CH tyremaker Michelin has unveiled a deeply discounted €1.2 bn (£1.02bn) rights issue to fund growth in booming emerging markets and set new long-term sales and profit goals.
Michelin said yesterday it was now targeting operating profit before non-recurring items clearly above €2bn by 2015, a 25 per cent increase in sales volumes by 2015, and a 50 per cent rise in volumes by 2020.
Managing partner Michel Rollier confirmed 2010 targets set in July for positive free cash flow, an operating margin close to nine per cent, and an increase of more than 10 per cent in sales volumes.
Fellow managing partner Jean-Dominique Senard said sales would probably grow 10-12 per cent this year.
Senard said the company saw 45 per cent of sales coming from emerging markets by 2020, compared with an estimated 33 per cent this year. The group would need the equivalent of one new factory per year in extra capacity in the coming years, he said.
Michelin is already due to open three new factories in 2012.
The company said it would achieve “significantly positive” free cash flow in 2010-2015 and would keep its dividend payout ratio at around 30 per cent over that period.
Michelin set a subscription price of €45 per share for the capital increase and said investors were entitled to buy two new shares for every 11 they held.
Citigroup has been taken on by Michelin to advise on the issue.