Michelin Cie Gen Unsp/Adr

Ladies and gentlemen, welcome to the Michelin 2026 first half results. I now hand over to Mr. Florent Melego, chief executive officer, and Miss Benedict de Bonnechaus, group CFO. Please go ahead.

Ladies and gentlemen, good afternoon and good evening. Thank you for joining us for our Michelin's first half 2026 results presentation. For this presentation and Q&A session, I am pleased to be with Benedicte Bonnechaude, our new CFO. In a context still highly uncertain, shaped by mixed macroeconomic signals, geopolitical tensions, evolving trade dynamics, strong currency headwinds, I am pleased to report that Michelin delivered a solid first half performance. This performance confirms the strength of our fundamentals. A powerful Michelin brand, the resilience of our business model, our tight operational steering, the quality of our business portfolio, and the relevance of our long-term strategy, Michelin In Motion 2030. I will start with some key messages for the first half and our outlook for 2026, then Benedict will take you through our markets, our financial performance, our cash generation, our outlook, and our guidance. Let me start with our first semester performance. What you see on the screen, and if you are aware to summarize it, I would qualify it as solid. Solid in terms of financial performance, as our slight revenue growth translated into a significant segment operating income progression of over 100 million Euro at constant Forex and Scope versus, of course, the first half of 2025. Solid in-tire activities as our Michelin brand posted material growth and gain share in most replacement markets. It reflects our customers' trust, the quality of our products, the strength of our distribution, and the relevance of our value proposition. Q2 marked a turning point. We are back to growing in tires. Solid in-polymer composite solutions. We are now integrating our three acquisitions announced in January. Kool-Aid Group and Flexitalik close in H1 and Tex-Tex close in July 1st. These transactions are fully aligned with our strategy to build a broader, more diversified and more resilient portfolio of high-value polymer composite activities. Altogether, they will increase polymer composite solutions revenue by 35% on a full-year basis. In summary, our first half was marked by solid execution, disciplined steering, continued ground momentum, and strategic progress. Our world may be chaotic, our assets are well grounded and weatherproof. Storm after storm, crisis after crisis, our strategy proves to be effective as it increases the resilience of our group. In 2026, we are growing both in tires and in non-tire businesses. Operating in an uncertain and chaotic environment has become our new normal. We see uncertainty in demand, in global trade, in exchange rates, in cost of raw materials, energy and in geopolitical environment. In particular, the conflict in the Middle East has created additional risk around energy, logistics, raw materials and demand. In this context, Michelin's ability to deliver is supported by four unique and differentiating strengths. First, of course, our teams. Our results are made possible by the engagement, agility and expertise of Michelin teams all around the world. Their ability to adapt, to serve customers and to execute transformation projects is a decisive competitive advantage.

Second, innovation.

Michelin's innovation is not limited to tires. We are developing new materials, new polymer technologies, digital twins, data-driven services and solutions to help customers improve their operational performance. Innovation is at the heart of our competitiveness and remains a key driver of our 2030 ambition. Third, our Michelin brand, now worth over 10 billion US dollars, is recognized and trusted all around the world. Our first half growth in Michelin brand replacement sales shows that even in uncertain conditions, customers continue to value performance, reliability, and trust. And at last, fourth, product and services. Our innovation pipeline remains very strong. We continue to launch products that improve performance for customers with a focus on safety, longevity, energy efficiency, and sustainability. These strengths enable us to keep moving toward our Michelin in Motion 2030 ambitions and to confirm our 2026 guidance. At Michelin, We assess our performance through a balanced lens, people, profit and planet. Let me share with you some examples of our achievements in each of these pillars over the first semester. People, as you can see on the screen, we progressed in recognition and attractiveness. Michelin has been ranked seventh European most innovative company in Fortune's 2026 ranking. We also stood out in inclusion and fairness as we obtained the Universal Fair Pay Check certificate from the Fair Pay Innovation Lab, which recognizes gender equitable compensation on a global scale. Profits. On top of the segment operating income I mentioned earlier, our group delivered a positive free cash flow of €282 million, a strong improvement compared with the first half of 2025. We continued to reduce our environmental footprint. Water withdrawal decreased by 8% compared with the first half of 2025 and CO2 emissions on scope 1 and 2 declined by 9%. These improvements reflect the many initiatives deployed across our sites and operations. In short, Michelin delivered a balanced first half performance, financially resilient, socially responsible and environmentally committed. I now hand over to Bénédicte for more details.

Thank you Florent and good evening and good afternoon ladies and gentlemen. I will have the pleasure to guide you through our H1 results. Starting with the tyre market's evolution during the first semester. Overall, OE market remained weak while replacement was resilient, but the picture was very contrasted between regions. In passenger car, OE market was down 3%, dragged down by China, where domestic demand was less dynamic than in 2025, because incentives for new vehicle purchases have become less generous. Europe and North America remained stable overall despite pressures from the broader economic environment such as tariffs and the conflict in the Middle East. Replacement market grew by around 1%. On the one hand, it benefited from China with positive macroeconomics and the replacement effect of the many new vehicles delivered over recent years. On the other hand, the North American market declined reflecting the progressive reduction of the surplus stock of Asian tires built up in 2025. Europe was slightly down as well, with ups and downs due to swings of import flows. I am taking the opportunity here to remind you that in Europe, anti-dumping measures on passenger car tires produced in China came into force on July 8, with rates averaging 24 to 45% on the high end. In trucks, the oil market excluding China was down 2%. North American demand remains depressed in cumulative terms, but the month of June has turned positive, which is a long expected turning point. After several months of favorable orders for new trucks, production is set to accelerate. In Europe, demand maintains good momentum on a low comparison base And in South America, the Brazilian market was penalized by a difficult economic situation, limiting CAIA's investment and by competition for truck imports from Asia. In replacement, the market grew by 2%. Europe posted an increase reflecting resilient freight demand and stronger imports. In South America, demand rose strongly, driven by the combined effect of high imports and mechanical compensation for the decline in the oil market. The North American market fell sharply by 13% due to lower imports, difficult weather conditions early in the year, and the soft freight demand. In specialties, the situation is very contrasted. Mining markets remained well-oriented thanks to solid structural demand. In aircraft, The year started very strongly until the crisis broke out in the Middle East, which limited demand in the commercial segment in the second quarter. But overall, the semester was positive. Beyond Road showed a very mixed picture. In agriculture, replacement markets grew slightly, but OE remained displaced, especially in the high-power segment in North America. Infrastructure was positive, both OE and replacement. in the continuation of 2025. Material handling was flat, with replacement compensating for the decline in OE. Finally, the demand in defense posted growth. Moving to group revenue now, we have reached 12.7 billion euros in the first half. Reported revenue declined by 2.6% due to currency headwinds. At constant exchange rates, revenue was actually up by 0.5%, demonstrating the resilience of our business model in a still challenging market environment. Looking at the bridge, Scope contributed positively by €90 million, reflecting the acquisition of Coulee Group and Flexitalik, partly offset by the disposal of Compact Line activities to SEAT completed last year. We are down 0.9%, mainly reflecting lower original equipment demand and lower sales of Tier 3 brands. This was partly offset by the strong performance of the machine brand in replacement. A word about the trend. Along the semester, we saw an improvement in sales momentum in Q2 versus Q1, with June posting significant growth. Price mix remained a strong contributor, adding €115 million. Behind this figure, mix was particularly strong at plus 1.8%, driven by continued premiumization, a richer product mix with larger range size, and a favorable channel mix with replacement outperforming OE. The negative pricing effect mainly reflects the impact of indexed contracts linked to low raw material costs in 2025 and our dynamic pricing approach. This overshadows price increase implemented in Q2 to offset cost inflators triggered by the Middle East conflict. Non-tire businesses are the modest negative impact of 21 million euros. You may need to reach demand in conveyors, partly masking the good performance of other polymer composite solution businesses on a comparable basis. Finally, currencies had a very significant negative impact of more than 400 million euros, largely driven by the depreciation of the US dollar against the euro. In summary, H1 revenue growth at constant exchange rates was supported by mix, mission-bound strength and targeted acquisition, with sales gaining momentum over the semester. Tuning now on the detailed view of volume performance. This slide shows how the 0.9% decline results from two opposing trends. While replacement outperformed, driven by machine-bound strength, original equipment remained challenging. In OE, the group continued to face weaker markets, especially in truck North and South America. In passenger car, sales failed to recover due to weak demand, an unfavorable mix of automakers and vehicle models in some regions. In the first half, machine-bound sales in replacements increased by 5% in tonnage, a strong performance in the context of relatively modest market growth. This was driven by several factors. The strength of our product offering, The success of recent launches, such as Mission Climatic 5 Energy, continued growth in 18-inch and larger tires, and good momentum in key markets such as Europe, China, and North America. Regarding Tier 2, brand sales remained flat, while Tier 3 brand sales declined, challenged by strong import flows from Asia, which resulted in high inventory levels in distribution in some regions particularly Europe and North America. Turning now to profitability. Segment operating income reached 1.45 billion euros, representing an operating margin of 11.4%, an improvement of 0.3 points versus last year. At constant scope and effects, SLI rose by 103 million euros, or 7%, reflecting strong operational execution. Looking at the bridge, lower volumes had a limited 38 million euros drag, as improved plant utilization helped contain fixed cost absorption. Price mix contributed 78 million euros, driven by primarization and a favorable shift to replacement and larger rim size. Raw materials delivered a substantial 199 million euros tail rim, following the decline in raw material prices during 2025. This was partly offset by €130 million higher manufacturing and logistics costs, including tariffs and inflationary pressures. Finally, currencies reduced segment operating income by €114 million. Despite the epic lead-win, margin improved versus H1 2025, underlining the resilience of our model. Looking now at the business segments. Consumer delivered resilient performance with revenue increasing by 0.7% at constant exchange rates and an operating margin improving to 12.5%. Volumes growth was supported by automotive replacements and two wheel cells. Machine brand performance was strong in replacements Notably in Europe and China and market share improved in North America. Transportation posted a revenue of 2.8 billion euros. This segment continued to face difficult market conditions in the first half leading to lower revenue and margin pressure. However, profitability improved slightly with a gain of 0.3 points thanks to better fixed cost absorption following the restructuring of our manufacturing footprint. Specialties revenue reached 2.2 billion euros, demonstrated continued resilience with a 1.1% increase at constant exchange rates and a solid operating margin of 14.1%. Mining and aircraft delivered strong growth while agriculture only remained depressed. Infrastructure and defense showed encouraging signs of improvement. Polymer Composite Solutions maintained strong momentum, posting 16% revenue growth driven by recent acquisition. While operating margin was affected by difficult market condition in conveyors, the segment continued to deliver attractive profitability and remained accretive to the group overall performance. Overall, the group achieved 0.5% revenue growth at constant exchange rates alongside a 0.3 points increase in margin. Now, I would like to give you more details regarding the performance of our polymer composite solutions business. You probably remember that it's made up of four main product categories. Conveyors that accounted for almost 40% of our revenues this semester, ceiling, coated fabrics and film, and belting. Out of these four categories, three posted good performance. Ceiling recorded strong growth, supported by momentum in hydraulic, gas compression, and aerospace applications. In addition, the integration of flexitalics from April has been supporting this positive trend and will be fully visible in the results of the second semester. Coated fabrics and fields growth was driven by the diversification of applications and the recovery of niche automotive solutions such as impregnated carbon fabrics. The integration of Coulet Group from February is progressing quickly, which enables the teams to focus on the business. Belsing posted growth, supported by resilient industrial markets, air and fluid handling solutions, or bearing liners in aeronautics. On the flip side, conveyors had to cope with a low demand cycle this semester, with Australia impacted by rich construction activity in China, and North America penalized by destocking and cash management at some distributors and industrial customers. Overall, we expect a sequential improvement in the operating margin of this segment in the second semester, with a rebalancing of our business portfolio, resulting from the three acquisitions. Moving now to cash generation. You know that in the tire industry, the pattern is very seasonal, with most of the cash being generated in the second semester of the year. In H1, starting from an EBDA of 2.4 billion euros, a 19.1% of sales, the group was able to generate a positive free cash flow of 282 million euros over the period. To do so in an inflationary context, We had to steer very closely our operations, especially our working capital in CAPEX. We did not cancel or postpone any major projects, and we are maintaining a CAPEX ambition of around 2 billion euros for the year. M&A accounts for around 600 million euros over the period, with the closing of Coulee and FlexItaly. The closing of TexTech will impact the financials of the second semester. Looking at now the net debt, you can see that our gearing has increased slightly versus last year, going from 22% to 26% at the end of June 2026, reflecting mainly the recent acquisition. This financial strength gives us the flexibility to pursue a balanced capital allocation policy. Investing in the business, financing targeted acquisitions, maintaining an attractive shareholder return and preserving a strong balance sheet. In 2026, around 1.7 billion euros will be returned to shareholders, including 944 million euros of dividends paid in May and around 750 million euros share buyback, of which 300 million euros were already executed at the end of June. The group continues to benefit from strong long-term credit ratings. All major agencies reaffirm the group rating of A with stable outlook during the first semester. Now moving to 2026 outlook. I will start first by sharing our vision of the tire market. In passenger car, We see the situation weakening slightly in the second semester. OE markets should be more negative in H2 than they were in H1. Except China that is expected to remain negative, but to a lesser extent than in H1, all other regions are showing a downward trend. Replacement markets should be similar to H1 at best. The main change here is China, where the strong growth posted in H1 should normalize. In trucks, the situation is contrasted. We are confident that OE markets will improve, driven by the recovery in North America. After the strong pre-order of the first semester and EPA 27 is still expected to be a catalyst, tire markets should pose significant growth in H2. The situation should be more stable in Europe. Replacement markets should be close to H1, maybe slightly below, due to some normalization of the demand in Europe. In specialties, mining demand is expected to be slightly more supportive sequentially as the inventory situation is very sound. Aircraft markets depend on the geopolitical situation, but the outlook is positive at this stage. And regarding beyond road, infrastructure and defense should be growing while material handling and agricultural look contrasted. At AgOE especially, the market is stuck in a historically long downturn and there are no signs of a short-term rebound. So before moving to our guidance, I would like to briefly come back to the Middle East situation as shared in our first quarter release and the way we qualified it. As a reminder, in Q1 we shared a scenario to illustrate the potential impact of a prolonged conflict. The scenario considered was based on the Brent oil price around 100 US dollars per barrel for the rest of the year, along with the related effects on raw material, energy, and logistic costs. Looking at the first half actual, the situation has evolved almost in line with the assumptions. Demand has remained resilient overall and we managed to ensure business continuity toward our customers as well as our supply in raw materials. However, the geopolitical environment remains highly uncertain and triggers high volatility, as illustrated by the swings in brand price. For this reason, we keep our assumptions broadly unchanged, including the brand scenario rather than assuming a normalisation that cannot yet be taken for granted. Based on these assumptions, we continue to estimate that a prolonged disruption could generate around 400 million euros of additional cost inflation, mainly for raw materials, energy and logistics. We are steering along this scenario in an agile way, in close contact with each of our markets. and leveraging our brand premium on a skew-by-skew basis thanks to our precision pricing approach. As you are aware, Michelin has a proven track record of performing well in this environment. Our crisis management process remains in place, while our vertical integration, local for local footprint, and disciplined pricing and mix management help mitigate risk and protect profitability. Finally, based on our solid first-half performance and despite the continued uncertainties surrounding currencies and the geopolitical environment, we are confirming our full-year guidance. We continue to expect segment operating income at constant action rates and scope to exceed 2025 levels. We also reaffirm our objective of generating more than 1.6 billion euros in free cash flow before M&A. Looking ahead, we remain committed to delivering attractive shareholder returns through a balanced capital allocation policy, combining a sustainable dividend with the ongoing share buyback program. Before we get into the Q&A session, I would like to conclude by sharing with you the schedule of our upcoming financial milestone. In particular, I wish to inform you that the date for our next capital market It will take place on May 28, 2027. This concludes the presentation. Thank you for your attention. And together with Florent, we are now ready to take your questions.

Ladies and gentlemen, if you wish to ask a question, please press star 1 on your phone keypad. Please ask your question in English. Please limit yourself to two questions only. If you have additional questions, we kindly ask that you rejoin the Q&A queue to allow time for other analysts. The first question is from Martino de Ambrogi with Equita. Please go ahead.

Thank you. Good evening, everybody. My focus is on the free cash flow. Just on the restructuring costs, I know it is difficult to have a precise estimate, but could you quantify what is the cash out that you have in 26 and 27 roughly embedded in current guidance for this year free cash flow? And the second one is on the volume drop through, which was particularly low in this semester. You mentioned higher capacity utilization, higher cost absorption. Could you quantify what is the change in the capacity utilization in the first half, and if 31 is achievable also going ahead as a drop through for volumes? Thank you.

The first element, so your question about the drop-through and the capacity utilizations, right now The capacity utilization is slightly overall below 80% and improving month after month. So, we are confident that the drop-through will improve due to that. Now, as far as the free cash flow, we have... Maybe you want to give... Yeah, absolutely.

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

The next question comes from Thomas Besson with Kepler Chevreux. Please go ahead.

Thank you. I'd like to ask a first question about your SR4, please. You don't disclose the organic loss course of that business. Is it possible to have the number for that? And could you also break down the scope effects in revenues and adjusted EBIT between the SR4 acquisitions and the tar business you sold last year? That's my first question. And the second, is about volume growth by segments and by quarter. Is it right that your Q2 volumes were already positive in the FR2 and Q2, but that they turned back to negative in FR3? Is that correct? Can you give us a bit more granularity than the comments you've made to explain specifically the negative figure for FR3? That came as a surprise at least for me. Is it fair to believe that you could have, in the second half of the year, FR2 and FR3 volumes, eventually positive, given your comments about mining being sequentially better in the second half? Thank you.

Loaded questions. So the first one, in SR4 revenue, we had basically a 14% increase, but that included 90% on perimeter due to M&A, and minus 2% on Forex, and basically we didn't grow on the rest of the activities. Many do, as explained by Benedict, to the conveyor, the situation that we think is temporary, especially for our conveyor north activities. Australia has been struggling in the first semester but improving throughout the semester, so we are hopeful that the situation will improve in the second semester. Now, the conveyor is the main cause of the operating margin decrease. We grew everywhere else. So we don't disclose the families inside SR4, but we are still in the growth pattern everywhere. Now we have some, conveyors have some cycles and we are in the dyne cycle right now. Now for the volume in SR2 and SR3, what your comment about SR2 is true. Yes, we have grown in Q2 in SR2. especially replacement, slightly at OE but mainly on replacement. Now for SR3, the main issue is concentrated on AG. We are ramping up production in material handling, in infrastructure, in defense, mobility, and so there we have a good momentum. Ag, especially OE Ag, which accounts for more than 60% of our volume in Ag, is still stuck. And therefore, we have not grown beyond road in volume. Now, in the second semester, Again, it will depend on, for Beyond Growth, it will depend on the Ag OE. And we have to look at John Lear and the other players in that field to understand better. We think we will have slight growth in the second semester. However, we don't know at this stage because the environmental conditions, especially the farmers' net income in the U.S. is not very strong, despite the subsidies that went into the market. So we don't know. But we have very good perspective in mining, aviation, and for the rest of Beyond Road, excepting ag for the second semester.

The next question comes from Michael . with Odo BHS. Please go ahead.

Yes, hi. Two questions also on my side. So first one on raw materials. I have to admit that given the full guidance of tailwinds of around 100 million euros, I was expecting a higher tailwind in H1.

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

Is it better?

We cannot hear you.

Is it better now?

Hello? Yes, it's better now.

Okay, sorry. So what I was saying is on raw materials, given your four-year guidance, which was, if I'm correct, around 100 million positive, I was expecting a higher tailwind in H1. So could you explain why it was not higher as you were expecting a 400 million four-year tailwind back in February? And what do you expect for H2 as a result at current spots? And maybe a second question on price mix, which was lower than expected in Q2, despite the very solid performance of the Michelin brand. It seems that mix was broadly similar in Q2 versus Q1, but price was more negative. There's probably some indexation closures, but would have also expected some initial price increases in the replacement segment. Could you clarify what should we expect on both heading into H2, with pricing likely improving, but mix deteriorating?

So on the prices and then maybe you can answer on the raw materials. So for prices, first we would not make detailed comments due to what you understand as the situation. But what you should factor in the price mix. In Q2 we started to have the index contract to kick in. We had a little effect in Q1, but more effect in Q2. Those effects will be less in the second semester. Then, of course, we had some price investment, and the price increases we've announced have an effect towards the second semester, not the first semester. So that's why you don't see them in the price mix effect. But the mix has been very strong and slightly above the expectation. And for raw materials?

So for raw materials, initially we were expecting a positive 400 million euros for the full year. Then after the Middle East crisis, we said that we will have a decrease in this positive element roughly around 300 euros for raw materials, so a net for the year of 100 million euros. So you need to have in mind that behind this question of rent and the inflation that we have on all raw material derivative from oil, was much higher than the swing that we have seen via the oil with the barrel. So it is why at the end we are still expecting a positive around 8100 mil for the year, so less positive than what was initially expected.

The next question comes from Harry Martin with Bernstein. Please go ahead.

Good evening. So the first question I have is on the US market. The replacement market trends have been weak in the first half, but from today, you should outperform on imports and also lack the ATG contract, the non-renewal and Q3 as well. So are you preparing the US business for growth in the second half, even if the market outlook is fairly flat? And then maybe if you can put the context of the Tuscaloosa plant closure into that outlook as well, in terms of the right size of the US business. And then the second question is on free cash flow. H1 capex was quite a bit lower year over year, similar to the discipline we saw in H2 last year. still expecting 2 billion in total for the year as a big ramp in the second half. So can you give a bit of color into what that capex is being spent on and the sort of the speed of payback of those projects? Thanks.

Okay, so for the US market, we anticipate the second semester not to be buoyant because the US economy The real economy is not very strong right now. You have high inflation in the U.S. The income is not very strong. Consumer revenue is not very strong. So we don't anticipate a sharp rebound for the U.S. volume in the second semester. But they should be in line with what we were expecting. Now with the Tuscaloosa, what we are doing is we had two under-optimized plants. We had one in Texas and the other one in Fort Wayne and the other one in Tuscaloosa. So we decided to shut, gradually shut down the Tuscaloosa to transfer those productions. Cie Gen Unsp with our local to local policy. Now, in terms of share market, we don't anticipate market share losses due to this gradual closure. The aim of this consolidation is to improve efficiency and productivity. We are also upgrading the Fortran capabilities so that they can produce the big tires that are required for BFG, especially off-road. Now, as far as the capex, as you perfectly noted that the first semester was lower in spending than the preceding year, nothing to read about that. It's more about seasonality of our capex and we will have our investment policy is not really affected and we didn't change anything in the first semester. Maybe you want to add?

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

Next question comes from Jose Asumandi with JP Morgan. Please go ahead.

Thank you. Two questions please. Can you please quantify roughly how much is the capacity expansion you're doing in China on SR1? When do you expect the capacity to come on stream? And if you could comment broadly on, you know, the proportion of revenues that China represents within SR1. I suspect this region has higher margins than the other regions, if possible, to comment. And then the second question on a group level now, I would just, I want to simply just go back again to MIPS and do you see an opportunity for MIPS to accelerate in the second half of the year versus the first half?

Thank you. So about China, so we are expanding our capacity in Shanghai. Therefore we are reducing also the imports to China. So this expansion is also due to offset some imports that we are still doing from especially Europe into China to cover the sales we are doing in China. So again our strategy is mainly local to local. The revenue that China represents overall is, at group level, is around 6% of our revenue and China is mainly exposed towards passenger car sales. We have some, now we have, you probably remember that we had We have shut down our production capacity in truck in China so that we focus more on passenger car but also we are expanding very fast in two wheel and in ag and somewhat in mining but less in truck. The capacity expansion we are doing in Shanghai. is basically we are doubling the size of our plant in China. Over time, this capacity is ramping up. It started to ramp up last year, a year ago, so we will still be ramping up for the next at least 24 months. And the mix.

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

This question comes from Monica Bosio with Intesa San Paolo. Please go ahead.

Thank you for taking my question. I have to just recap on the volume side, given the different trends by segments. Do you still assume that volumes will turn positive in the second half of the year? And my second question is on the carryover effect of the inflation on raw material and other cost inflation in 2027. I know that it's early to talk about this, but I was wondering if you can give us an indication and if you are confident to recover part of the cost inflation that we will carry over in 2027. And if I may, if I can squeeze just a final one. Could you please explain how the introduction of the anti-damping measures in Europe could benefit the group? And if you see any benefits, if these benefits would be basically transitory. Thank you very much.

So the first part of your question is the answer is yes. We are expecting to continue to grow. We had a good momentum throughout the year. We continue to grow. We expect to continue to grow. And especially we are still expecting not a massive rebound, but a rebound in OE truck in North America, which would of course be beneficial to us. Now, as far as 2027, let's make a deal. If you can predict to me, What is going to happen in the Middle East for 2027? I can probably forecast you what the underlying raw material costs and inflation would be in 2027. What we see today is that because of what is happening, the inflation is going to be according to what we were expecting. We will have 400 million additional costs compared to what we were forecasting when we entered the year in 2026, because of what has happened now. We have, right now, it's too soon to make any prediction about 2027.

And perhaps in addition, what we said regarding 2026, we will protect our margin and 20% of costs related to

Now, your question about the anti-dumping measures for Europe, we have seen already the effect. Since they have been enforced, they have been put in place with an effective date, the volume of imports has sharply declined in Europe. The level of inventory of these tires in Europe is still very, very high and it will take many, many months before it's flushed out. So us, we are not that impacted by this because we play on the top of the Tier 1 market and therefore what is happening below is less affecting us than others.

The next question comes from Christoph Laskawi with Deutsche Bank. Please go ahead.

Good evening. Thank you for taking my questions. The first one would be on your comment that June saw quite some momentum in volume terms. Could you comment what was driving that in particular? Was it comp-based, potentially a free or you hike the prices for the mitigation Any comment, really, if it was basically ranked in some of the end markets? And then you mentioned also for price in Q2, price investments that you did. Could you comment on in which region or division you did that mostly? And then the last question, if I may, just on how you approach purchasing now with the significant volatility. Have you in any way changed the approach a bit? in purchasing your raw materials moving forward? Did you leave some exposure more open than you usually do, considering the volatility, or is it essentially unchanged in business as usual? Thank you.

Okay, so regarding the volume impact in the first half, yes, there was a small pre-buy in the volume we've seen in June, but it was small. So we are more capitalizing on the fact that we are rightly priced in the market now. The fact that we have excellent products. We have launched very well received new products. In every product line, so it's not only passenger car but also in truck, it's also in material handling and so we have a big portfolio of launches that have helped. 2025 we had almost zero launches during that year, which also is penalizing our activities. Now, as far as pricing, pricing is still very volatile and we anticipate that basically we adapt our pricing to the circumstances, of course, and to the market So we constantly watch what is happening and we see and then we adapt. And of course I cannot make too many comments on this. We were agile and we will continue to be agile. In every business segment? In every business segment. Now your question about did we change anything in our purchasing policies? The answer is no. We have a very strict business continuity management where we balance the risk of our sourcing all the time. So we reassess the situation. So we play more on a long-term relationship with our suppliers than on short-term opportunities. So we think it's better for our brand, especially for Michelin Brand. The next question comes from Ross McDonald with Citi. Please go ahead.

Yes, good evening. Thank you for the call. I have three questions, so I'll keep them reasonably brief. The first one from an investor is actually just looking at IEPA tariff rebates. So the question is just to be clear that you haven't released any IEPA rebates year to date, and perhaps you can quantify if you were to do so, you know, what the magnitude could be to the group on a full year basis. My second question is on raw materials. I notice a lot of your assumptions seem to be around, the conflict and Brent prices specifically. But looking at the natural rubber prices, there seems to be something else happening and quite a big surge in natural rubber specifically. So I'd be interested if you think that's maybe being driven by this El Nino concern and how Michelin as a group can to defend themselves against any potential weather-related shortages for natural rubber. More comments would be appreciated just on how you're thinking about navigating the natural rubber inflation specifically. And then my final one is a quick great question. You showed very good spin on SG&A in the first half. How should I think about the SG&A and manufacturing headwinds for the full year now, given that big first half performance?

Thank you. Okay. So about the tariff rebates. So, we have enjoyed the double impact of Paris in North America and the retaliated activities from other countries. So, we have had some rebates. Due to the Supreme Court ruling in the US, we had a waiver. We have cut back exactly 28 million dollars. So we have made claims for more. We don't disclose that information, but we have made claims for more. There is nothing in our accounts because we don't book any provision for positive rebates coming from something that is not in our cache. So we wait for the cache. I have a very demanding CFO and we have to be very careful on this. So now, on Roman tigers and natural rubber and El Niño. First, it's very... Today, natural rubber is growing on a band of 200 kilometers north and 200 kilometers south of the equator. So it means that it is already hot climate. So I don't perceive, I am not an economist, but I have not read anything saying that the natural rubber price is affected by any El Niño. Other things may be affected, but not natural rubber, as far as I know. So at this stage we have seen it rather to get back up because it's more the fact that you have trees that have been cut down or inventories movements that happen on a worldwide basis.

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

The next question is from Stefan Benhamou with Bank of America. Please go ahead.

Yes, good evening. I have two questions. The first one is a follow-up regarding what you've mentioned for the manufacturing and logistics cost. If I'm not mistaken, last time you were mentioning gross headwind of around 300 million euros for the year. So just like you've mentioned for the WOMAT, is this assumption still valid? And if not, what's your latest view on the impact for the full year? And the last question is regarding the line others in the EBIT bridge. It's a kind of black box for me, at least. And if I'm not mistaken, it mainly corresponds to a bonus payments. So how we should look at this line for H2, please? Even the fact that you've confirmed the guidance, so I would assume that this line should turn negative in H2. Thank you.

Okay, so let me start with your second question first. On the bonus, the target we fixed for the bonus is different from the guidance. We want to perform the guidance and We are more challenging for our teams for the bonus. So what you have seen in PNL in the first semester is we have adjusted the bonus to what we think can be achieved versus the goal we have fixed to our teams, which are higher than the guidance you have. So you cannot read from the bonus provision what targets we had for our teams. Now, for the manufacturing and logistics, it's 400 million. Our estimate is still 400 million. 300 million in manufacturing and 100 million in logistics.

To complement what you are saying, Florent, regarding manufacturing and logistics cost, compared to the initial headwind of 300 million euros, But bear in mind that we still have two open conflicts of high intensity in the world today, especially the one in Middle East.

And we are far from understanding the ramification of that, especially in terms of supply. I think we are less concerned about the price of raw materials, but more concerned about the availability of supply. And we have visibility towards end of September, but that's it.

Just to make it clear, can you please repeat the number for the manufacturing and logistic cost? You said 230 million euros net impact for 2026?

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

Thank you.