(24/02/2004) COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN : 2003 earnings

February 24th, 2004 Confronted with exceptional increases in its external costs, Michelin continues to show resilience and to strengthen its global footprint. Combined with slightly better tire markets than in 2002, Michelin's operational performance made it possible to absorb most of the unprecedented surge in external costs, including raw materials, healthcare, and currencies. . Operating margin stands at 7.4%. Excluding the impact of consolidation of the tire distribution activities of Viborg, it is stable at 7.7%, versus 7.8% in 2002. . The amortization over one single year of the goodwill related to the acquisition of Viborg amounts to 306 million euros. In line with Michelin's expectations at the end of the first half-year, it significantly weighs on 2003 net income, down to EUR 329 million. . Net financial debt is down 378 million euros to 3.4 billion. Free cash flow is positive for the 3rd year in a row, even after a 30% increase in investments in 2003 at 1.2 billion euros(1). . In 2004, Michelin is determined to continue and improve its performances and global competitiveness. The Group's vigilance, however, is unchanged, as external inflationary pressures, in particular as regards raw materials, are likely to remain high, and foreign exchange fluctuations, unpredictable. . A net dividend of 0.93 euro per share, before tax credit, will be submitted to the approval of the Annual Shareholders meeting to be held on May 14, 2004.

In EUR million	December 31, 2003	2003 / 2002 change
Net sales	15,370	-1.8%
At constant scope and exchange rates		+5%
Volumes sold		+3.7%
Operating income	1,143	-6.7%
Operating margin as a % of net sales	7.4%	7.8%
Operating margin as a % of net sales, excl. the impact	7.7%	-
of consolidation of Viborg
Amortization of goodwill	-338	EUR -306 m
Net income	329	-46.5%
Net Income Group share	318	-45.3%
Net financial debt	3,440	EUR -378 m
Gearing	78%	-7 pts
Free cash flow(2)	299	EUR -338 m

The rules and methods applied for the establishment of the consolidated accounts at December 31, 2003 are in accordance with the accounting rule 99-02 of the French Comité de la Réglementation Comptable. (1) Total financial and industrial investments, net of disposals (2) Free cash flow= cash flow - change in working capital - net capital expenditure (including financial investments) ' Our 2003 results do not fully reflect all the efforts accomplished and the improvements achieved within our Company. We operated in reasonably good tire markets, achieved significant gains in productivity, dynamic growth and a strengthened global footprint. Unfortunately, our teams internal improvements were rubbed out by the unprecedented inflation in external costs. Higher raw materials, in particular, but also increased expenses related to healthcare, transportation costs and currency fluctuations cost us close to 520 million euros in operating income, at constant sales volumes. This inflationary environment may persist in 2004, which reinforces Michelin's resolve to further improve its 'all terrain capabilities', i.e. its ability to anticipate and react in the face of a difficult environment. Now more than ever, we look to the future with confidence.' said Edouard Michelin Volumes sold: +3.7% Ahead of the Group's expectations for 2003, world tire markets slightly increased over 2002, with a rather robust fourth quarter. The European replacement markets, in particular in passenger car and light truck, showed surprisingly strong growth at a time when automotive production was down. Operating conditions - in other words, tire markets, but also, exchange rates and raw materials - continued to be volatile, globally in line with Michelin's working assumptions. Yet the Group was able to further improve its commercial performance, as illustrated by the +5% year on year increase in net sales, excluding the severely negative impact from foreign exchange fluctuations. Operating income down. But operating margin quasi stable at 7.7% excluding the impact of consolidation of Viborg. While Michelin benefits from a fairly good natural hedge, the unprecedented sharp appreciation of the euro versus most currencies and especially the US dollar had an unusually high impact on the operating margin more (-0.4pt). Other than that, the 6.7% decline in operating income compared to 2002 is mainly attributable to the 320 million dollar surge in raw material consumption costs compared to 2002, translating into a negative 2.2 points of operating margin. At constant exchange rates and scope of consolidation, this 21% surge in raw material consumption costs is slightly above the Group's initial forecast of a 15% to 17% increase in US dollar terms, as announced last February 2003. However, Michelin's continuing operational resilience almost entirely compensated for the above-mentioned negative impacts: . Better price mix for the third consecutive year, at +1.6% at constant exchange rates and volumes; 2003 benefited from further sales mix improvements and also from the price increases successfully implemented throughout the world. This positive impact added 1.7 point of operating margin when compared to 2002. . Improved productivity, adding 0.7 point to the operating margin, which resulted from: - A 3.7% increase in sales volumes expressed in tons, with +5.8% alone in the fourth quarter compared to the same period a year ago. After going up +2.9% in 2002, this is the second year in a row that volumes are on an upward trend, whereas they had been down -2.6% in 2001; - Further reduction in net finished goods inventories, although to a lesser extent than that achieved in 2002; - Efficient cost control that helped partially compensate for certain external costs such as energy, freight, insurance costs and social benefits. In addition, the acquisition of Viborg cost 0.3 pt in operating margin. The operating loss for the 9 months of consolidation of Viborg was 15 million euros. Viborg is now effectively integrated into Euromaster. As a result at current scope and exchange rates, 2003 Group operating margin stands at 7.4%. The amortization over a single year of the goodwill related to the acquisition of Viborg for 306 million euros significantly weighs on net income. The -46.5% decline in net income reflects a combination of several factors, of which the most notable are the following: . On the negative side: - Restructuring charges of 192 million euros, of which 160 million euros, essentially related to the measures taken in Spain and announced in January, were already consolidated in first half accounts; - A 306.5 million euro charge related to the amortization of the goodwill generated by the acquisition of Viborg. This amount is in line with the 300 million euros estimate published by the Group in July 2003. . On the positive side: - Following a review of Michelin's pension and post retirement healthcare currently in force in various countries, Michelin initiated adjustments in 2003 in the US and Japan with the goal of adjusting the Group's long-tem liabilities. These changes resulted in 282 million euros savings recognized in 2003 accounts. Taking a proactive and responsible view of its commitments, Michelin launched this ongoing, global, and in-depth review to preserve Company, employee and shareholder long-term interests in light of rising healthcare costs and pension volatility. The apparent average tax rate increases at 44.7%, against 38.4% in 2002, since the amortization of the goodwill related to the Viborg acquisition is not tax-deductible. Free cash flow is positive for the 3rd year running, even after a 30% increase in investments in 2003 at 1.2 billion euros. At 1 billion euros(4), net capital expenditure stands at a level that is consistent with Michelin's strategy. In this respect, manufacturing capacities were selectively increased in Mexico, Brazil, Asia as well as Eastern Europe. Michelin was able to finance all of its investments and generate free cash flow. The latter is below its 2002 level, in particular because of stable inventories in value terms (they are, however, down in tons, as inventories had seen their value increase under the pressure of higher raw material costs). At the end of 2003, cash flow represented 9.2% of Michelin's net sales, against 7.8% in 2002. It is stated after payment of 357 million euros to the various Group employees' pension funds and non-externalized defined benefit plans, compared to some 542 million euros in 2002. As was the case the years before, cash-flow largely covers payments related to non-funded obligations, (pension benefits, healthcare costs...). Contributions paid out in 2003, amounted to 133 million euros, in line with Group expectations. Pension funds continue to be adequately funded with respect to local regulations. In 2003, Michelin improved its global footprint: financial investments totaled 229 million euros, against 62 million euros in 2002, with a specific focus on high growth potential regions. The largest operations were the purchase of minority interests in Poland and China. The year was also marked by strategic moves in Asia: in South Korea Michelin concluded a partnership agreement with Hankook Tire and, at December 31, 2003 had acquired a 2.5% stake in its share capital. In India, a source of potentially strong growth for the truck radial tire market in the years to come, Michelin has entered into an industrial and capitalistic agreement with Apollo Tyres, the country's largest truck tire manufacturer. (4) Net industrial investments, in tangible and intangible assets Net financial debt: down 378 million euros At 3.4 billion euros, financial net debt is down for the third consecutive year. This 378 million euro decrease from December 31, 2002 can be broken down into a 453 million euro positive impact of the change in exchange rates and a 157 million euro impact due to a larger scope of consolidation. The gearing ratio stands at 78%, well below its 85% level at the end of 2002. Michelin further strengthened its financial structure with the issue, mid-November 2003, of a 500 million euro, 30-year, lowest ranking subordinated note issue redeemable in cash. Subscribed by French and European investors, this issue continues to perform well on the secondary market. It enables the Group to increase its financial flexibility, improve its ability to meet its long-term commitments and also lengthen the mid-term maturity of its financial debt, at times of increased volatility in the economic environment. Since the issue, the spread narrowed, reflecting the quality of Michelin's rating with the investment community. Net debt includes financings related to securitization of trade receivables, which are fully consolidated in the Group's balance sheet.

		Operating	income			Operating	margin
						(as a %	of sales)
	2003		2002		Variation	2003	2002
					03-févr
	Million	%	Million of	%
	of euros	of total	euros	of total
Passenger Car / Light	664.0	58.1	765	62.4	-13.2%	8.9%	9.6%
Truck
Truck	521.5	45.6	485	39.6	+7.6%	13.1%	12.3%
Other activities*	-42.4	-3.7	-24	(2.0)		-0.9%	-0.5%
Group	1,143.1	100	1,225	100	-6.7%	7.4%	7.8%

* Other Activities include specialty tires, distribution activities, wheels, the travel editions, ViaMichelin, and Michelin Lifestyle, and other sales. Each of them accounts for less than 10% of the consolidated net sales. The results of these activities may vary substantially. By nature, the operating profitability of distribution activities is below that of manufacturing activities. Passenger Car / Light Truck: operating margin down 0.7 point. After a 2 point operating margin improvement between 2000 and 2002, the drop in this segment's operating income and margin in 2003 is attributable to its North American operations. Michelin was faced with inflationary raw material prices (up more than 20% in USD) and medical expenses. In spite of the fact that all the 2002 price increases have held up well, the sluggishness of the SUV(5) market in the first half year, at a time when most competitors had not yet taken steps rendered necessary by these strong external pressures, translated into lower than expected sales volumes for the Group. Strict control on investments and costs, as well as price increases passed during the year, did not offset this situation, which, together with the euro appreciation, account for the drop in the operating margin of this segment. Yet, further progress was recorded with improved inventory management and lower receivables. Truck: operating profitability further improves. Following the sharp drop in profitability in 2001, this segment records a significant increase in its operating income for the 2nd year running. The operating margin gains 0.8 point. The substantial improvement in operating profit can be attributed to the following factors: . successful implementation of the commercial strategy as illustrated by the increase in sales volumes and correct anticipation of the impact of higher raw material costs. Indeed, price increases have been implemented as early as end 2002 in Europe and in South America, and early 2003 in North America and Asia. They have all held well; . strict control maintained over the cost structure. Other activities hit by the dollar depreciation and by higher raw materials. At constant scope, operating income is quasi stable. Distribution's operating income includes a 15 million euros operating loss corresponding to the consolidation of Viborg over 9 months As had been the case in 2002, this segment was hardest hit by the appreciation of the euro against the US dollar and several other currencies the Group operates in. Other activities' operating income is down 18 million euros compared to 2002, with the operating margin losing 0.4 point. The main reasons can be found in the increase in raw material prices and currencies when it comes to specialty tires, disappointing operating results at Euromaster despite its improvement in sales and the consolidation of a 15 million euro loss at Viborg over the 9 months consolidation period. Outlook: Michelin remains more than ever focused on further enhancing its geographical footprint, performance and global competitiveness. The Group's continued vigilance, however, is unchanged. Indeed, its markets should not vary much from their average long-term growth rate of +1% to +2%. Furthermore, external inflationary pressures, in particular as regards raw material prices, and the euro against the US dollar, are likely to remain high. (5) SUV: Sport and Utility Vehicle (4x4) *** COMPAGNIE GENERALE DES ETABLISSEMENTS MICHELIN The Financial Statements of the Compagnie Générale des Etablissements Michelin (CGEM) for the 2003 fiscal year show a profit of 178.2 million euros. They have been presented to the Supervisory Board. The partners will convene a General Shareholders' Meeting on Friday, May 14 th, 2003 at 9.00 am in Clermont-Ferrand, They will propose to pay a net dividend of 0.93 euro per share, before tax credit on May 18, 2004. In spite of lower earnings compared to 2002, the dividend is maintained at the same level as a year ago, thus reflecting the Group's confidence in its ability to further improve its performance in a still uncertain economic situation. *** COMPAGNIE FINANCIERE MICHELIN In 2003, Compagnie Financière Michelin (CFM) net sales amounted to 15.63 billion euros, down 1.7% compared to 2002. At 1,102.2 million euros, operating income is 4.3% down. Net income amounts to 285.6 million euros. As CFM and Compagnie Générale des Etablissements Michelin have almost an identical scope of sales, the qualitative comments equally apply to CFM. *** A more detailed report on the 2003 accounts is available upon written request to our Investors Relations Department, or on internet at the following address www.michelin.com, or by calling this Toll Free Number 0 800 000 222. The First quarter 2004 sales will be released on April 26rd, 2004, after the close of Euronext Paris. For those wishing to obtain more information on tire markets and on Michelin, a Fact-book is available on www.michelin.com/corporate/investorrelations/fr/fact_book.jsp or in the form of a CD-ROM (from Mid-March 2004) upon request to our Investor Relations Department *** Contacts Investor relations Eric Le Corre: + (33) 4.73.32.77.92 Laurent Cavard: + (33) 4.73.32.18.02 Press relations Fabienne de Brébisson: + 33 (0)1.45.66.10.72 + 33 (0)6.08.86.18.15 Individual shareholders relations Jacques Thonier: + 33 (0)4.73.98.59.00 To download the entire press release, please go to www.companynewsgroup.com (C) Companynews