5 _331 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE Report of the Managers 5.1.2 c) Road transportation and related distribution – Analysis of sales Sales in the Road transportation and related distribution segment totaled €6,975 million in 2023, down 6.5% from the prior year. After two post-Covid years shaped by very strong overland freight demand and highly constricted supply conditions across every value chain, the Road transportation business contracted sharply in 2023, particularly in Europe. Volumes sold declined by 8.5% over the year, reflecting both unfavorable comparatives, particularly in the second half, and the massive fleet and dealer destocking that continued through to year-end in every geography. In this environment, the Group pursued its selective marketing strategy with a sharper focus on the MICHELIN brand and the highest value-creating regions. In the Original Equipment segment, OEM output continued to trend upwards during the year and the Group increased its market share, especially in the higher value-creating North American market. Environmental standards aimed at reducing CO2 emissions and difficulties in hiring truck drivers in Europe and North America are prompting trucking companies to upgrade their fleets, offering the Group an opportunity to demonstrate its technological leadership, its knowledge of usage practices and the energy efficiency of its products. In addition, Group sales were supported by local price adjustments designed to capture the full value of this technological leadership. In the Replacement segment, worldwide new tire demand (excluding China) fell a steep 5% during the year due to extensive inventory drawdowns by dealers and fleets. In this challenging environment, the Group focused on its value-added offerings, led by the MICHELIN brand and retreading solutions. The portfolio of connected mobility service solutions was further broadened during 2023, notably in November when the Group presented Michelin Connected Mobility, a comprehensive solution combining end-toend tire management (fitting, maintenance, end-of-life management) with a suite of digital support services. In the passenger transportation segment, the Group reaffirmed its leadership for example in the highly profitable subway tire segment, especially in emerging markets. Lastly, the growth in online shopping, while somewhat slower than in the post-Covid years, continued to underpin demand in the last-mile delivery segment, where the MICHELIN Agilis 3 tire remained a best seller. In the European market, in a market with high transport overcapacity which is readjusting downward, marked by a strong increase in imports of Asian tires, the Group sales declined during the year, albeit to a lesser extent overall in Southern Europe. The Group is pursuing its value-driven strategy and optimizing its retreading solutions to support customers in their commitment to increasingly sustainable trucking. In North America, stronger economic growth kept business more buoyant than in the other operating regions. The Group is gaining market share thanks to its geographic coverage and its network of fleet service centers. The South American market remained buoyant, but growth was held back by economic conditions in Argentina and high inflation in Colombia, Chile and many other countries in the region. In addition, the mix moved downmarket due to the significant upsurge in imports from Asia, particularly in Brazil. The Group strengthened its positions in the premium segment by prioritizing its MICHELIN brand sales, again particularly in Brazil. Sascar’s fleet management solutions remained on a growth trajectory, with a steady upmarket shift in the portfolio and a significant increase in the number of vehicles under contract. In Asia (excluding China), where the economy was more lackluster during the year, the Group stepped up its value-driven approach to targeting market segments that appreciate MICHELIN solutions for their technological content. The Group consolidated its positions in the Africa/India/MiddleEast region. In India, the ongoing shift to radials, a segment where the Group can capitalize on its technological advantage, helped to drive market share gains. The Group also locally raised prices to offset adverse currency movements, particularly in Nigeria. 5.1.2 d) Specialty businesses and related distribution – Analysis of sales Surface mining tires: In an ore market still positioned for longterm growth impelled by rising demand for metals, in particular to support the energy transition, Group sales experienced two very different half-year periods in 2023. After rising quickly in the first six months, led by restored operating efficiency and a significant improvement in maritime shipping capacity, sales were hurt in the second half by inventory drawdowns at certain mining companies. In addition, with sales hitting all-time highs in several months of second-half 2022, prior-year comparatives were particularly unfavorable. Despite a slight reduction in indexed prices on July 1 due to the decline in commodity prices in 2022, prices still had a favorable impact over the year, led by the increases introduced in 2022 and first-half 2023 to offset inflation factors unrelated to raw materials, especially energy costs and payroll costs. Digital tire management services continued to deliver sustained growth. This was particularly the case for the Michelin Earthmover Monitoring System (MEMS) connected tire, which offers major competitive advantages in the areas of safety and operational productivity.
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