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Market Review

• Passenger car and light truck tires

*Including Turkey
**Commonwealth of Independent States

The global Original Equipment and Replacement Passenger Car and Light Truck Tire market ended the first quarter 2022 with a 2% increase in tires sold. This is due to strong growth in the first two month (up 2% and 10% respectively) and a global drop of -7% in March.

Worldwide Original Equipment tire demandThe decline in sales was 6% during the period, which was influenced by the 14% decrease in March due to the initial repercussions from the conflict in Ukraine, especially in Europe, when components were already in limited supply.

In EuropeMarch’s market contraction was due to the conflict in Ukraine. This impacted automaker output. These falloffs of 60% in CIS, and 22% in Western Europe and Central Europe, resulted in demand ending the quarter at 25% and 15%, respectively, year-on-year.

AmericanMarketsThe decline in sales was slightly less than expected, due to tighter supply of auto semiconductors, but to a lesser extent than Europe.

Demand in ChinaThe quarter’s growth was only 2%. However, the surge in growth in the first two-months slowed in March. There was a 15% decline year-on-year due to the resurgence in Covid-19 cases. Many automotive plants were forced to close temporarily.

Demand in Southeast Asia In theAfrica/India/Middle EastRegion fell mainly because of shortages in semiconductors.

The global demand for replacement tires increased by 4% in the first quarter 2022. There was dynamic growth in the first two-months, followed by a contraction in March (down by 2%).

Markets in Central and Western EuropeThe quarter’s growth was 10%, with 6% in March. This reflects the gradual return to normal mobility as well as active rebuilding of dealer inventories, in a context where prices are increasing frequently. The growth was led by the countries of Southern Europe (France and Spain), as well as Italy. The demand in Central Europe, especially in Poland, remained strong while the Turkish market was stable compared to the first-quarter 2021.

In CISDemand was strong in the first two months but dropped 54% in March following the conflict in Ukraine. Many Western carmakers also stopped production in Russia and suspended exports to the country. The market ended the quarter with a 7% drop in demand.

In need of replacement demand North and Central AmericaIn the same environment of import duties as last year,, climbed by 5%. March saw a slight decrease in demand in the United States. They eased 2% year-on–year, but it remained strong in Canada, where it gained 8%.

Demand in South AmericaThe quarter saw an increase of 3%. This was due to normal mobility returning to normal and wider access to vaccines helping to reduce the pandemic’s impact.

In ChinaThe replacement tire demand fell by 9% year on year, as strong gains in January and February were overturned by a 20% drop in March. This was due to the resurgence in Covid-19 and strict lockdowns in certain provinces.

Demand in Asia (except China and India).The first quarter 2022 ended up 13%, boosted by growth in all markets, particularly Japan-South Korea (18%). Covid-19 has not stopped mobility from expanding in every country in the region.

The Africa/India/Middle EastThe market was almost flat in this region year-on-year due to rising demand from Africa and the Middle East, which offset a 6% decline for India.

• Radial and bias truck tires

*Including Turkey
**Commonwealth of Independent States. Markets as of February 28, 2022. Market data for March is not available due to the Eastern Europe situation.

The number sold of new Truck tires worldwide dropped by 12% in Q1 2022, but rose 4% excluding China.

The global Original Equipment Truck tire market fell by 28%, as measured by the total number of tires sold. This was due to the Chinese slump.

In Central and Western EuropeOriginal Equipment demand was stable in all three months of the quarter.

Markets in CISwere trending upwards up until the outbreak in conflict in Ukraine, March data is not available.

Insufficient OE demand North and Central AmericaThe period ended with an increase of 2%

In ChinaDemand plunged 52% after extremely unfavorable comparisons. In 2021, the new China 6 emissions standards were introduced in July. This boosted the market for the entire first semester.

The rest of the globe is the South AmericanMarket grew by 11% and demand shot up by 52% Africa/India/Middle Eastregion, including a 63% increase in India due to the Indian government’s policy of scrapping vehicles older that 15 years.

The AsianMarket was unchanged from year to year.

The global replacement truck tire market fell by 5% in its first quarter 2022, with a 25% decline in China.

In Central and Western EuropeThe market grew by 8.8% over the period due to strong freight demand which drove growth in France Benelux (up 12%) as well as Germany (up 15%)

Demand in North and Central AmericaThe period ended up 2% year-on–year, with a North American 3% increase and a Mexican 8% decrease.

In CISThe market was up by approximately 11% in the first 2 months of the year, prior to the conflict in Ukraine. March data is not available.

Markets in South AmericaThe first quarter 2022 saw a 5% increase in overall sales, aided by a 29% increase in demand in Argentina. This is a strong comparison. The Brazilian market saw a 7% growth.

In ChinaThe decline in replacement tire demand was 25% over the same period. This is due to both very unfavorable comparables and mobility restrictions that were implemented in March after the resurgence Covid-19.

Asian markets 7% growth, with strong gains in Japan (South Korea) and Indonesia (up 14% and 9% respectively).

The markets in the rest of the globe were mixed during the period, with 8% growth Africa/Middle Eastregion and a 15% contraction IndiaA more favorable comparison is suggested.

• Mining tiresDespite high demand for ore, the mining tire market is still being held back due to production constrictions as well as downstream logistics issues.
• Construction and agricultural tiresDespite rising farm commodity prices, the agricultural tire markets are still growing. Construction and Infrastructure segments enjoy sustained demand, especially for Original Equipment.
• Two-wheel tiresDemand for two-wheelers is growing, especially in the OE motorcycle/bicycle segments.
• Aircraft tires: The first quarter saw a rise in demand, especially in the Commercial Aviation segment. This segment rebounded strongly at the start of the year. However, the recovery is still fragile due to China’s geopolitical instability as well as its health situation.
  • Conveyor belts: The market for conveyor belts in the Construction and Mining markets grew over the first quarter.

Michelin sales

• Consolidated sales evolution

*In tonnes

The first three months of 2022 saw sales totaling 6,481 millions. This is an increase of 19.0% over the previous year. This was due to the net effect of the following factors.

– A 0.5% (28,000,000) decrease in tire volumes due to strong demand in January and Februaruary, followed by a slowdown March due to operational disruptions resulting from the conflict in Ukraine.

13.5% increase from the very positive price-mix effect. This includes: (i) a solid 11.9% gain from successive price rises since second-quarter 202021 to offset rising prices and (ii) an increase of 1.6% from the positive mix effect resulting from:

• A favorable mix of Original Equipment and Replacement sales in Automotive segments.
• Continuing improvement in product mix, led primarily by growth in the 18 inch and larger tire segment.

– A 0.7% rise in non-tire sales after the strong 12% increase. This is due to higher Fenner sales and ongoing expansion in fleet management.

– A 3.4% rise in exchange rate movements, mainly due to gains in the Brazilian real against the Euro and the US Dollar.

– A 0.8% increase due to changes in scope of consolidation, primarily Allopneus.com being included since December 30, 2021.

• Reporting segment: Sales

Automotive and related distribution

Sales in the Automotive segment reached 3,254 millions in the first quarter of 2022, up 20% over the year-earlier period.
The markets increased by 2% but group volumes remained stable at 0.2 percent. This is due to inventory build-ups by some dealers before the announcements of price increases and production disruptions related to the Ukraine conflict in Russia and Europe. A very favorable price-mix effect benefited business. This was due to (i) slow Original Equipment sales, especially in Europe, and (ii), highly disciplined pricing management in the Replacement business, supported with sustained enhancements of the mix within the expanding 18-inch- and larger tire segment.

Segment sales were also positively impacted both by the consolidation of Allopneus.com operations and by currency rate fluctuations.

Road transportation and related distribution

The Road Transportation segment sales increased by 20.6% year over year to 1,674 Million in the first quarter of 2022.
Group volumes rose 2.6% in markets that were up 4% (excluding China). This is due to inventory build-ups by some dealers before announced price increases. Also, production disruptions in Europe and Russia relating to the Ukraine conflict caused by Russia’s conflict resulted in a delay. The segment also enjoyed a strong price-mix effect due to price increases in 2021 and 2022, and a selective management approach that focuses on creating value.
Currency rate movements had a positive impact on segment sales.

Distribution of specialty businesses and related products

The first quarter sales of the Specialty businesses amounted to 1,553 million, an increase of 13.7% over the same period in 2021.
Volumes fell 0.9% year on year, primarily due to supply chain issues in Mining segment. These problems were caused by a shortage of maritime shipping capacity. This slowing down shipments from Group plants.

Segment sales also increased due to a positive price effect that resulted from the non-indexed businesses maintaining a disciplined pricing policy.

• Off-road tires: Sales were boosted by the steady rise in demand for agricultural tracks and construction tires, as well the price increases that have been implemented since the second half 2021.
• Mining tiresDespite the fact that operational and production problems were being addressed, sales in still expanding markets were adversely affected by disruptions to downstream supply chains.
• Two-wheel tires: Business continued to be driven primarily by high demand and high utilization of capacity, with a very favorable price/mix effect.
• Aircraft tires: Sales trend continued to trend upwards, especially in General Aviation, while Commercial Aviation enjoyed a sharp upturn at the beginning of the year before slowing down in March due geopolitical developments and the resurgence Covid-19 China.
• FennerThe growth of the conveyor belt, precision plasticmers and engineered sealings industries is steady.
• Currency rate movements had a positive impact on segment sales.

Michelins All Sustainable vision

Fostering diversity-friendly workplaces

Michelin strongly believes that diversity of backgrounds and experiences can enhance creativity, spur innovation, foster mutual fulfillment, and contribute to the Group’s economic and social performance. This commitment is evident in Michelin’s Groups score in the Gender Equality Index, an indicator created by the French government in 2019 to support progress in gender wage equality.

Supporting safer mobility

Michelin is pursuing its commitment towards safer mobility through a three year partnership with the Global Alliance of NGOs for Road Safety in Latin America. Latin America is a region where road accidents are a major concern. Michelin will support training and coaching initiatives for local NGO’s to help them advance the United Nations global plan for road safety, which aims at reducing road deaths and injuries by at minimum 50% by 2030.

Take action to stop global warming

The Michelin Group’s 2021 Universal Registration document incorporated its climate strategy according to the Task Force on Climate-Related Financial Disclosures. The strategy is organized around two key outcomes: i) a transition plan that decarbonizes direct and indirect activities (Scopes 1 and 2) and fosters a low-carbon economy; ii) an adaptation plan that prepares for the physical effects of climate change.

Supporting sustainable natural rubber

ESG rating:ZSL SPOTT, an ESG rating site that focuses on agricultural commodities, was ranked Michelin number 1 in a recent assessment with an average score of 81.8%. The sample was comprised of around 30 natural rubber companies. This included tiremakers, tiremakers, and glove manufacturers. This is a real reward and a testament to the transparency and commitment of the Group to improving the sustainability the entire natural rubber value-chain.

Michelin supports Sri Lankan natural rubber producers. Michelin is seeking its involvement through a three-year public/private project, co-financed by a grant from France’s Ministry of Economy and Finance. This project will improve the skills of 6,000 farmers using a digital-enabled, innovative training model. This new initiative, which will begin operating in 2022 is a continuation of the Group’s support for local communities in their transition to sustainable, mutually benefiting social and environmentally responsible practices.

The Green Gold Bahia projects Michelin Ecological Reserve, Brazil: Michelin decided to double the reserve’s size to 3,900 ha in 2021 to accommodate the growing wildlife population in the Atlantic Forests, the region with the highest biodiversity. The ecosystem has been regenerated thanks to the 18-year-old programs to restore and protect one of the most endangered forests in the globe. Wildlife populations have also increased. The region has seen the planting of more than 108,000 trees, which include 275 different varieties. In addition, over 2,000 species of plant and animal have been identified. Michelin plans on planting 40,000 trees over 10 years to create a high quality habitat for wildlife and support endangered tree species development.

First-quarter 2022 highlights

January 7, 2022, Michelin launches the new MICHELIN Road 6/Road 6GT motorcycle tire. The new tire uses the latest technologies developed in Michelin’s R&D to offer a distinct experience in wet grip and tire longevity.

January 13, 2022 Michelin will continue to develop WISAMO the prototype wing sail system that will help reduce carbon emissions in maritime shipping. The innovative solution will be fitted to a Compagnie Maritime Nantaise – MN ro/ro container ship. It will operate two weekly rotations between Spain, the United Kingdom and Spain with a WISAMO wing sailing.

January 28, 2022, Michelin introduces two new summer tires: the MICHELIN Pilot Sport 5 & the MICHELIN Primacy4+. They can be used for longer distances and reduce mobility’s environmental impact thanks to their durability.

February 3, 2022, Michelin launches the MICHELIN City Extra commuter tires. These tires are available for scooters, step-throughs, and small motorcycles. Michelin hopes to expand its global market reach by offering a wider selection of sizes.

February 22, 2022 Michelin has been selected by its Michelin Editions subsidiary to produce travel-related content on the airline’s new EnVols media platform.

February 23, 2022: Michelin redesigns its MICHELIN B tire to increase longevity, reduce soil compaction, improve fuel economy and optimize longevity. Michelin now offers a complete range for powerful tractors with this new addition.

March 7, 2022, Ferrari selects Michelin as its official tire supplier for the new 296 GTB. The new fittings were created by Michelin’s innovation abilities and co-design work of Ferrari and Michelin teams.

March 10, 2022: Michelin launches its new MICHELIN-STARCROSS 6 tire. It is the first MICHELIN motocross tire that uses MICHELIN Silica Technology to provide superior, long-lasting performance.

March 15, 2022 – The Michelin Group suspends all industrial operations in Russia and exports to Russia. Michelin is committed in helping to address the humanitarian needs for those affected by the conflict, in Ukraine as well as abroad. Through its Central Europe facilities and the Michelin Corporate Foundation the Group has donated funds to local humanitarian organizations and initiatives by the Red Cross/Red Crescent.

March 21, 2022. At a time where soft mobility is becoming more popular with consumers, Michelin will launch the new MICHELIN Power Cup premium bicycle tire range. This tire range is designed for racers but is optimized for high-demand cyclists.

March 2022 Michelin, Milla Group, Railenium Technology Research Institute and French National Railways will all be part of a project to create a fully electric shuttle. The hybrid concept, known as Flexy, will be able run on both roads and rails with the goal to revitalize smaller transit lines in France.

March 22, 2022 Michelin presents 2022 Michelin Restaurant Selections of the MICHELIN Guide France. It also celebrates its strategic focus on All Sustainable by awarding 87 chefs a Green Star to show its appreciation for their environmentally responsible engagement.

April 12, 2022. Symbio, Faurecia, and Michelin have been selected by the California Energy Commission (CEC), to develop and demonstrate a hydrogen fuelled, regional-haul Class 8 truck. They will also be leading contributors in a state-supported, zero emission hydrogen mobility project.

Here’s a complete description of highlights from the first three month of 2022
may be found on the Michelin website: http://www.michelin.com/

Presentation and conference call

Analysts and investors will be able to review first-quarter 2022 sales at a presentation in English, Tuesday April 26, 2022 at 6:30 pm CEST.

WEBCAST

The presentation will be webcast live on: www.michelin.com/en/finance.

CONFERENCE CALL

Please dial the following numbers starting at 6:20 CEST:

The presentation of financial information for the three months ended March 31, 2022 (press release, presentation) may also be viewed at http://www.michelin.com/en, along with practical information concerning the conference call.

Investor calendar

• Annual Shareholders meeting: Friday, May 13, 2022
• Ex-dividend date: Tuesday, May 17, 2022
• Payment date:Thursday, May 19, 2022
• Results for the six-month ending June 30, 2022After the close of trading, Tuesday July 26th, 2022
• Financial information for nine months ending September 30, 20,22After close of trading, Tuesday, October 25, 2022
• Michelin in Motion progress report (digital event):Tuesday, November 29, 2022

DISCLAIMER

This press release is not intended to be an offer to purchase shares in Michelin or to solicit the purchase of shares. For more information about Michelin, please refer to the documents filed in France Autorit des MarchsYou can also get financing from the www.michelin.com/eng website.
This press release could contain forward-looking statements. These statements, while the Company believes they are based upon reasonable assumptions at the time this document was published, are by nature subject of change. These contingencies and risks could lead to a discrepancy in actual data and forecasts.

1 Significant supply chain disruptions or restrictions that restrict freedom of movement that could cause a significant drop on the tire markets.
2 Structural Free Cash Flow refers to the free cash flow before acquisitions adjusted for the impact on raw material costs on trade payables and trade receivables.

• 20220426_PR_Michelin-Sales Q1