Q1 2026 Compagnie Generale des Etablissements Michelin SCA Earnings Call

April 29, 2026

Speaker #2: We have three percent growth in the volumes sold at the Michelin brand, in all our replacement markets, across all our business segments. The three M&A operations that we have announced at the end of 2025, early 2026, are going well on completion.

Operator: 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.

Speaker #2: And two acquisitions have been already closed as of the moment I'm speaking. The Kool-Aid Group is integrated for two months over the first quarter, and the Flexitalic will be introduced in the group figures from the 1st of April.

Yves Chapot: Thank you very much. Good evening, ladies and gentlemen. I will have the pleasure to share with you our sales figures for Q1 2026 and try to give a little bit of color about our business going forward. For this meeting, I am accompanied by Bénédicte de Bonnechose, who is going to take over as the group CFO from 1 June. But I will handle the presentation. First, Q1 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.

Speaker #2: Nevertheless, the context in the Middle East has dispelled a shadow over the year to go. And at this stage, it's very difficult for us to assess the precise impact on our businesses.

Speaker #2: Except one certainty, which is the increasing cost of energy and raw materials, which is going to impact our costs. But in this context, we have not changed our guidance for the full year.

Speaker #2: And I will come back at the end of the meeting over the element that leads us to maintain this guidance. Looking first at the market, the market in the first quarter of 2026 was negative as expected, particularly the original equipment market.

Yves Chapot: 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 as the moment I'm speaking. The Cooley Group is integrated for 2 months over the Q1, and the Flexitallic will be integrated in the group figures from 1 April. Nevertheless, the context in the Middle East has dispelled a shadow over the year to go, and at this stage, very difficult for us to assess the precise impact on our businesses. Except 1 certainty, which is the increasing cost of energy and raw material, which is going to impact our costs. In this context, we have not changed our guidance for the full year.

Speaker #2: The passenger car tire market overall is negative. OEE being down by 4%. Mostly driven by the scale down of incentive in China. And market which is as well decreasing in North America.

Speaker #2: Stable in Europe, but with a mix which is positive in terms of electrification. As the European market is posting positive growth in OEE for electric vehicles.

Speaker #2: The replacement market is stable overall. We have, nevertheless, to keep in mind that minus 3% in Europe and the minus 7% in North America are mostly driven by 2025 Q1 and Q2 anticipated buy from the importers in the respective areas.

Yves Chapot: Except 1 certainty, which is the increasing cost of energy and raw material, which is going to impact our costs. In this context, we have not changed our guidance for the full year.

Speaker #2: In Europe, due to the anti-dumping inquiries led by the European Commission. And in North America, due to the perspective of the type. So 2025 figures have been, as you know, very distorted by the non-pull businesses.

Yves Chapot: 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 Q1 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 market which is as well decreasing in North America, stable in Europe, but with a mix which is positive in term of electrification, as the European market is posting positive growth in OE for electric vehicles. The replacement market is stable overall.

Speaker #2: And that's why these two markets are posting negative figures. On the other hand, the Chinese market is growing by 9%, while the first two-wheel market is slightly growing as well in most of the areas.

Speaker #2: 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%.

Speaker #2: 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 tractors, inventories at the dealership.

Yves Chapot: We have nevertheless to keep in mind that the -3% in Europe and the -7% in North America are mostly driven by 2025 Q1 and Q2 anticipated from the importers in these respective areas. In Europe, due to the antidumping inquiries led by the European Commission, and in North America, due to the perspective of the tariff. 2025 figures have been, as you know, very distorted by the non-pool businesses, and that's why these two markets are posting negative figures. On the other end, the Chinese market is growing by 9% over the Q1. I do not mention it, but the two-wheel market is slightly growing as well in most of the areas.

Speaker #2: That will take a few months to be fully absorbed by the market. So for the time being, the growth of sell-out of vehicles is absorbed not by the production of new vehicles, but mostly by consumption of vehicles that are already in inventories.

Speaker #2: The North American and South American markets are also highly impacted, minus 16% over the quarter. On the replacement side, plus 3% overall, plus 7% in Europe, minus 12% in North America.

Yves Chapot: Regarding transportation, so truck and buses, the 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 H2 2025. When we look forward, although we see that the orders of new vehicle have started to increase in North America, there is still a quite important backlog of inventories, of tractors inventories, at the dealership that will take few months to be fully absorbed by the market. For the time being, the growth of sellout of vehicle is absorbed, not by the production of new vehicle, but mostly by consumptions of vehicles that are already in inventories.

Speaker #2: In North America, it's mostly the consequence of the tariff that has led to a surge in import during the first two quarters of 2025.

Speaker #2: In Europe, the market is quite segregated between a pull and a non-pull market. The growth of 7% is mostly triggered by the non-pull market—so the import.

Speaker #2: We have, as well, to keep in mind that Jan and February were plagued with some difficult weather conditions in North America. That has impacted, by the way, both the passenger car, truck, and truck tire market.

Speaker #2: On the specialty side, beyond roads, so agro we see a recovery in small machine segments, particularly in Europe, and North America. But high-power tractors market is still depressed at OEE.

Speaker #2: Replacement market is recovering slightly in the different zones. The infrastructure market is posting more favorable trends. Material handling is stable. Mining market is growing at a modest pace, but with a slight decrease in inventory of mining companies.

Yves Chapot: South American market is as well highly impacted, -16% over the quarter. On the replacement side, +3% overall, +7% in Europe, -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 quarters of 2025. In Europe, the market is quite segregated between a Pool and Non-Pool market. The growth of 7% is mostly triggered by the Non-Pool market, so the import. We have as well to keep in mind that January and February was plagued with some difficult weather condition in North America. That has impacted, by the way, both passenger car, light truck, and truck tire market.

Speaker #2: But it's still growing. And the aquatic market was positive over the quarter. So having these elements in mind, as I mentioned, the group posts a stable revenue at a constant exchange rate.

Speaker #2: But the exchange rate is waiting heavily on the top line, minus 355 million euros or minus 5.4%. Of which 70% is coming from the US dollar.

Yves Chapot: On the specialty side, beyond road, so agro, we see a recovery in small machine segments, particularly in Europe and North America. High power tractors market is still depressed at own. 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, with a slight decrease in inventory of mining companies, it's still growing. The aircraft market was positive over the quarter. Having this element in mind, as I mentioned, the group posts a stable revenue at a constant exchange rate.

Speaker #2: Volume, so first, in terms of scope, we have the positive effect of the integration of the cooling group for two months. Which is offset by the impact of the disposal of our compact line activities to the SEAT group.

Speaker #2: Which explained the very small scope effect over the first quarter. Our volumes have lost 1.4% over the quarter. And taking into account 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.

Speaker #2: Price mix is positive, 1.1%. As planned, the price effect is minus 0.8. It 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.

Yves Chapot: The exchange rate is weighting heavily on our top line, EUR -355 million or -5.4%, of which 70% is coming from the US dollar. 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 the very small scope effect over Q1. Our volumes have lost 1.4% over the quarter, and taking into account the strong growth in the replacement market for the Michelin brand, that was free.

Speaker #2: And as well, some measures that were taken have already started during the second half of 2025 in order to adjust our competitiveness. The mix is positive, plus 1.9%.

Speaker #2: It includes both the very positive—the constant effect of our growth in 18-inch and Michelin brand, which now represents 69% of our global volumes.

Speaker #2: At the Michelin brand, both OE and RT for the consumer segment. As well as a positive mix effect between original equipment and replacement markets.

Yves Chapot: 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 +1.1%. As planned in the mix, the price effect is -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. 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, +1.9%. It includes both the very positive, the constant effect of our growth in 18-inch and above.

Speaker #2: 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.

Speaker #2: So, the first time that you see the Polymer Composite Solutions segment published separately. And I will start with this segment, which is posting 5.1% growth overall—which is basically the only segment posting positive revenue over the quarter.

Speaker #2: So it demonstrates the relevance of our strategy. Of course, with the help of the inclusion of the Cooling group, plus, which contribute 10.2% revenue growth.

Yves Chapot: The mix is positive, +1.9%. It includes both the very positive, the constant effect of our growth in 18-inch and above.

Yves Chapot: 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 markets. Non-tire sales are stable at ISO scope and currency, and the Forex have been already commented. That's the first time that we are presenting our actual figures through our new reporting segment. The first time that you see the Polymer Composite Solutions segment published separately. 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 demonstrate the relevance of our strategy.

Speaker #2: And I will later on do a zoom on this business segment. Consumer volumes are growing by 1.3%. With a contrastive situation between original equipment, where our volume has globally decreased.

Speaker #2: In line with the markets, 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.

Speaker #2: The replacement market on the other end are very positive. Particularly at the Michelin brand. But at the same time, we are still losing ground on the Tier 3 segment.

Speaker #2: Both in Europe and North America and in some elements as well in Asia. Two wheel posts strong growth over different geographies, including China. The transportation segment is showing it's not a surprise the strongest decline in volume.

Yves Chapot: 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 demonstrate the relevance of our strategy.

Speaker #2: And due to the contraction of our sales in original equipment, particularly in North and South America. Replacement sales are posting positive in Europe, and decreasing in North America and South America.

Yves Chapot: Of course, with the help of the inclusion of the Cooley Group, of course, which contribute 10.2 to the revenue growth. I will later on do a zoom on this business segment. Consumer volume are growing by 1.3%, with a contrasting situation between original equipment where our volume have globally decreased in line with the markets. 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.

Speaker #2: In the specialties, you see volume growth of 2.5%. Thanks to mining and aircraft. But as well, stabilizing beyond world activity at ISO scope. As the disposal of our compact line business is in the scope effect.

Speaker #2: Despite—so, beyond that, the world is stabilizing the situation. Despite the challenging situation in agro, tracks, and material landing. So, zooming now on the tire performance overall at a group level.

Yves Chapot: At the same time, we are still losing ground on the tier three segment, both in Europe and North America, and in some element as well in Asia. Two wheel post a strong growth over different geographies, including China. The transportation segment is showing it is not a surprise, a stronger decline in volume and due to the contraction of our sales in original equipment, particularly in North and South America. Replacement sales are posting a 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-forex as the disposal of our Compact Line business is in the scope effect.

Speaker #2: So you see that most of the 100% of the volume lost is coming from original equipment. Mostly equally shared between track and bus and passenger cars.

Speaker #2: With a slight decrease in Agro. And on the other end, the replacement volumes are stable, with growth of 3% in the Michelin brand, and volume lost in the Tier 2 and particularly Tier 3 brands.

Speaker #2: Over the quarter. So as far as the polymer composite solution is concerned, so we have we'll share with you the situation of the market not by head market, but by product.

Yves Chapot: 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-forex as the disposal of our Compact Line business is in the scope effect.

Speaker #2: In the sealing business, we record a very strong performance in 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.

Yves Chapot: Despite, beyond all this stabilizing the situation, despite the challenging situation in agro tracks and material handling. Zooming now on the tire performance overall at the group level. 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. On the other hand, the replacement volumes are stable with a growth of 3% in Michelin brand and, a volume lost in the tier two and particularly tier three brands over the quarter. As far as the Polymer Composite Solutions is concerned, we have, we'll share with you the situation of the market, not by end market, but by product.

Speaker #2: And the belting market is posting a slight growth, particularly in general industrial and aeronautics applications. On the other hand, the conveyor belt market—so, heavy conveyor belt, particularly the ones that are servicing the mining market—are declining, particularly in Australia.

Speaker #2: And on top of that, we have an industrial maintenance in a site that takes three months instead of one. And that has waited on the performance of this division in this geography.

Speaker #2: But overall, we are seeing a solid growth, with a slight setback in conveyors. As we are coming, we are zooming on this, on the PCS activity.

Yves Chapot: As far as the Polymer Composite Solutions is concerned, we have, we'll share with you the situation of the market, not by end market, but by product.

Yves Chapot: In the sealing business, we record a very strong performance particularly in hydraulic applications. The coated fabrics and films are growing as well, thanks to business development beyond the marine application, which is still the main destination market for this product. The belting market is posting a slight growth, particularly in general industrial and aeronautics applications. On the other hand, the conveyor belt market, so heavy conveyor belt, particularly the ones that are servicing the mining market, are declining, particularly in Australia. On top of that, we have an industrial maintenance in the site that takes three months instead of one, and that has weighed on the performance of this division in this geography.

Speaker #2: I would just like to remind you of the figure that was shared during the last Capital Market Day in 2024, and that we have updated. At that time, it was a comparison between 2018 and 2025.

Speaker #2: 2023, though it's updated with 2025. So basically, you can see two things on this graph. First, 2028, which was the first year of integration of FENER.

Speaker #2: So, it's FENER joined the Michelin group in May 2028. The FENER activities were generating €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.

Yves Chapot: On top of that, we have an industrial maintenance in the site that takes three months instead of one, and that has weighed on the performance of this division in this geography.

Speaker #2: And this activity showed in 2025 pro forma represents 1.7 billion euro. So it's a compounded organic growth of 3%. And let's say a growth generated by acquisition, which is in the of the similar magnet order of magnitude.

Yves Chapot: Overall, we are seeing a solid growth in sealing and coated fabrics with a slight setback in conveyors. As we are zooming on this on the PCS activity, I would just like to remind you the figure that was shared during the last capital market day in 2024, and that we have updated. At that time, it was a comparison between 2018 and 2023, though it's updated with 2025. Basically, you can see two things on this graph. First, 2028, which was the first year of integration of Fenner. It's Fenner joined the Michelin Group in May 2028.

Speaker #2: At the same time, in 2018, the operating margin of this activity was 11.5%. And it would have been 15% at in 2025. You see as well that the portfolio of activity has evolved over the period.

Speaker #2: In 2018, two-thirds of the businesses was mostly conveyors. One-third is sealing. One 30% or 25% sealing. And the rest was belting. We have no inactivity, which is much more balanced.

Yves Chapot: 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 a North American private equity company. This activity should, in the 2025 pro forma, represent EUR 1.7 billion. It's a compounded organic growth of 3% and, let's say a growth generated by acquisition, which is of the 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.

Speaker #2: Conveyor belt is still a very important activity. But it has been balanced with a growth of the sealing and mostly the coated fabrics and films.

Speaker #2: Thanks to the different acquisition that has been done in the past years. We are still expecting to close the last of the three deal announced earlier, the Textec company.

Speaker #2: Let's say during around mid-year. So now looking forward, for the full year of 2026. At this stage and being after one quarter, we did not change the outlook for the full year tire market.

Speaker #2: Which is basically a 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.

Yves Chapot: In 2018, two-third of the businesses was mostly conveyors. One-third is sealing. 30% or 25% sealing, 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 sealing 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 three deal announced earlier, the Tex-Tech company, let's say during around mid-year. Now, looking forward for the full year of 2026.

Speaker #2: Versus the second half. And for the special so we mean that the market should be around zero, both for consumers and transportation overall, OE plus RT.

Speaker #2: 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 share with you at the end of at the beginning mid-February.

Speaker #2: And in excluding the potential systematic, systemic impact on the demand following the conflict in the Middle East. So now, looking to the situation in the Middle East.

Speaker #2: First, in the areas we have mostly commercial operations. We employ around 100 little bit less than 100 employees. In sales. We don't have any tire manufacturing activity in the regions.

Yves Chapot: 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 H1 of the year, versus H2. We mean 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 the same that the one we share with you mid-February.

Speaker #2: And we operate two joint ventures in Saudi Arabia: one of which is the Michelin commercial operation, and one which is in the sealing activity of our polymer composite solution, which is servicing the oil and gas industry.

Speaker #2: 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.

Speaker #2: 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.

Yves Chapot: And excluding the potential systematic impact on the demand, following the conflict in the Middle East. Now looking to the situation in the Middle East. First, in the areas, we have mostly commercial operations. We employ around 100 and little 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, the Michelin commercial operation, and one which is, in the sealing activity of our Polymer Composite Solutions, which is servicing, the oil and gas industries. Altogether, the region represents less than 1% of the group sales.

Speaker #2: 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.

Speaker #2: But for the time being, we are working on an assumption, which is translating into an oil price at around $100 per barrel until the end of the year.

Speaker #2: 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 400 million on the raw material.

Yves Chapot: We have set up crisis cells 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. Of course, monitor our upstream supply chain resilience. 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. For the time being, we are working an assumption, which is translate in oil price at around $100 per barrel for till the end of the year. With this assumption in mind, we know one thing for sure is that we'll have to face inflation.

Speaker #2: This tailwind will be at least probably at least completely wiped 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 400 million euro of additional cost.

Speaker #2: Of which three-quarters are related to raw material, and 25% related to energy and logistics. Why only 25% for energy? Because half of our energy costs are energy purchase.

Speaker #2: Are already secure since the beginning of the year, so that's what we know for sure. What is much more difficult to assess is the potential impact on the demand.

Speaker #2: On the tire demand—maybe first on the regional equipment, and maybe then on replacement. Today we do not have any sign of slowdown in any market.

Speaker #2: 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 it very closely with our crisis cells, is the potential disruption of raw material supply.

Yves Chapot: 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, or probably at least completely, wiped out by inflation in raw material and energy and logistics. 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 costs, of which three quarters are related to raw material and 25% related to energy and logistics. Why only 25% of energy? Because half of our energy costs are energy purchase are already secure since the beginning of the year. That's what we know for sure. What is much more difficult to assess is the potential impact on the demand, on the tire demand.

Speaker #2: Again, at this stage, we have reasonable visibility for 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.

Speaker #2: 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.

Speaker #2: The free cash flow is both for the margin but as well inflation is contributing to, let's say, the baloning 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 area particularly in synthetic rubber, in some other product as well.

Yves Chapot: Maybe first on original equipment and maybe then on replacement. Today, we don't have any sign of slowdown in many markets. The more we 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 it very closely with our crisis cell, is potential disruption of raw material supply. Again, at this stage, we have a reasonable visibility for our supply till the end of June. Beyond that, it's extremely difficult given the fact that nobody knows how long and how far this conflict will continue.

Speaker #2: The localization of our operations and our proven margin resilience in, let's say, recent similar or very volatile environments—all that leads us to maintain our guidance.

Speaker #2: So our guidance, I remind, is to generate segment operating income at ISO scope and ISO forex above the one we generated in 2025, and a free cash flow above €1.6 billion.

Yves Chapot: 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 through the margin, but as well, inflation is contributing, to, let's say, the ballooning of our working capital. At this stage, with the structural levels, so the way we manage the operations, the fact that we are vertically integrated in some area, particularly in synthetic rubber, in some other product 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.

Speaker #2: In this highly volatile and unpredictable environment, I would also like to insist on the strength of the group, and the fact that we are holding the cap on our strategy.

Speaker #2: 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.

Speaker #2: In Europe, we have recently announced that we have sold and closed the remainder of our UK retail distribution operations for light vehicles. And we have recently announced the consolidation of our agriculture track activity factories from two factories to one factory in North America.

Speaker #2: Which lead to the close of one of these factories. 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.

Yves Chapot: Our guidance, I remind, is to generate a segment operating income at iso scope and iso-forex above the one we generated in 2025, and a free cash flow above EUR 1.6 billion. In this highly volatile and predictable 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 UK retail distribution operations for light vehicles.

Speaker #2: Which led to a dividend yield of 4.9%. And the Group has started, with the help of banks, to complete the €750 million share buyback program that was launched in the second half of February.

Speaker #2: And that should be executed by the end of November. So having sharehold these elements, I think it's time now to open the Q&A session.

Speaker #1: Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. Please ask your question in English. The first question is from Stephen Benhamo, Bank of America.

Yves Chapot: We have recently announced the consolidation of our agricultural track activity factories from 2 factories to 1 factory in North America, which lead to the close of 1 of this factory in order to improve the competitiveness of our operation. Last, I remind that we have maintained our dividend per share for 2025 versus 2024, which lead to a dividend yield of 4.9%. 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. Having shared all these elements, I think it's time now to open the Q&A session.

Speaker #2: Yes. Good evening all. Thanks for taking my questions. I have two questions. The first one is regarding your pricing. Can you please give us more color regarding your pricing strategy?

Speaker #2: And so I understand that you basically adopted a more aggressive pricing strategy to boost market share gains, notably in the US. So do you expect overall a negative pricing for the year?

Speaker #2: 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.

Speaker #2: So you indicate at least 400 million euros. That includes raw matter energy and logistics. But what about wage inflation? And is it a gross or net impact post mitigation measures?

Speaker #2: And basically, what's the phasing of those 400 million euros cost inflation between H1 and H2? Thank you.

Speaker #3: 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.

Yves Chapot: Having shared all these elements, I think it's time now to open the Q&A session.

Operator 3: Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. Please ask your question in English. First question is from Stephen Benhamou, Bank of America.

Operator: Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad. Please ask your question in English. First question is from Stephen Benhamou, Bank of America.

Speaker #3: 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.

Stephen Benhamou: Yes, good evening all. Thanks for taking my questions. I have two questions. The first one is regarding your pricing. Can you please give us more color regarding your pricing strategy? I understand that you basically adopted a more aggressive pricing strategy to boost market share gains, and notably in the US. Do you expect overall a negative pricing for the year? If not, how do you intend to increase prices without weighing on volumes? This is my first question. The second question is regarding your expectation for the cost inflation. You indicate at least EUR 400 million that include raw mat, energy, and logistics. What about wage inflation? Is it a gross or net impact post mitigation measures?

Speaker #3: 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 end, we are implementing a transformation within the Group in order to manage our pricing in a more and more agile manner.

Speaker #3: Which leads us sometimes to, even in the same category, adjust the price at some SKUs abroad and some other SKUs onwards. What I can already tell you is that there was already some price increase announced and implemented, for example, in Europe on the 1st of May.

Speaker #3: It has been communicated on the market recently. Because we are already seeing some element of inflation, particularly in energy or transportation costs—maritime shipping, just to mention it—or even inland transportation.

Stephen Benhamou: Basically, what's the phasing of those EUR 400 million cost inflation between H1 and H2? Thank you.

Yves Chapot: Thank you, Stephen, for your question. 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, well, 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. On the other end, we have implement a transformation within the group in order to manage our pricing in a more and more agile manner.

Speaker #3: And so, the answer regarding the balance between price and market share and competitivity, let's say, is all in the quality of the execution by the team.

Speaker #3: And I believe that since the last quarter of 2025, our team has demonstrated their ability to grow in our market share in replace particularly in the replacement market thanks to a very agile pricing strategy.

Speaker #3: 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.

Yves Chapot: Which lead us sometimes to, even in the same category, to adjust the price at some SKUs upward and some other SKUs downward. What I can already tell you is that there was already some price increase announced and implemented, for example, in Europe, first of May. It has been communicated on the market recently. Because we are already seeing some element of inflation, particularly the energy or the transportation cost, maritime shipping, just to mention it, or even in land transportation. The answer regarding the balance between the price and market share and competitivity, let's say, is all is in the quality of the execution by the team.

Speaker #3: 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.

Speaker #3: But we are still seeing we are already seeing particularly an element that are going directly in the P&L, such as transportation, the impact of inflation.

Speaker #3: 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.

Yves Chapot: 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, well, 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 H2, if the situation is worsening. Nevertheless, and regarding the phasing, most of the phasing, of course, will be on H2.

Speaker #3: Will impact our P&L probably most in the second half. We have four months of inventory, but that's between raw materials, semi-finished, and finished product. So generally, you can count on a four- to six-month lag between the increase of these costs and the inflation in our cost of goods sold.

Speaker #2: Thank you. And regarding the gross or net impact?

Speaker #3: It's a gross impact. It's a gross impact.

Speaker #2: Okay. And did you quantify your mitigation measures?

Speaker #3: Of course, we quantify it. But what I can tell you is that we are, as I said, you can classify our business into categories.

Yves Chapot: We are already seeing particularly on 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 costs, so either raw materials or energy in the production costs. Energy represent 2.5% of our group sales overall, will impact our P&L probably most in H2. We have 4 months of inventory between raw materials, semi-finished and finished product. Generally, you can count on 4 to 6 months lag between the increase of this cost and the inflation in our cost of goods sold.

Speaker #3: The business which is mid-term contract with an indexation clauses there will be mechanical lag effect between the inflation increase of cost of goods sold and the increase of price.

Speaker #3: So this part will not probably be fully hedged over 2026. For the rest, generally, we have demonstrated our ability in the past to hedge our cost.

Speaker #2: Thank you.

Speaker #1: Next question. Is from Akshat Katkar. JP Morgan.

Speaker #2: Thank you, Pralong. Good evening, Akshat from JP Morgan. I have three questions, please. The first one on volumes. A very good beat in Q1 versus expectations.

Speaker #2: Could you just tell us if you're already seeing signs of pre-buys, specifically in March? We have seen some very strong industry data coming out for March.

Stephen Benhamou: Thank you. Regarding the gross or net impact?

Yves Chapot: It's a gross impact. It's a gross impact.

Speaker #2: Have you seen any signs of strong dealer buying ahead of those price increases? Or are there any signs of selling activity looking different at the start of Q2?

Stephen Benhamou: Okay.

Stephen Benhamou: Yeah.

Stephen Benhamou: Did you quantify your mitigation measures?

Yves Chapot: Of course, we quantify it. What I can tell you is that, we are, as I said, you can classify our business in two 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. This part will not probably be fully hedged over 2026. For the rest, it's generally we have demonstrated our ability in the past to hedge our costs.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Of the conflict. Is the $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 $400 million?

Speaker #2: Is it only the direct impact from synthetic rubber and carbon black? And you haven't considered broader inflation in steel, chemicals, supply chain, etc.? Just trying to understand the big buckets within that $400 million, please.

Akshat Kacker: Thank you.

Stephen Benhamou: Thank you.

Operator 3: Next question is from Akshat Kacker, JP Morgan.

Operator: Next question is from Akshat Kacker, JPMorgan.

Speaker #2: Thank you.

Akshat Kacker: Thank you, Florent. Good evening, 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 are already seeing signs of pre-buys, 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? Are there any signs of selling 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. On the other side, placement volumes have been at high levels. You have high inventory.

Speaker #3: So thank you, Akshat. For the time being, we have not seen any significant pre-buy over the first quarter. In any of the regions where we are operating.

Speaker #3: So we have not seen any meaningful volumes that can be interpreted as a pre-buy from distributors. But that's something that we are obviously monitoring very closely.

Speaker #3: As we are monitoring every month the selling and the sell-out, so as well the sell of our product to end users by distributors. For the truck market, it's a bit reflected in the slide.

Akshat Kacker: How are you thinking about overall truck volumes from here for rest of the year in 2026, please? The last one, coming back to cost sensitivity of the conflict. Is the EUR 400 million number a H2 impact for this year? Is that how we should think about it? 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. Thank you.

Speaker #3: That I present for the full-year market. Of course, we are starting—we will start particularly on OE to compare ourselves with data that were at historically low levels, particularly on original equipment, since the months of April and May 2025.

Yves Chapot: Thank you, Akshat. For the time being, we have not seen any significant pre-buy over the first quarter in any of the regions where we are operating. We have not seen, let's say, meaningful volumes that can be interpreted as a pre-buy from distributors. That's something that we are obviously monitoring very closely as we are monitoring every month the selling and the sell-out, so as well the sell of our product to end users by distributors. For the truck market, well, it's reflected in the slide that I present for the full year, full year market.

Speaker #3: As I mentioned, I will comment mostly on the original equipment market, and particularly the North American, which is weighing heavily on our OE performance. Because we have seen the open market slightly rebounding since the last quarter of 2025.

Speaker #3: 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 three to four months to flush out the over-inventory of vehicles that has been built up by the OEMs in the past two years.

Speaker #3: So, it's very probable that over Q2 and even early Q3, we are not going to see a sharp increase in orders of tires by OEMs.

Yves Chapot: Of course, we will start particularly on OE to compare ourselves with data that were, let's say, at historical low level, particularly on 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 weighing heavily on our OE performance, because we have seen the open market slightly rebounding since the last Q4 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.

Speaker #3: Because they are still selling vehicles that have been produced earlier. As far as the cost and the duration of the conflict, the $400 million are obviously mostly on H2.

Speaker #3: 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 $400 million, probably $300 million on raw materials, $100 million shared between energy and transportation.

Speaker #3: And on the $400 million of raw material, we are looking at all raw materials. So of course, it's synthetic rubbers, a lot of chemical 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.

Speaker #3: So we take in consideration all the elements of the different raw materials that we are acquiring.

Yves Chapot: It's very probable that over Q2 and even early Q3, we are not going to see a sharp increase in orders for tires 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. As I mentioned, we are already seeing some very concrete inflation measures, for example, in transportation. 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. On the EUR 400 million of raw material, we are looking at all raw materials. Of course, it's synthetic rubbers, a lot of chemical products, resins.

Speaker #2: That's clear. Thank you so much.

Speaker #3: Thank you, Akshat.

Speaker #1: Next question is from Harry Martin Bernstein.

Speaker #3: Harry? Are you online?

Speaker #1: Henry Martin, your line is open.

Speaker #3: So maybe we can switch to the next one and eventually call Harry later on.

Speaker #1: Next question is from Thomas Besson, Kepler Chevrolet.

Speaker #4: Good evening. Thank you. I have a few questions as well if that's okay. I've got them one by one. First is could you say a few words about your North American business?

Speaker #4: 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?

Yves Chapot: You can, if you look at the cycle data, you will see that the natural rubber prices as well started to slightly increase. We take in consideration all the elements of the different raw materials that we are acquiring.

Speaker #3: Oh, yes. So you want to answer question by question. So.

Akshat Kacker: That is clear. Thank you so much.

Speaker #4: Is that okay?

Yves Chapot: Thank you, Akshat.

Speaker #3: No, no. But I can answer to this one. First, I will say that Q1 2026 was a little bit in between Q3 and Q4 2025.

Operator 3: Next question is from Harry Martin, Bernstein.

Operator: Next question is from Harry Martin, Bernstein.

Yves Chapot: Harry, are you online?

Operator 2: Harry Martin, your line is open.

Operator: Harry Martin, your line is open.

Speaker #3: All the OE markets are negative in the US, in North America, and both for consumer vehicles or professional vehicles. And I remind that the replacement market in 2025 was boosted by the anticipation of the tariffs.

Yves Chapot: Maybe we can switch to the next one and eventually, call Harry later on.

Operator 2: Next question is from Thomas Besson, Kepler Cheuvreux.

Operator: Next question is from Thomas Besson, Kepler Cheuvreux.

Thomas Besson: Good evening. Thank you. 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 H1 2026 more aligned with Q4 or Q3 on an underlying basis, please?

Speaker #3: So it's still a market which is, let's say, in between the two quarters—the two last quarters—of 2025.

Speaker #4: Thank you. 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 to the year.

Speaker #4: 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?

Yves Chapot: Oh, yeah. You want to answer. Okay, question by question.

Thomas Besson: It's okay.

Yves Chapot: Yeah. No, no, but I can answer to this one first. I will say that Q1 2026 was a little bit in between Q3 and Q4 2025. The OE market are negative in the US, in North America, and both for consumer vehicles or professional vehicles. I remind that the replacement market in 2025 was boosted by the anticipation of the tariffs. It's still a market which is, let's say, in between the two, the two quarter of the two last quarter of 2025.

Speaker #3: As far as I know, I don't see we are not seeing a huge anticipation of dealers on future price increase. If price increase are when price increase are announced, the magnitude of the price increase is not huge.

Speaker #3: For what has 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.

Speaker #3: In 20 and afterwards, Q3 was difficult in North America. For the time being, no specific message in one either positive or negative on April.

Thomas Besson: Thank you. To follow up a bit on Akshat Agarwal'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? Do you now see any anticipation from dealers of future price increases? Is it still, are they still pretending nothing is happening?

Speaker #4: Those two. Thank you. 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?

Speaker #4: Do you expect any retroactive action?

Speaker #3: So we expect the anti-dumping measures to be announced at the end of the quarter of this quarter, so the Q2 quarter. We do not expect any retroactive implementation.

Yves Chapot: As far as I know, we have not seen a huge anticipation of dealers on a future price increase. When price increase are announced, the magnitude of the price increase is not too huge for what have been announced in Europe, for example. I think I will not comment in April. 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 and afterwards, Q3 was difficult in North America. For the time being, no specific message in one either positive or negative on April.

Speaker #3: And that's, yeah, at this stage, the information that we have on this.

Speaker #4: Thank you.

Speaker #3: The tariff on the due to anti-dumping in Europe for passenger car tire probably from July or very end of June onward.

Speaker #4: Thank you very much. And Steve, happy retirement.

Speaker #3: Thank you very much. Thank you.

Speaker #1: Next question is from Harry Martin Bernstein.

Speaker #5: Hi. Can you hear me now?

Speaker #3: Yeah, yeah. It's better, Harry. Yeah, we hear you. Perfectly.

Thomas Besson: No. Thank you. Do you have any update to give us on the European Commission China treatment that was delayed from December? Is it still expected Q2? Do you expect any retroactive action?

Speaker #5: Great, great. Well, thanks for taking my question. The first one—as you mentioned—historically, Michelin's been able to pass on raw material costs without major EBIT impact.

Speaker #5: 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.

Yves Chapot: We expect the anti-dumping measures to be announced at the end of the quarter, of this quarter, so the Q2 quarter. We do not expect any retroactive implementation. That's, yeah, at this stage is the information that we have on hand, yes.

Speaker #5: 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 talk about expanding market share in the 18-inch and above segment.

Speaker #5: 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.

Thomas Besson: Thank you very much.

Yves Chapot: There will be tariff due to anti-dumping in Europe for passenger car tire, probably from July or the end of June onward.

Speaker #5: It would be useful. Thank you very much.

Speaker #3: Okay. So regarding our ability to pass raw material effect in the EBIT, we have as always to keep in mind that we have this lag effect for the index business.

Thomas Besson: Thank you very much. Yves, happy results.

Yves Chapot: Thank you very much. Thank you.

Operator 2: Next question is from Harry Martin Bernstein.

Operator: Next question is from Harry Martin Bernstein.

Harry Martin: Hi. Can you hear me now?

Speaker #3: 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.

Yves Chapot: Yeah, it's better, Harry. Yeah, we hear you.

Harry Martin: Great.

Yves Chapot: Yeah. Thank you.

Harry Martin: Great. Well, thanks for taking my question. The first one, as you mentioned, historically, Michelin's been able to pass on raw material costs without major EBIT impact. 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, you know, if all goes well, you should at least be able to recover a good amount of the inflation over time. The second question I had in the release, you talk about expanding market share in the 18-inch and above segment.

Speaker #3: 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.

Speaker #3: The difference versus past, and if you mention, for example, what happened after the war in Ukraine—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 2020. Remember, after 2020, prices went down.

Harry Martin: 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 know, you're having the most success there will be useful. Thank you very much.

Speaker #3: There will be, there was some cooling down of prices at the end of 2020, and into 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.

Yves Chapot: Okay. 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 is stabilizing or decreasing. That is the first element that you have to keep in mind. We will probably not fully compensate the full effect of inflation, at least on raw material in 2026. Some part of it, at least for the index business, will be to recover in 2027.

Speaker #3: 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.

Yves Chapot: The difference versus past, if you mention, for example, what happened after the war in Ukraine, at 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 2020. Remember after 2020 price went down. There was some cooling down of prices in the end of 2024, 2025. The question is the ability of the market to accept the level of price that this kind of inflation may command. 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.

Speaker #3: So in terms of market, it's cover let's say mostly all the markets. In Asia, in Europe, maybe in a less extent in North America.

Speaker #3: And when you speak about vehicles, if I take the Chinese market—actually, I was in China last week—we are quite successful with local OEMs.

Speaker #3: Partly with electric vehicles. So that's where we are gaining market share, particularly in the OE market.

Speaker #4: Thank you.

Speaker #1: Next question is from Monica Bosio in Tesa, San Paolo.

Speaker #6: Yes, good evening. I have two questions, and thank you for taking them. The first is — I know it's difficult to answer — but during the last call, the company anticipated a slightly positive volume trend overall in the second quarter.

Yves Chapot: 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. In terms of market, it covers, let's say, mostly all the markets in Asia, in Europe, maybe in a less extent in North America. 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. That's where we are gaining market share, particularly for the OE market.

Speaker #6: 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 volume trend for the second quarter and EPS? Maybe if you can give us some flavor across Consumers, Transportation, and Specialties?

Speaker #6: And if you are still confirming a positive growth in volumes in 2026. My second question is on polymer composites. I admit I do not know very well the segment, but what is the company's ability in passing through the raw material cost increases in this division?

Speaker #6: Any insights could be helpful. And the very last is just a check. Can you split again the euro 400 million of gross headwinds between Romat Energy and other items?

Harry Martin: Thank you.

Operator 2: Next question is from Monica Bosio in Intesa Sanpaolo.

Operator: Next question is from Monica Bosio in Intesa Sanpaolo.

Monica Bosio: Yes, good evening. I have two questions. Thank you for taking them. The first is, I know it is difficult to answer, during the last call, the company anticipated a slightly positive volume trend overall in Q2 and still a light growth for 2026. I know it is difficult to answer as the macro scenario is evolving, are you still confirming a positive volume trend for Q2 and BPS? Maybe if you can give us some flavor across consumers, transportations, and specialties, if you are still confirming positive growth in volumes in 2026. My second question is on Polymer Composites.

Speaker #6: Thank you very much.

Speaker #3: Okay. Thank you. Thank you very much, Monica. I will take your question in the last order. So, the $400 million of headwind following the war in the Middle East is 75%, so around $300 million in raw material.

Speaker #3: And 100 million between energy and transportation costs.

Speaker #6: Okay.

Speaker #3: Regarding polymer composite solutions, we are in businesses except for the conveyor belts, 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.

Speaker #3: So of course, if there is inflators, the companies that are operating these different businesses will, depending on the respective weight—because it can be very different between sealing, small belt, or heavy conveyor belt.

Monica Bosio: I admit I do not very well the segment, what is the company ability in passing through the raw material cost increases in these divisions? Any insights could be helpful. 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? Thank you very much.

Speaker #3: 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, beginning of the year and after the two first months, we were on track to deliver a slightly positive volume in 2026.

Yves Chapot: Okay. Thank you. Thank you very much, Monica. I will take your question in the last order. 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.

Speaker #3: We have announced that Q1 will be negative. Q2 will probably be around flat, flattish. And Q3, positive. That is mentioned in your question. It's very difficult to answer.

Monica Bosio: Okay.

Yves Chapot: Regarding Polymer Composite Solutions, we are in businesses except for the conveyor belts, 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.

Speaker #3: But on one side, there is elements 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 through Q3 in North America.

Monica Bosio: Mm-hmm.

Yves Chapot: Of course, if there is inflators, the companies that are operating the different business will, depending on the respective weight, because it can be very different between a sealing, a small belt or heavy conveyor belt, they will have to adjust their strategy. But it's really a local and, let's say, local product related operations. Regarding volumes, so of course, beginning of the year and after the two 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 flattish, and Q3 positive.

Speaker #3: So we are going to have a basis for comparison which will be very much more favorable.

Speaker #6: Favorable.

Speaker #3: 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 have the sticker shock of the price of gas oil at the station.

Speaker #3: Or even the impact that the price of kerosene can have on—and even the availability potentially. So, at this stage, I'm not in a position to comment on the impact of any of these elements on the final demand.

Speaker #6: Perfect. Thank you very much, Yves.

Monica Bosio: Okay.

Yves Chapot: Mention it in your question. It's very difficult to answer, but on one side, the relevant elements 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. We are going to have a basis for comparison, which will be.

Speaker #3: Thank you, Monica.

Speaker #1: Next question is from Martino de Ambrogi, Equita.

Speaker #4: Thank you. Good evening, Yves. The first question is on the supply chain the Romat and so on. What are where do you see the main risks for your supply chain today?

Speaker #4: And could you remind us what is the updated sensitivity to oil price, butadiene, and natural rubber? And I have another follow-up later.

Operator 2: Mm-hmm

Monica Bosio: Mm-hmm

Yves Chapot: very, it's more favorable.

Yves Chapot: Favorable.

Monica Bosio: Favorable.

Yves Chapot: On the other end, nobody knows at the moment I am 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. At this stage, I am not in position to comment the impact of any of these elements on the final demand.

Speaker #3: 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.

Speaker #3: 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 5 billion euro of raw materials.

Monica Bosio: Perfect. Thank you very much, Yves.

Yves Chapot: Thank you, Monica.

Speaker #3: 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 chemical products—around 15%—steel core, 9%, and textile.

Operator 2: Next question is from Martino De Ambroggi, Equita.

Operator: Next question is from Martino De Ambroggi, Equita.

Martino De Ambroggi: Thank you. Good evening, Yves. The first question is on the, on the supply chain, the raw mat and so on. Where do you see the main risks for your supply chain today? Could you remind us what is the updated sensitivity to oil price, butadiene, and natural rubber? I have another follow-up later.

Speaker #3: So that's basically the different source of our raw materials. So of course, there is a direct sensitivity on the oil price. But some of the products we are using are just derivatives from the long oil transformation value chain.

Yves Chapot: I will probably give you a very, let's say generic information. Geographically speaking, we are expecting a more tense situation of the supply chain in Asia than in Europe and than in North America. It's rather in this order. As I said, it's very difficult to decipher where a rupture can occur, and how. Last year we buy around more than EUR 5.5 billion of raw materials, of which 29% is natural rubber, 22% synthetic rubber, and 21% fillers. Fillers is carbon black and silica. The rest is shared between chemical products, around 15%, steel cores, 9%, and textile.

Speaker #3: 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.

Speaker #3: So I will not try to give you a magic formula of translating with starting with dollar per barrel and translating in million of euro of raw material cost.

Yves Chapot: That's basically the different source of our raw materials. Of course, there is a direct sensitivity on the oil price. Some of the products we are using are just derivated from the long oil transformation value chain. That's probably where it's most difficult to assess. 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.

Speaker #3: Keep in mind as well that we are a global company. All these raw materials are priced in dollars—in USD, the underlying currency is the USD.

Speaker #3: And we are purchasing in euro, GMMB, Thai baht, as well as Brazilian real, and USD. So there is also an effect on the currencies in our acquisition cost.

Speaker #4: Okay, okay. Another complicated one—housekeeping question. Because I remember in the previous call, you mentioned that, for Romat, Tailwind: €400 million, but today you are telling us they are erased by inflation—cost inflation.

Speaker #4: But in the previous call, you also mentioned that the cost inflation was in the region of €200 million. So I'm unable to match the figures if probably the cost inflation is much higher than €400 million.

Yves Chapot: I will not try to give you a magic formula of translating with starting with dollar per barrel and translating million of EUR of raw material costs. Keep in mind as well that we are a global company. All the raw material are priced in dollars, in USD, the underlying currency in the USD. We are purchasing in euro, RMB, Thai baht, and as well, Brazilian real, and USD. There is as well an effect on the currencies in our acquisition costs.

Speaker #4: Starting from the €200 million that you commented on, or I don't know if I remember correctly—the €200 million at the beginning of the year.

Speaker #3: No, no. At the beginning of the year, the assumption was the following. We were expecting a €400 million tailwind from Romat, and a €200 million headwind from other inflators.

Speaker #3: 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 a €400 million tailwind—headwind—from raw materials.

Speaker #3: So you can say that if it's confirmed, the net effect on raw material would be €100 million. That was last year. And another €100 million on energy and transportation.

Martino De Ambroggi: Okay. Okay. A little complicated. One housekeeping question, because I remember in the previous call you mentioned that raw mat tailwind EUR 400 million, that today you are telling us, they are erased by inflation, cost inflation.

Speaker #3: So the net effect of cost inflation outside raw material should be around $300 million.

Yves Chapot: Mm-hmm.

Martino De Ambroggi: In, in the previous call, you also mentioned that the cost inflation was in the region of EUR 200 million. I'm unable to match the figures if probably the cost inflation is much higher than EUR 400, starting from the EUR 200 that you commented, or I don't know if I remember correctly, the EUR 200 million at the beginning of the year.

Speaker #4: Okay. Okay. Now it works. Okay. Thank you, Yves.

Speaker #3: Thank you, Martino.

Speaker #1: Next question is from Michael Fondokidis, Adobe HF.

Speaker #5: Yes, hi. 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.

Yves Chapot: No. At the beginning of the year, the assumption was the following: We were expecting a EUR 400 million tailwind from raw mats and a EUR 200 million headwind from other inflators. Everything including salaries in some regions, energy, transportation, and now these assumptions are still valid, but on top of that, we are going to get a EUR 400 million headwind, of which EUR 300 million is coming from raw materials. 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 come on energy and transportation. The net effect of cost inflation outside raw materials should be around EUR 300 million.

Speaker #5: 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.

Speaker #5: I mean, some of the charts, both in OE and replacements, are a bit higher than where they were in February, which is a bit puzzling to me.

Speaker #5: Especially on the OE, with S&P cutting estimates from flat-ish in February to minus 2 now. So how do you reconcile that? And how do you reconcile 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.

Speaker #5: That's the first question.

Speaker #3: Yeah. Michael, we have not changed our globally in terms of markets. Both for consumer and transportation.

Speaker #5: Now, I see that minus two plus two 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 your indicating that the Middle East issue will have a negative impact on volumes?

Martino De Ambroggi: Okay. Okay. Now it works. Okay. Thank you, Yves.

Yves Chapot: Thank you, Martino.

Operator 3: Next question is from Michael Foundoukidis, ODDO BHF.

Operator: Next question is from Michael Foundoukidis, ODDO BHF.

Michael Foundoukidis: Yes. Hi. 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 replacements, 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 -2 now.

Speaker #5: And you're also saying that you cannot commit anymore on the Q2 volumes improvement.

Speaker #3: So, what I said is that the hypothesis that we share with you in detail—the one that is in slide 13—has been built without taking into account the potential systemic effect of the Middle East conflict on the final demand.

Speaker #3: Because, for the time being—still the month of March—we have not seen a very different market picture than the one that we described at the 2025 yearly disclosure.

Michael Foundoukidis: How to reconciliate that and how to reconciliate also the view that you are saying in the Middle East slide that you expect, more negative, I mean, negative tire demand, but still, you do not change at your market scenario. That is the first question.

Yves Chapot: Yeah. Michael, we have not changed our outlook globally in terms of market, both for consumer and transportation.

Speaker #5: Okay. So, guidance still embeds slight volume growth at this point.

Speaker #3: Yes. Yeah.

Speaker #5: Okay. Then maybe a question on pricing and for Q2. Probably indexation clauses will remain negative. In Q2, do you think that replacement price increases that you mentioned in the call are sufficient to, let's say, offset them and lead to break even on the pricing side?

Michael Foundoukidis: No, I see the minus two plus two are the same. Some of the charts, I mean, where the points are higher. 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 cannot commit any more on the Q2 volumes improvement?

Speaker #5: And second question on that side too—on the mixed side—do you expect to maintain this around, let's say, 2% for the full year?

Yves Chapot: What I said is that the hypothesis that we share with you in detail, the one that is in the slide 13, 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.

Speaker #3: So, on the indexation close, I will not mix the indexation close that we are seeing, 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.

Speaker #3: With the fact that we are probably going to see indexation close playing in the other way, in the very late part of the year.

Speaker #3: Because of raw material price increasing now. But that will translate later on in our cost of goods hold. And I will not mix that with the increase on the replacement market.

Michael Foundoukidis: Okay. guidance still embeds a slight volume growth at this point.

Speaker #3: Because, again, we try to have a fair price policy. So, we are not trying to overcompensate one market by the other. I mentioned very clearly that the other 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 of the clauses.

Yves Chapot: Yes.

Michael Foundoukidis: Okay.

Yves Chapot: Yes.

Michael Foundoukidis: Okay. 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 break even on the pricing side? 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?

Yves Chapot: 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 H2 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. That will translate later on in our cost of goods sold. I will not mix that with the increase on the replacement market, because again, we try to have fair price policy, so we don't, you know, trying to overcompensate one market by the other.

Speaker #3: And regarding the mix, the mix was quite strong. And in the first half, it will depend on the, let's say, the weight of the recovery of the original equipment volumes.

Speaker #3: But as we can expect, a slight rebalance between OE and RT maybe will have a slightly lower mix effect in the second half.

Speaker #5: Okay, thanks. Maybe one last question, more general, just to better understand your guidance. Since February, I would say that volumes are probably more negative than you assumed.

Speaker #5: Costs, obviously, are also. So how do you assess that in your guidance? I mean, probably pricing, of course—that's the number one. But is it only that?

Speaker #5: 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?

Yves Chapot: I mentioned very clearly that the overinflation triggered by the situation in the Middle East that will impact our cost of goods sold on our index business in H2 will not be fully recovered by price adjustments because there is a time lag in the application of the tools. Regarding the mix, the mix was quite strong in H1. It will depend on the, let's say, the weight of the recovery of the original equipment volumes. As we can expect a slight rebalance between OE and RT, maybe we'll have a slightly lower mix effect in H2.

Speaker #5: Thanks. That's the last one.

Speaker #3: Yeah. It's 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.

Speaker #3: We as well are going as well to offset that by a discipline. And as I mentioned, at the end of the presentation, you know that we have implemented in the past two years one of the largest restructuration plans that the group has ever implemented.

Michael Foundoukidis: Okay, thanks. 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. Cost obviously are also. 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? Thanks. That's the last one.

Speaker #3: We continue to work on our cost structure. We have downsides. Our distribution retail operations in the second in the UK for light vehicles in February.

Speaker #3: And we continue to work on improving our footprint. What we can say as well is that, probably,

Speaker #5: But any new additional restructuring since February? Or any measures that you would add?

Yves Chapot: Yeah. It's, well, so your assumption is that, well, of course, the volume can be, let's say less, less positive in the H2 than what we were expecting in February. We are going as well to offset that by strong cost discipline. As I mentioned at the end of the presentation, you know that we have implemented in the past 2 years one of the largest restructure plan that the group has ever implemented. We continue to work on our cost structure. We have downsized our distribution retail operations in the UK for light vehicles in February. We continue to work on improving our footprint.

Speaker #3: As I said, in February we announced the closure of sales and the closure of our retail distribution network in the UK for light vehicles.

Speaker #3: More than 100 points of sales. And we recently announced, two weeks ago, the closure of one factory for Agro Trucks in the US and the merger of this factory with another one.

Speaker #3: 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.

Speaker #5: Okay. Thanks. Very clear.

Speaker #3: Thank you, Michel.

Speaker #1: Last question is from Ralph McDonald, CT.

Speaker #6: Hi there. Thank you for taking my questions. The first question is just on the mixed benefits—obviously quite strong in Q1 at plus 1.9%. Do you have any guidance you can give on the overall mix contribution for the full year 2026, and what sort of drop-through we should assume for that?

Yves Chapot: What we can say as well is that.

Michael Foundoukidis: But any new-

Yves Chapot: Oh, yeah.

Michael Foundoukidis: Just to follow up. Is there any additional restructuring since February or any measures that you would add?

Speaker #6: It looks like on channel mix, tier mix, and obviously segment mix, all are positive here. So, how should we think about the overall mixed benefits revenues this year?

Yves Chapot: We announced, as I said, in February, we announced the closure, the sales and the closure of our retail distribution network in the UK for light vehicles.

Speaker #6: 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.

Michael Foundoukidis: Yeah.

Yves Chapot: More than 100 point of sales. We recently announced 2 weeks ago the closure of 1 factory for agro trucks in the US, 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.

Speaker #6: 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?

Speaker #6: 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 €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.

Michael Foundoukidis: Okay. Thanks. Very clear.

Yves Chapot: Thank you again.

Operator 3: Last question is from Ross MacDonald, Stifel.

Operator: Last question is from Ross MacDonald, Stifel.

Ross MacDonald: Hi there. Thank you for taking my questions. The first question, just on the mix benefits, obviously quite strong in Q1 at +1.9%. Do you have any guide if you can give on the overall mix contribution for the full year 2026? What sort of drop through we should assume for that. It looks like on channel mix, tire mix, and obviously segment mix are all positive here. How should we think about the overall mix benefits revenues this year? The next question, I'm sorry to come back to the net price versus raw mats.

Speaker #6: And then a final question. Obviously, oil is continuing to rise. We have the tariffs in the US. It sounds like industry pricing isn't moving up too much.

Speaker #6: How do you think about value over volume benefit to Michelin going volume in the US to protect volumes and fixed cost absorption this year?

Speaker #6: I'd just be curious how you think about leaning on your budget brands to maybe shore up some of the volume this year. Thank you.

Ross MacDonald: 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 2026, 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? 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 2026, and we have roughly EUR 300 million of manufacturing and logistics.

Speaker #3: 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, the energy cost, and the transportation cost are respectively lower in premium brands or premium products than on entry products and budget products.

Speaker #3: So except if there was a massive

Speaker #3: favorable for premium manufacturers like after some of the lower-end 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 are probably impacted by inflation faster than in North America and Europe.

Ross MacDonald: Maybe if you could just split both of those buckets in terms of your assumptions for 2026, then I can work back how much price mix and volume need to be to offset that. A final question. Obviously, oil is continuing to rise. We have the tariffs in the US. 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 US to protect volumes and fixed cost absorption this year? Just be curious how you think about leaning on your budget brands to maybe shore up some of the volume this year. Thank you.

Speaker #3: And on top of that, they have to build 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 were expecting a €400 million tailwind on raw mat, and now we know that we have at least a €300 million headwind which is coming from the event in the Middle East.

Yves Chapot: Maybe I will take the 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 the entry products, in budget products. Except if there was a massive, let's say, tear down market effect, generally, this kind of situation is more favorable for premium manufacturers, like us. Because the cheaper brand that are mostly imported from Asia will have to be, first, being in Asia, they are probably impacted by inflation faster than in North America and Europe.

Speaker #3: So, net is still a €100 million tailwind. And on the log of energy and other inflators, we're betting on €200 million of inflation, on which we will have to wind the €100 million coming from the impact of the Middle East conflict.

Speaker #3: Last regarding the mix. So we have a strong mix but if you look over the past years, we have a mixed effect that are generally translated around 1.5 which has moved around 1.5%.

Speaker #3: We are at 1.9 in the first quarter. I believe that a reasonable assumption for the full year at 1.5 is probably the most relevant assumption that you can take.

Yves Chapot: On top of that, they have to bear the extra cost of the transportation. That's my first point. Regarding, assume net price raw material versus a new bridge of 2026. As I said, we were at the start of the year, we were expecting a EUR 400 million tailwind on raw mat, now we know that we have at least a EUR 300 million headwind, which is coming from the event in the Middle East. Net is still EUR 100 million tailwind. On the load of energy and other inflators, we are betting on EUR 200 million on inflation on which we will have to run the EUR 100 million coming from the impact of the Middle East conflict.

Speaker #6: Thanks, Steve. 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.

Speaker #6: But with that implied, there's maybe a further $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?

Speaker #6: Thank you.

Speaker #3: For sure. 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've not looked at the news today when the almost straight will be fully reopened.

Yves Chapot: Last, regarding the mix. We have a strong mix, but if you look over the past years, we have a mix effect that are generally translated around 1.5. Just move around 1.5%. We are at 1.9 on the Q1. I believe that a reasonable assumption for the full year at 1.5 is probably the most relevant assumption that you can take.

Speaker #3: So, I think I will not make any speculation—let’s say beyond one quarter.

Speaker #6: Thanks, Steve. And all the best.

Speaker #3: Thank you, Ross. And I believe it's a last question so ladies and gentlemen, thank you very much for your attention. Our next meeting is scheduled with 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 eight years.

Ross MacDonald: Thanks, Yves. 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. Would that imply there's maybe a further EUR 150 million, let's say, cost headwind into early 2027? I know it's still very early in 2026, how should we think about the cost inflation that carries over into 2027 based on your analysis? Thank you.

Speaker #3: So, thank you very much, and I wish you a good evening. Bye-bye.

Yves Chapot: For sure. If the situation is lasting further, there will be a carryover in 2027. Let's take the situation quarter by quarter. Nobody knows, I've not looked at the news today, when the Strait of Hormuz will be fully reopened. I think, I will not make any speculation, let's say, beyond beyond 1 quarter.

Ross MacDonald: Thanks, Yves, and all the best.

Yves Chapot: Thank you, Ross. I believe it's the last question. Ladies and gentlemen, thank you very much for your attention. Our next meeting is scheduled with the shareholders meeting on the 22 May. 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. Thank you very much, and I wish you a good evening. Bye-bye.

Operator 3: Ladies and gentlemen, this concludes today's Michelin conference call. Thank you for your participation. You may now disconnect.

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

Q1 2026 Compagnie Generale des Etablissements Michelin SCA Earnings Call

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