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Strategy • Fundamentals • Businesses • Résultats Earnings
Supervisory Board Report
To the Shareholders,
The report of your Managing Partners and the accounting and
financial documents available to you show developments in
Group business and results in the 2004 financial year. We have
no comments to make on the Auditors’ report for the year.
The consolidated financial statements show net income of €527
million and €515 million after minority interests, compared to
respective amounts of €328 million and €317 million in 2003.
Operating income totaled €1.30 billion, or a 13.6% increase on
the previous year. The operating margin, meanwhile, improved
by 0.9 percentage points to 8.3%.
As the Managing Partners highlighted, 2004 was a mixed year.
Though the first part saw very buoyant markets, some of these
lost ground in the second half. Above all, however, 2004 was
another year of sharp increases in raw material prices and more
generally the Company’s external costs. Michelin was able to
weather this context efficiently. By continuing with the strategy
it has implemented now for several years and keeping a tight
rein on internal expenses, the Company was able to compensate
for these extra costs.
Furthermore, there was continued improvement in the gearing
ratio of net debt to equity, as well as able management of the
transition to International Financial Reporting Standards with
effect from January 1, 2005. We believe these once again
illustrate the solidity and rigor of the Company’s management.
You shall easily understand, therefore, that the Supervisory
Board supports the proposal of the Managing Partners to
increase the dividend to 1.25 euro per share, or a 35% improvement
on 2003.
Mr. Grégoire Puiseux’s term as member of the Supervisory Board
is drawing to a close. He has informed us that for personal
reasons, he is not seeking its renewal. We thank him wholeheartedly
for his contribution to the work of the Board in the last
15 years.
With regard to the proposed appointments of two new members
to the Supervisory Board, these have been heard by the
Chairman and certain Board members. On this point, the Board
wishes to underline how enriching for it the international
exposure and experience of these two new members could be,
so better enabling the Board to conduct the control tasks
it performs on your behalf.
Supervisory Board Report
Furthermore, the Board fully supports the proposal to appoint
Mr. Michel Rollier as Managing Partner, alongside Mr. Edouard
Michelin and Mr. René Zingraff. We have had the opportunity
to assess Mr. Michel Rollier’s competence and qualities and
believe he fulfills the requirements of the post of Managing
Partner entirely.
The Board also supports the proposal to extend double voting
rights to all Shareholders who have held their shares for more
than four years, upon elimination of the nationality condition in
the bylaws. We believe this nationality condition – a product of
history – is no longer compatible with the global dimension of
the Company and its shareholder base.
Like last year, a specific report from the Chairman of the
Supervisory Board accompanies the Managing Partners’ Report
for the Meeting. This provides information, firstly, on the conditions
of preparing and organizing the work of the Supervisory Board
and Committees in the year and, secondly, on internal control
procedures established by the Company.
The Supervisory Board performs its control tasks in complete
independence. It has transparent, complete and reliable
Company information, notably in relation to its accounts,
financial commitments and the risks inherent in its activities
and business context.
By virtue of the above, the Supervisory Board reiterates its
confidence in the Company’s future – a future founded on solid
financial statements.
In these circumstances, we recommend you to adopt the proposals
submitted for approval and, as a result, vote in favor of
the corresponding resolutions.
Clermont-Ferrand, March 11, 2005
Eric Bourdais de Charbonnière,
Chairman of Supervisory Board.
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