Financial Overview

(in million euros)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Rate of change (%)	Factor
Overall
Sales	21,474	20,719	3.6	-Consolidated net sales rose by only 3.6% in 2012 due to weak demand of OE and replacement tires in Europe.
Operating income	2,423	1,945	24.6
Business unit of Passenger Car-Light Truck & Related Distribution
Sales	11,098	10,780	2.9	-
Operating income	1,033	1,018	1.5
Business unit of Truck & Related Distribution
Sales	6,736	6,718	0.3	-Operating income rose sharply by 90.6% due to decline in raw materials costs and favorable currency effect.
Operating income	444	233	90.6

Contracts

-In August 2012, "Michelin Primacy LC," a premium tire featuring serenity and low rolling resistance has been selected for the Nissan Serena S-HYBRID, Michelin Japan announced. The tire helps the model achieve the lowest fuel consumption in its class of 15.2 km per liter under the JC08 mode. (From an article in the Nikkan Jidosha Shimbun on August 9, 2012)

-In June 2012, the Company announced that the MICHELIN Pilot Super Sport tire will be fitted on the BMW M6, which will be launched in summer 2012. All together, nearly 1,200 prototype tires and 1,000 pre-series tires have been produced, measured and tested in extreme conditions. (From a press release on June 19, 2012)

-In March 2012, the Company announced that the MICHELIN Pilot Super Sport tire will be fitted on the new Ferrari F12 berlinetta. The sizes are: 255/35 ZR 20 front tire, 315/35 ZR 20 rear tire. (From a press release on March 12, 2012)

-In March 2012, the Company announced that the Renault ZOE models equipped with 15 and 16-inch tires will be fitted with the new Michelin Energy E-V tires, which were jointly developed by Renault and Michelin. In near-urban use, the Michelin Energy E-V tires increase the ZOE's range by up to 6%. (From a press release on March 6, 2012)

Recent Development Outside France

-In April 2012, the Company and its Tigar Tires subsidiary have announced the signing of a memorandum of understanding with Serbian authorities and the City of Pirot to expand production capacity at the Tigar Tires plant in Pirot. The memorandum of understanding calls for increasing production capacity at the plant from 8 million tires in 2012 to 12 million tires at year-end 2016. The plant produces and will continue to produce exclusively entry-level tires that are sold under the Tigar, Kormoran and Riken brands, all of which are in the Michelin Group brand portfolio. Work to expand the plant is expected to begin in early 2013 and the first tires should roll off the new production lines in the middle of 2015. Most of the tires produced will supply the Russian and CIS markets, as well as markets in Central and Eastern Europe, Africa and the Middle East. Overall, the project will represent an investment of 170 million euros for the period 2012-2016. Over the long term, the new unit will lead to the creation of 700 jobs in Pirot.  (From a press release on April 2, 2012)

R&D Expenditure

(in million euros)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
Overall	622	592	545

R&D Structure

-6,000 people are engaged in the R&D operations in the world.

Product Development

In September 2012, the Company launched three new products for passenger cars; MICHELIN ENERGY E-V for electric vehicles, MICHELIN ENERGY SAVER+ suitable for almost every car on the market, and MICHELIN AGILIS+ for light commercial vehicles.

Capital Expenditure

(in million euros)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	FY ended Dec. 31, 2010
Overall	1,996	1,711	1,100

-For passenger car and light truck tires, construction of new plant in Shenyang, China is underway, while projects to increase capacity, improve productivity or refresh product lines are going on at following plants;

Itatiaia (Brazil)
Fort Wayne (USA)
Olsztyn (Poland)
Cuneo (Italy)
Vitoria (Spain)
Laem Chabang (Thailand)

-For truck tires, construction of new plant in Chennai, India is underway. Besides, it is increasing capacity or improving productivity at Shenyang plant in China and Campo Grande plant in Brazil.