is from Thomas Besson, Kepler Cheuvreux.

First question, could you confirm that in Q4, both in SR1 and SR3, your volumes were positive and also confirm that we should expect these 2 segments to have positive volumes for 2026 so that your group volumes are effectively positive for the year? That's the first question.

And the second is 2 small topics on modeling. There's been, first, much stronger contribution in the P&L from your associates. Could you explain why and what we should expect again in '26 for the associates line? And the second small modeling question is your CapEx has been a positive surprise in '25. The group has clearly shrunk in terms of volumes over the last 3 years. Could you expect that you can stay at a relatively lower CapEx than what was projected at the last CMD in 2026? Or is it -- was it just a one-off in '25?

So on the volume, Yves was clear on that. We have grown at the MICHELIN brand, especially on replacement markets in SR1 and SR3. Now OE is still depressed. So we didn't grow at OE specifically, but we have improved the performance at OE in SR1.

But to answer precisely to the question, our volume both in SR1 and SR3 were positive in Q4.

Now in terms of CapEx, we did not spend exactly what we wanted to spend in 2025 because of internal thing. It's not -- we didn't drive specifically CapEx to shrink that much. So we have said we should be in the neighborhood of EUR 2 billion, EUR 1 billion because we want to improve the ergonomics and especially the productivity everywhere. So we still have a lot of things to do to complete our productivity effort. So that's why we maintain that level. But we have almost 0 capacity investment.

So regarding the JV and Associates, we had in these categories different kind of activities. We have some mature activities such as our distribution JV and Associates and the activities that are linked to the natural rubber plantation and transformation as well as one -- we have as well the medical joint venture, Solesis, that we have put in a joint venture few years ago.

These companies are generally positively contributing. And in the case of TBC, there was some additional contribution due to the fact that TBC concentrate itself on its core business, which is mostly wholesale and sold first, its retail business in -- company-owned retail in 2023 and more recently, its Midas franchise. So there was, let's say, an extra contribution.

On the other hand, we used to have in this segment also some technological ventures such [indiscernible] and Symbio. Symbio, as you know, due to Stellantis' decision to withdraw from the hydrogen value chain has to bear some heavy restructuring cost in 2025. So it has negatively impacted. But when we look -- looking forward, this negative contributions are now over. We have -- we are still the Symbio shareholder, and we have a plan over the next 3 years. But the cost of the next 3-year Symbio turnaround plan is already embedded in our 2025 contribution from JV and Associates. So looking forward, we should have, let's say, the natural recurrent contribution of distribution, medical business and natural rubber value chain.

The next question is from Monica Bosio, Intesa Sanpaolo.

I have 3, if I may. The first one is on the price/mix for 2026. If I'm not wrong, for 2026, we should see mostly a mix effect rather than price. And if I'm right, which is the division do you expect the mix will be -- which division will benefit the most from the mix in 2026, if I can ask? And the second question is on the Truck business. I understand that the company is implementing actions to make the Truck Tires less related to the cycle. So considering this action, what do you see as a sustainable margins for this area? And very finally, the last question is on the SR3. Are you planning any specific action regarding the manufacturing loading rates in beyond tires? And if so, what could be once again a sustainable margins for this area?

So on the price/mix effect, you're right, it's mainly a mix effect, but the mix is composed of many different dimensions. You have the geographic mix, you have the division mix, you have the product mix, you have the segment mix. There are many mixes. So it's -- unfortunately, we don't have the time to go into the details of the type of mixes.

But yes, on the other one, the price should be -- it would be more a mix than price. But remember, we have a lot of index businesses and the raw materials started to go down, and there is a lag between -- in the index business, the lag time before we see the decrease in the cost and before it translates into the price. That's what you start to see in 2026. But we know that -- we know very well how to manage pricing, and we understand what are our input costs. So we will be very agile and adapt.

In SR2, we have done a lot of restructuring. We forgot to mention that we have -- most of the restructuring in SR2, especially industrial restructuring is behind us. And in 2025 has been affected by the Cholet closure specifically, that has -- a portion of the SR2 business has been heavily affected by that closure. This is behind us now.

So it's very easy. Yves has been very clear. In the down cycle, we want the margins of this business to be not destroying value and in upward cycle, creating value. That's where we -- that's how we want to drive the business. And when we look at Beyond-Road, the learning rates are low because of OE. And we know in this business, very cyclical business, when OE gets back, then we almost immediately fall into shortfall in back orders and we lack product because the ramp-up is going to be extremely steep. So what we are doing is we are flexing our industrial capacities right now. So that in terms of planning, we are creating -- we are very innovative in the way we can flex these plans so that we are less sensitive to the market fluctuation. But then we cannot give you more details on that.

The next question is from Stephen Benhamou, Bank of America.

I have 2 questions, please. The first one is on the road map. So can you please give us more detail regarding the magnitude of the raw mat tailwind that you anticipate for 2026? And what's the expected logistics and wages cost inflation that you also anticipate? And what's the phasing between H1 and H2? This is my first question.

My second question is about the share buyback program. Can you please confirm that you said that you're committed to a program of EUR 750 million this year? And what about the remaining potential portion of EUR 1.3 billion? Should we expect a balanced program between 2027 and 2028? And last question is about your potential new road map. When do you expect to present this new road map?

Okay. So I will take the last portion. Actually, it's 4 questions. But -- so very quickly, we have said it's up to EUR 2 billion in 3 years on share buyback. We have said we will launch EUR 750 million, and we will look where we are at in terms of cash generation, our balance sheet and our acquisitions. And then we will see.

On the new road map, the new road map, of course, we are finishing -- we have to finish 2026 and 2026 just started. And before we come back to you on the CMD to say, okay, what is our road map from 2027 up to 2030, and we will give you that road map at that time. And maybe on the 2 first questions.

Yes. So on the raw material, we estimate that we'll have a favorable effect around EUR 400 million in 2026 with a negative logistics and wage inflation in the range of EUR 220 million. Today, it's around EUR 180 million of wages, labor cost and around EUR 40 million in logistics. Don't forget that we'll have as well EUR 120 million of the 2026 effect of the North American tariffs that we hope to be able to transfer to the market, but we have seen 2025 has shown us that it's not always a long and peaceful journey.

Okay. I think we have to take the last question.

The last question is from Christoph Laskawi, Deutsche Bank.

Sorry for being relatively short term. So good you commented on a very negative Q1 in volume terms, down 10%. Given that you've essentially now repositioned in China, in Europe and the U.S., could you comment where you expect Q1 volumes roughly to be for the market? And if we should think about your performance be rather in line with the market or slightly different to that?

And then just second question, really on the PCS business. Do you see after the 3 transactions year-to-date, the business in a place where you want it to be? Or would there be further white spots that you seek to add?

So I would not comment on what our competitors are saying. That's down to their business. We do not see the same thing, and we expect to bring, especially the MICHELIN brand where it should be -- and where it has been and where it should be, and we have every signal that it should be the case. So our anticipation in the first quarter, we don't see the market being down 10%. So I will not comment further on this. And maybe on PCS?

And maybe inventories to complete the answer to the first question, inventories in distribution for our product is at a healthy level...

Everywhere.

In all segments.

For PCS, yes, we are constantly looking at potential opportunities. But as you know, as I explained, the deal can take up to 18 months or 2 years. So the teams are working on some deals. But to tell you when they will be finalized, I don't have a crystal ball because it depends as well of the willingness of the seller and of course, our ability to -- as well to well understand. I mentioned the question of the parental advantage to make sure that we have a real parental advantage. So that's why we take the time we need to make sure we are making sound decisions in terms of acquisitions.

Well, thank you. This concludes our call. Thank you very much for attending. See you soon.

Thank you. Bye-bye.

Ladies and gentlemen, this concludes today's Michelin conference call. Thank you for your participation. You may now disconnect.

Good afternoon and good evening. As a CEO, I wanted to introduce this conference and stand in front of you at this challenging moment for Michelin.

On Monday last week, we issued a profit warning. It came late in the year and with unexpected magnitude. I fully recognize it. I owe you clarity to help you understand what led us to warn this way.

I won't elaborate much on the highly uncertain business context. You are fully aware of it. My purpose today is to share more of what is specific to us.

First thing, until we got September financial results, we were in line with our expectations. But September business took a hit and forced us to drastically adjust the year-end forecast.

What hit us had mostly to do with our North American business, which represents around 40% of our group sales. Two major causes. The first one, we decided to stop our operations with the largest tire wholesaler in the U.S. as of 1st of July. This decision led to important volumes missing in Q3 versus last year, as we have been redirecting sales flows to other wholesalers. This one-off transition period should be behind us by year-end.

Second, we lost market share due to the positioning of our offerings. We passed price increases at OE to restructure our margin and on replacement markets to offset cost inflators starting with raw materials first, then EUDR and then tariffs. This resulted in a decrease of our market share over Q3. For the replacement market, we took the lessons. We have already taken steps to regain these lost shares.

Now if we consider the current situation from a broader perspective, it results from a combination of our strategy being implemented and the context in which we operate. Our Michelin emotion 2030 strategy is being deployed. And I have no doubt that it will lead to substantial value creation for the company and for our shareholders.

Deploying our strategy leads to resolute decisions and actions, and I take full accountability for these decisions, even though some of them conflicted with the current context.

Let me give you a few examples. We exited several value-destroying market segments, which logically led to negative volume impact. In parallel, we restructured our pricing conditions with OEMs to reach a better balance. We have done it over the past 2.5 years, margin got restored and volumes got rebalanced as well.

Context-wise, these 2 key measures came at an unfortunate time because there are negative volume impact accumulated with the widespread drop of OE demand across industries passenger car, truck, agriculture and construction. This resulted in low-utilization rates for our plants and low absorption of our fixed cost, which negatively impacted our segment operating income.

Another example, we restructured and we are still restructuring our manufacturing footprint and global capacity to adjust to a transform competitive environment and to prepare for the future. We announced 12 activity closures in the past 2 years. This is a lot in a very short time, and it penalized our financials before we will get the benefits from now onwards.

Last example, we were resolute on passing through cost inflators to the market to properly value our technologies. In a market disturbed by overcapacity and low overall demand, this was detrimental to the competitiveness of our offers on the replacement market. These examples show how some strategy-led decisions have interfered with context.

Let's be clear, I have no regret in driving those changes as they are making Michelin stronger and prepare it for the upcoming demand when OE markets rebound and vehicle fleets are renewed.

On the operational front, our teams are reacting and fighting in this context with numerous successes to name just a couple. In Q3, specifically, besides North America, group tire sales have posted growth in volume. In China, we have been able to tune our positioning last year, and we will deliver double-digit growth in 2025.

Our group has solid fundamentals, remains highly profitable and generates significant cash flow. Our balance sheet is strong and provides us with independence and room for maneuver. Our cash generation in 2025 is sufficient and will allow us to complete our share buyback program.

As a conclusion, Michelin is emerging stronger from the current turmoil. We are looking ahead to 2026 with confidence. Thank you for your attention and your long-lasting support. I now hand over to Yves for details on our sales development and our outlook for the near term.

Thank you, Florent. Good evening, ladies and gentlemen. So I will drive you through our sales of the third quarter and, of course, the bridges related to our new full year guidance.

So regarding first the context, if we look at the selling market at the end of September, they posted a slight growth in the segment one, plus 2% in OE, plus 1% in replacement. We have already commented in the past that the replacement market was mostly driven by flow of imports before the implementation of tariffs as well as the flow of imports in Europe before the implementation of duties for anti-dumping that the European Commission is expecting to officialize by the end of the year.

During the Q3, we have seen more or less the same trend, a little bit more dynamic original equipment market. And regarding the replacement market, the selling was probably better in Europe, and it's clearly the import from China because it has been expected that the tariff following the anti-dumping measures will be implemented probably with a retroactive effect from 1st of October, and a negative minus 4% replacement market in the U.S., probably the consequence of the implementation of tariffs from the third quarter.

On the truck side, the market is still very negative in original equipment, minus 4%. You note that the European market is nearly flat. We recorded a slight recovery in Q3. When the North American market is still very negative at minus 20%, it was minus 24% for Q3 and even worse if we look at the Class 8 segment.

On the replacement side, the market is at plus 4%. Here also probably triggered by the growth of imported brands, both in Europe and North America.

As far as the specialties are concerned, the mining business is steady. The Beyond Road continued to show a negative trend in OE, particularly driven by agro and the North American agro market is partially impacted by the implementation of tariff for the import of soya in China from U.S.

Replacement market posted slight growth and the other markets, such aircraft and polymer composite solutions are growing slightly as well. So that translates in an overall decrease of our volume by 4.4% at the end of the 9 months, 2.3% coming from the currency and 2.1% from our activity, meaningless scope effect, volume minus 5.5%, price/mix plus 3.2% and equally shared between price and mix. An entire business, which contributed positively to our sales at the end of the 9 months.

Zooming now on the third quarter. So you observed that besides the currency, the trend is very similar with the 6 previous months. The currency effect is huge, minus 4%, mostly driven by the USD. And as far as the other elements are concerned, meaningless scope effect, minus 4.5% of volume. And Florent has commented it, it's, in fact, nearly minus 10% in North America and slightly growing volume in the rest of the world.

Price/mix is less favorable, plus 1% in mix, plus 0.5% in price. The mix effect is exacerbated by the regional mix effect as traditionally, our North American business posted a higher margin than the average of the group. And entire business contributed by 0.3 points at the group growth in the third quarter.

Now zooming on the volume. Here, you have the picture of the first 6 months on the left and third quarter on the right of that slide. As you can see, our volume dropped during Q3, mostly in North America. So it represents nearly 5-point of our volume lost during the quarter, mostly triggered in SR1 by the wholesale shift that was explained by Florent and in SR2 by the original equipment drop.

We are seeing as well a negative trend or negative outlook of fleets in the U.S. with the level of freight, and we are included in the deck, in the annexes slide with a trend of the freight. We are seeing the freight at a very low level in North America for the third quarter.

If I look at the rest of the world, so OE outside North America is at minus -- slightly minus 1% for the group, here mostly driven by the beyond-road activities and replacement post a positive without North America, positive volume thanks to our mining business, our aircraft business, 2-wheels and the China region.

So now zooming on the guidance for segment operating income for the full year. So versus our previous guidance, which was issued at the end of July, so we dropped the guidance from above EUR 3.4 billion to in between EUR 2.6 billion and EUR 3 billion.

Basically, and we provide here some range, which help you to understand why we have communicated on such a wide range at this stage of the year. We are still the unknown of what is going to happen in North America and on the truck original equipment, which is not only North America, it's Europe as well.

The Brazilian market has been heavily impacted by the 50% tariff implemented by U.S. and it's weight down on the overall economy and the volume of freight.

Regarding the mix -- price/mix, so we expect price to be slightly positive during the Q4, but the mix is impacted by the geographical mix as well by the implementation of the tariff -- sorry, and of the EURD.

Raw materials should have a positive effect, but we have less -- I mean, we have less unknown. Regarding the raw material, it's pretty consistent with the hypothesis we had at the end of July. And regarding operating performance, it will be impacted from the tariff, from raw material, cost of goods sold and as well as operating efficiency, because our factories are running with quite a low level of activity. Year-to-date, we were at around 74% for SR1, 72% for SR2, our agriculture tire factory are running below 50% and our construction and earth-mover around 73%. So its impact as well the efficiency of the factory, not only the fixed cost absorption. And there might be some upside on the SG&A side. That's why we have put a range between EUR 0 million and EUR 100 million.

Now looking at the bridge, what should be the bridge at the end of the year versus 2024. So most of the loss will come from the volume. And in the volume, we have, let's say, 2/3 of volumes and 1/3 of fixed cost absorptions. Price/mix should partially but not totally compensated the volume effect.

In the raw material, we have -- which is pretty consistent, again, with our previous expectations, we have around -- close to EUR 100 million of EUDR effect. In the operational performance, so in the -- in our supply, logistics and manufacturing costs, we had the impact of tariffs. We assume that for the -- let's say, since first quarter of 2025 till the end of the first half of 2026, we will have around EUR 500 million of additional tariff cash out, EUR 300 million should impact our P&L in 2025 and around EUR 200 million at the beginning in the first half of 2026.

And we expect the currency effect to be in the range of minus EUR 180 million, minus EUR 200 million at the end of the year with an average euro-dollar parity at 1.13. And here, again, to explain the range of SOI lending, we try to help you to clarify this lending.

On the volume side, our expectation today is to be at minus 3% during the fourth quarter. But depending on the evolution of the contractor, it can move between minus 1% and minus 5%. There is as well some volatility in the mix and a little bit on the prices. And we consider as well that there is some uncertainty on the operational performance and others. So clearly, there is some opportunities.

Our product plan, we have renewed a large part of our offer in truck tire this year. We have launched a few new iconic range in passenger car tire, the Primacy 5, new CrossClimate 3, the CrossClimate 3 Sport. So it's clearly an opportunity. Our dynamic in China as well as opportunity and we believe that we have room for improvement in the management of our SG&A as well.

On the other hand, tariffs are still an uncertainty. Till yesterday, we were not clear about a 25% duty on the truck that has been decided from 1st of November by the U.S. We did not know if it's included or not the part, and if it was included or not USMCA product. In fact, we have learned yesterday that it does not include USMCA product.

We have -- as well the trend of the original occupant market are still uncertainties. And we have the question mark on the risk side about the GDP evolution and the consumer behavior in North America. And the pace of recovery of the OE truck market in Europe, which is in Q4, slower than in Q3. So all of that give you this EUR 400 million range uncertainty.

If I look at the market on the Q4, here you have for each market, the 9 first months and our Q4 expectations. On SR1, we noticed on our side, a little late start of the winter season in Europe. And probably on the original equipment side, we will have a basis of comparison in China, which will be less favorable as the Chinese government started to implement incentive for acquisition of BEV and hybrid end of the third quarter 2025.

On the truck side, OE should still be very negative, particularly driven by North and South America. And the replacement side should be negative as the market -- the selling market, after the tariff implementation and potentially the implementation of -- after the tariff implementation in North America. On the specialty side, we don't notice a huge change in the market evolution versus the 9 first months.

So as mentioned, we updated our guidance for our segment operating income one week ago with probably less -- we're less pessimistic on the free cash flow than on the segment operating income because we are managing our CapEx in the lower range -- in the lower part of our range of CapEx for the year, which means around EUR 2 billion. And we are going to as well record positive contribution from our working capital, partially on the inventory side and the positive contribution of our joint venture, as it was already the case during the first half of the year.

Now looking for 2026. So of course, we will tune our guidance in February with the full 25% full-year disclosure. But we already know that we'll not be able to achieve our '26 ambition that was shared during the Capital Market Day to reach EUR 4.2 billion at 2023 ForEx and 14% operating margin.

What we already know regarding 2026, probably 2 negative impact the tariff that I mentioned, we should have an additional EUR 200 million and a negative impact on the price side, coming from the raw material closures adjustments. But on the other hand, we'll have some tailwinds, the raw material that will -- whose prices are further declining. The -- most of the restructuring savings should be achieved by the end of 2026. As at the time we are speaking, most of the announcement made has been concretely achieved. I mean that the factories have stopped operations, except the two last ones that we announced during the first half of this year. We shall see a further SG&A improvement and hopefully, a slight volume improvement at ISO market condition.

On the free cash flow front, we maintain our ambition to deliver EUR 5.5 billion of free cash flow over 3 years before acquisition, thanks to some effort on our CapEx, the continuous improvement of our inventory and our working capital. So in this context and following Florent's comments, confident in our cash generation will speed up our share buyback program with an additional EUR 400 million that we are going to implement by the end of this year.

So basically, that's all for the presentation, and I think we can now open the Q&A session.

[Operator Instructions] The first question is from Thomas Besson of Kepler Cheuvreux.

It's Thomas from Kepler Cheuvreux. I have a couple of questions, please. I mean you have just said that you're going to implement EUR 400 million incremental buyback. Could you update us on where you were -- I think you had launched a plan last February EUR 4 billion, down EUR 500 million last year, and you were supposed to do EUR 250 million this year. Do you therefore mean you're going to do EUR 250 million plus EUR 400 million or EUR 400 million on top of the EUR 250 million you had in mind?

And could you indicate whether we may assume as well that you will maintain dividend given the strength -- the confirmed strengths of your cash generation and also confirm asset disposals? So that's the first question on capital returns.

The second question really is about the relative lack of visibility you still seem to have and allowing us to better understand what drives your relative performance versus end market compared with some of your peers. So I mean, you gave us a very wide range at the end of October for Q4. And we have seen Michelin over the last 2, 3 years, showing almost consistently decent underperformance versus the end market in the SR1, for instance. In 2025, you seem to largely underperform in SR2. We've seen Continental issue a reverse warning while you were issuing a warning, with them having as well some exposure to the truck market, you mentioned as a key reason for your warning.

So my second question is basically, why don't you have more visibility? And could you help us understanding when we should expect Michelin to be closer to its end markets in its various segments?

So I will give you some elements to answer, and then Yves will complement. So as far as the dividend for the end of this year, we have a dividend policy, and we have no reason to change that dividend policy. And of course, this is a discussion we will have with our Board, and we will discuss the details early next year.

As far as the buyback, it's on top of what we have done already. And we had done around a little bit in excess of EUR 750 million and the EUR 400 million comes on top of that.

Now the underperformance of our competition, and you mentioned Continental, we have several leads to that. As I was explaining, we have been undertaking a heavy restructuring of our plants. That has weighed a lot in our results in 2025, especially in the segment 2, on the truck operations because we had to ramp down and ramp up some activities. Our competition didn't have to do the same thing.

The second restructuring we have done is our structural pricing at OE and especially in North America, where we were over-indexed in market share at -- with OEMs in North America, and our prices were not at the adequate level. So we have done what we had to do on price, but in a market that has reversed sharply certainly, it has created some issue, and we've lost share with those OEMs. Half of those share loss were expected and not wanted, but we were anticipating those, half were not expected.

I think we have adequate margins now at OE, and we just have to wait for the market to get back to a more normal level. And of course, the market share loss has been opportunities for our competition. Of course, now under what conditions they took them is down to them.

Now we are also in terms of business, we have a big activity in Beyond Road. Beyond Road, especially in agricultural, agricultural in North America is heavily depressed. And we have 2 activities now. We have trucks systems and trucks. And we have a high performing for high-power tractors in North America. Right now, this business is heavily depressed. I don't think our competition has the same exposure to that business. And for us, it is still an area of focus to restructure our go-to-market and what we do with this business. And especially the OE portion in ag is heavily depressed. So these are some elements to help you understand why we have seen this difference in performance versus our competition. And maybe if you want to add...

Maybe on the visibility, why it's not higher at the end of October for Q4?

I mean we have had so many surprises since the beginning of this year. So I prefer that we stay cautious on what we can expect. Maybe we'll have good news. Maybe we'll have bad news. I don't know. I mean, really, this year has been really intense in terms of surprises.

Yes, just an illustration, our South American operations were trending very well during the first, let say, 8 months. And then the decision of 50% implementation of tariff from U.S. have completely turned the market upside down.

So really -- yes, so I wish I would have the clever glasses from others that are able to predict what will happen in the Q4.

The next question is from Harry Martin of Bernstein.

I'll start with a question on the U.S. on the volume side. I mean, can you help us understand what the immediate production actions that you're taking and some of the plants like the Truck and Bus segment in the U.S., where original equipment production is set to be down double digits for many more months before getting better?

And then a related question to this is, should we expect that the SOI drops are on volumes this year should be slightly better than normal given that the declines in 2025, a focus in North America where cost flexibility is usually higher than somewhere like Europe.

And then the second question, just about the pricing in the U.S. I mean you have a long track record of pricing, cost inflation and Florent, as you mentioned, the ability to earn a price for your technology. So it's been surprising from the outside that it's been pricing stepping backwards in Q3. How much of this environment do you think is transitory around dealers buying those cheaper tires ahead of the tariffs coming in, overcapacity? And should we expect a full price pass-through that sort of roughly EUR 300 million of tariff costs in the medium term?

So some element of answers and I will leave the rest to Yves. So on the U.S. volume, we are a net importer of truck tires in the U.S. from various parts of the world. So in the low level of markets, what we are doing is we are loading better our plants in the U.S. But it takes a while to adjust the global flows so that we reduce the imports from other countries to load better our plants. We will have this effect -- we have better effect of this happening in the fourth quarter and going on in 2026.

So the U.S. volumes are heavily depressed because -- but it's -- we consider that as temporary because we think the OE truck product producers have built inventories in preparation of a new legislation, new regulation on engines in the U.S. That regulation has been postponed. So it means that the truck OEMs have excess inventories of trucks on the yard, and they have to approach that, but that is temporary. So that -- this is depressing further the volume, but we think it's not structural to the market.

Now when you assess the pricing environment and when you look at what is happening also in the market, when we look at how the market is assessed, it's based on sell-in activities and sell-in has been mainly driven by cheap imports from Asia into North America in anticipation of tariffs. So the market has been artificially inflated by this phenomena. It happened -- the same thing happened also in Europe and in other parts of the world.

So as far as the pricing environment, our price premium continues to be what it used to be. In the long run, either the entire industry accepts to drop their margins or that will go into the market. When it will happen, I don't know. We've tried our bit. And then on the drop-through and...

Yes, maybe on the drop-through, so Harry, you clearly see it very well the -- our North American operation has been much more impacted in Q3 than during the first 6 months. Accordingly, we have lowered the capacity utilization in the U.S., where we have the higher -- probably a higher fixed costs so the less fixed cost absorption. So that's why we are probably -- we have recorded a higher drop-through in this year. Conversely, when the market will rebound and we'll be able to reload our U.S. factory, it will have a positive effect on the drop-through.

The next question is from Akshat Kacker of JPMorgan.

Akshat from JPMorgan. I have 3 quick ones, please. The first one on the overall inventory situation in passenger car and trucks. I think you are frequently highlighted the high inventories of budget tires and anticipation of those anti-dumping or import duties in different regions. Could you just talk about how those overall inventory levels look like in these different markets? And how long do you think it could take to normalize that based on current sell-out trends? And if you still expect continued low fixed cost absorption and low-capacity utilization going into the first half of next year? Just trying to understand the overall inventory situation for your business.

The second question is on the underlying profitability in the second half of this year. And thanks for explaining all the negative surprises that you've had in the last months, specifically. So when I think about all the actions that you mentioned, you've talked about inventory management. You've talked about sequential price actions. You have talked about low fixed cost absorption. And I know it's very difficult to answer, but can you quantify the extent of one-off that you are seeing in the second half of this year, which should not carry into 2026, please? Those are the 2 questions.

As far as the quantification, I have my personal calculator on my left. So I will leave Yves to answer on this. So as far as inventories levels, if we look at our inventory level is adequate at Michelin brand, adequate to low level, so we are well placed. Unfortunately, inventory levels at the dealerships are at a high level, almost everywhere because of -- especially in the Americas and Europe, because of this phenomenon of the flow of budget tires in every categories.

So now how long it will take to purge? Several months. We don't know. It depends on the level of activity overall. So back to what Yves was mentioning, for example, if I look at the U.S. Right now, the tons to be hold in the U.S. is decreasing. So this is not helping to purge excess inventory. So we just have to wait for the economy to stabilize further and to be at a higher level.

If we look at South America, Yves mentioned it very well, it was -- the economy was growing nicely up until -- in our business as well was growing nicely up until the 1st of July, and then suddenly in July, a change in the tariff. And suddenly, the economy in South America is having more difficulties. So of course, it has rippling effect on the truck activity.

In passenger car, what we see is the overall mileage driven is steady on the world, slightly growing, but steady. What is the real phenomena on passenger car is the aging of the vehicle park, that is aging very fast. So how long these phenomenons -- those phenomenons are going to last? I don't know because we consider that what is happening right now is not normal. These are not normal market conditions.

And then on the underlying earnings and the quantification is pretty tricky.

Yes, it's very difficult to quantify what we can call one-offs because it's -- we are more facing a very volatile environment. We -- and as you have seen during the presentation, every element of the bridge have some -- of course, the volume wider and the COGS because of the tariff as well wider, but every element of the bridge had some element of uncertainties. So we are more trying to build up our forecast on risk and opportunities based on the central scenario.

And then it's very difficult today to decipher what we'll have. We know, for example, that there will be some element will have positive effect in 2026. I was mentioning the raw material cost.

On the other hand, we know that the tariff started during Q2 and Q3, implemented mostly starting from Q3. And so it will have a effect over the first half of 2026. And hopefully, at one stage, it will start to normalize, providing they will not be renegotiation of the USMCA agreement. So that's the world we are living in as of today.

Just as I was listening to Yves, something came to my mind is that, for example, if I look at truck, in 2025, especially in the first semester, we had to -- in the first 9 months, we had additional cost due to the restructuring of our plants. And we had the ramp down and ramping up. So this could be considered as a one-off. But since this summer, we know that we have to reshuffle some of our flows because of what is happening in the U.S. and in other parts of the world. So suddenly, those one-offs are going to be offset positive one-off. The benefit of restructuring is going to be offset by additional costs just to reshuffle our flows. So that's why it's tricky to answer more precisely on this.

And what we can say is on particularly on the truck side, we have rightsized our manufacturing set up, and it is now in condition to be able to better react to an uplift in volume, partially when the original market will start to rebound.

Just one quick clarification. Have you built in any bonus provision relief in the second half of the year within your guidance, please?

Yes. Yes.

The next question is from Monica Bosio of Intesa Sanpaolo.

I have three, if I may. The first one is on SR2. In the first half, the margins for SR2 set at 5.5%. We know that the company does not guide at the divisional level. But on the back of the fixed cost absorption, which I can imagine is very low, in H2, can we imagine an operating loss for the SR2 division in the second half of 2025? Or are you still confident on the back of the restructuring that the division could achieve the breakeven?

The second question is on the potential savings from restructuring. We should see another batch in the fourth quarter. But can you also provide us any indication for 2026?

And very last is on the Beyond Road tires. I know it's difficult to answer. The visibility is very poor. But what is your outlook for 2026 across the quarters? For example, could we expect that positive volume trend Beyond-Road tires already in the second quarter? Or do you see volumes turning positive only from the second part of 2026? Just your flavor.

Yes. So we do not anticipate at this stage operating losses in the second half of 2025 for SR2. We had, in the first semester, some restructuring cost plus low volume, but we don't anticipate that. And restructuring, of course, has helped. And as Yves mentioned, we have speed up some restructuring. So we'll have the benefit sooner in our bottom line. So seen from today, we do not anticipate operating losses in SR2.

Now I will answer on the Beyond Road. Beyond Road typically, so looking at this very interesting environment we are in. Because of certain change in the tariffs between U.S. and China, China has started to stop buying American soybeans. Unfortunately, American soybeans, they are very large farms using very heavy tractors, and they consume a lot of truck systems. So now would it last? I don't know. Will those farmers find other markets than China? I don't know. It depends on the relationship between U.S. and China.

Now unless something changes there, we don't foresee a rebound in the agricultural activities in the near term. So really -- and we are over-indexed in truck systems. We have a very high market share in truck systems. And the truck systems only work on heavy tractors, especially in the U.S. and same for some of our technical tires in agriculture.

So our -- so far, our discussions with our specialized teams on this tell us maybe in H2 2026, maybe, but really you see things are moving very fast, and we don't know. It's difficult to have a good visibility. But you're right, for Beyond Road, these are very important markets and very, very lucrative markets.

That's probably Beyond Road. For the overall SR3, taking into account the growth in aircraft and in mining, we should be at a flat volume very soon and growing volume probably in first half of 2026 because of the other activities.

As far as -- regarding your question, about restructuring, we have -- we expect full savings of EUR 200 million over 2025, of which at the end of September, we have already recorded EUR 120 million, EUR 130 million. So we should have a further EUR 70 million in Q4 and a little bit -- probably a little bit more than EUR 100 million additional full year 2026.

If I may just a quick follow-up on the North American activities. On the back of the scenario, are you planning any further restructuring in this case, in Beyond Road tires? Or are you just waiting and see what's going to happen?

We are reengineering heavily our business activities in the Beyond Road in general, and we will let you know when we have made a decision.

And we completed during the quarter, the sales of our bias tires and small trucks activity to the CEAT group.

The next question is from Martino De Ambroggi of Equita.

Three questions, focusing on free cash flow. You mentioned Yves, CapEx will go down. Could you remind us what is your best estimate for '25 and '26? This is the first.

And the second always on free cash flow, is the cash out for restructuring. If I remember correctly, you mentioned EUR 400 million in the previous call for '25. What could be your assumption for '26?

And the last question is on the pricing. So I know very well, you don't make any more specific comment on prices. But could you elaborate a general comment on what is the pricing at sector level considering the low volume environment? Is there any big change that you see in the landscape? Or everything is similar to what used to be in the past?

On pricing, we will make no comment on the -- even on the landscape or we have said what we had to say on prices. Maybe for the CapEx...

For the free cash flow. So the CapEx, we will land probably slightly above EUR 2 billion. You know that we have a range between EUR 2 billion and EUR 2.4 billion. We were nearly between EUR 2.1 billion and EUR 2.2 billion last year. So we are piloting at the lower part of the range. And it should be similar in 2026, given the context we are operating in. On the restructuring side, we are expecting -- the figure has not changed, the EUR 400 million for 2025 is still relevant. And for 2026, it should be lower, probably around EUR 300 million.

Okay. And networking capital, is there any specific trend we should be aware of?

No, networking capital, we have 2 -- I will comment on 2 aggregates. First, on the receivable, we have a slight negative effect of our mix in the U.S. because of the change of wholesaler and that impacts slightly negatively our term of payment. But overall -- if I look at the overall working capital, our inventory are going down because we -- it was something that we shared during the CMD last year. We have a plan to better manage our inventory looking at the full process from the forecast from the sales team up to the way we are managing our inventory in our warehouse as well and the way we deploy our inventory over a given territory. Having said that, the only downside we can have on the inventory side is the impact of the tariff in the cost -- in the inventory level in the price, which is slightly negative. But on the other hand, there is currently a decrease in raw material prices, which should lend to a decrease of inventory price as well.

The next question is from Michael Aspinall of Jefferies.

Can I just go back to SR1. You mentioned the competition you saw in SR1 in the report that it mainly affected Tier 2 tire brands. Can you just remind us what your split is to the Michelin and non-Michelin brands? And did you see the kind of same types of competition in -- at the Michelin brand? Or was it mostly in Tier 2?

In terms of volume, 85% of what we sell is Michelin brand in terms of volumes. The rest is mainly Tier 2 and a little bit of Tier 3. Tier 3 really very intense competition. So right now, for example, our Union Royal brand that plays in the bottom of Tier 2 and top of Tier 3 is imported from Indonesia or we export from Indonesia to the U.S. So we are looking at how we can adapt the flows. And that -- for example, that brand was sold through the wholesaler, mainly through the wholesaler, that we have decided to cancel. So of course, we have to rechannel that brand into other wholesale channels. And the competition in Tier 2 is intense.

In Tier 1, it's less -- the Tier 1 market is more stable, even though now there is a big push from the Tier 4, Tier 3, especially in the U.S., that is weighing a little bit on the Tier 1 proportion. But I think it's more short-term things and structural long term, I don't foresee a major change in that. However, in Europe, Europe had more Tier 1 proportion than Tier 2 and Tier 3. And now it's getting more into levels of what we see in other parts of the world.

Okay. And just the second one on the distribution model. It sounds like -- I mean, I think there was a question earlier as to how much or what kind of things we could think about as being one-off change in distribution sounds like something you probably won't do every year kind of going forward. Maybe you can kind of help us with how much the change in distribution impacted volumes in 3Q or 4Q or the year?

It's a main driver of the volume loss in SR1 in North America, and it's a one-off because we are not changing wholesaler every year.

It's every 20 years.

It's every 20, years, yes.

The next question is from Michael Foundoukidis of ODDO BHF.

A few questions left on my side. First, to come back on ATD, I mean, it was a move that was planned by you probably since at least a few quarters. So could you give us more color on what exactly went wrong? Was it more challenging to get dealers to switch from ATD to NTW? Is it something like that? So that's the first question.

Second question, I'm sorry to insist on Q4, but this uncertainty you're mentioning and you're referring to is probably affecting a lot of companies, especially in autos. We could have expected tires to be somewhat less impacted, even considering trucks or ag exposure. So I know it's a bit of an oversimplification, but based on full year guidance or even the implied H2, your SOI runs at around, let's say, EUR 200 million per month.

We have only 2 months left and you're talking about EUR 400 million uncertainty over Q4. So what does it mean for the last 2 months, maybe a view on October, which is almost done? That's the second question. And maybe last, could you clarify your views on M&A in this context. Any change in terms of mindset or not at all?

Okay. So on the first question on ATD, the decision has not been planned several quarters before. The situation with ATD has deteriorated when they went Chapter 11, and they did not notified us in advance on this. And after that, we have reassessed our relationship with ATD, and we came to the conclusion that we could not continue with this type of wholesale channel for -- to promote our Michelin brand. So yes, we have decided then, but it was really a decision that was made late in the first semester.

And then we discussed -- it was made by our U.S. teams that they said, we don't foresee how we could improve the situation with ATD. So we said, okay, if you want to make the decision, we will follow you, and they've made the decision. Then of course, that business has to be rechanneled through 2 other wholesaler mainly, it's NTW and U.S. Venture. With U.S. Venture, it's going according and with NTW, it's slower than what we were anticipating and expecting. But of course, it's a big flow to rechannel, so that's why -- but we think that movement will be over by the end of the year.

Now if I look at the M&A ambitions in this context, our strategy is clear. We -- there is an M&A portion in our strategy. But as I always say to succeed in an M&A transaction is we have to have a buyer. We are clearly a buyer. We have to have a seller and you have to agree on the price. And so far, we have not been able to have the 3 according to what I just said.

Now number two and then Yves will complement. We have been surprised by September. And what we have seen happening in our September results, we had started to see the tariff effect. We started to see a lot of input costs happening plus the pricing environment where we know we cannot pass the input cost. So we said, okay, now that was a surprise we had in the September results. That's why for the remainder of the year, we have said, we just have to relook at what we should expect.

Yes. And maybe to give a little bit more color on that question, Michael, so I refer to the Slide #8 of the presentation. Don't forget that October and November are among the 4 best months in terms of operating margin for the group with March and September. So we have this seasonality effect. You know that traditionally, we have a far better segment operating income in H2 than in H1 because we have September, October, November, that are very critical months. The September sales in themselves were not too bad versus what we expected and versus last year, but it comes with a margin deterioration explained by mostly North America -- only North America with the consequence in terms of fixed cost absorption and mix that we have been describing.

Very helpful. Maybe just one last one, I could sneak in. On the share buyback program, could you just clarify very precisely what is new from the, let's say, EUR 750 million that you have done already and the EUR 1 billion program that you had, if I'm not wrong, could you clarify if there's something new on that?

So we have announced in Feb 2024, EUR 1 million program over 3 years. We completed EUR 500 million last year. We completed EUR 265 million by mid-October or early October. It's the one that we announced in -- at the end of July, and we will complete it with an additional EUR 400 million by the end of the year.

So that's EUR 150 million incremental versus the EUR 1 billion, or it EUR 250 million plus EUR 400 million, still remaining?

Incremental versus the EUR 1 billion and within 2 years instead of 3 years.

The next question is from Christoph Laskawi of Deutsche Bank.

The first one, sorry to come back to that market share. You commented that you are basically trying to get market shares back. Could you just remind us on the main levels for that? Is it just a normalization of distribution? Or are you planning to use the raw material tailwind next year to reposition brands a bit versus competition? And then when could we expect that to materialize?

The second one just on the winter tires, you commented a relatively slow start to the winter tire season. Now PSF commented that they actually saw quite a decent start. Is that basically due to brand-specific inventory levels at dealers or any other points that you would highlight?

And then sorry for a clarification question also on the share buyback program because my line was bad when you just answered it. Did you say EUR 400 million incremental to the EUR 1 billion or just EUR 165 million incremental?

We just said -- okay, so I leave the math to -- so we will do EUR 400 million on top of what has been -- on top of what we have done already and we have done EUR 500 million next -- last year and EUR 265 million this year. So you add EUR 400 million to that, EUR 500 million plus EUR 265 million, plus EUR 400 million.

Now on the winter and Continental. Continental has outsmart us in the pre-winter stocking season. And they've taken the remaining available space from the huge influx of cheap imports from Asia. So we -- the winter is not over, and we are very well positioned because we have very good product. And so the winter is not over yet, but they have been better than us in the preseason of winter.

So now long-term regaining shares, we have launched really excellent product. Primacy 5 mentioned by Yves, CrossClimate 3 is excellent. CrossClimate Sport, CrossClimate 3 Sport is really defining a new category. So all of that will contribute to regaining some position in terms of shares. And those launches have just happened. So we just have to wait and CrossClimate is already showing very good signs in several sense.

Now of course, the pricing on replacement, I have been very clear, and we had to reposition our prices because we became less competitive in the market. We have started to do it, and it will have the effect that our price premium really doesn't change in the market. So we look at our competitiveness all the time. And I'm confident we will get back to normal levels. We have a very strong signal happening in China, where we have done this and it had paid very strong dividend, and we are back to growth in China.

As a follow-up to that. Maybe we highlighted pricing to be still slightly positive in Q4, I think. But since you now started to implement those repositioning measures that obviously would see a fading into 2016, right, also considering the comp base in '25?

The thing is moving so fast that you cannot say what will happen in 2026 at this stage. We'll see. And even in 2025, we'll see.

And we don't comment further future price decisions.

I think this was the last question. So thank you very much for attending. And thank you for your commitment.

Thank you very much. Have a nice evening.