_334 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE Report of the Managers 5.1.3 a) Analysis of segment operating income (in € millions) (1) Segment operating income. Segment operating income amounted to €3,572 million or 12.6% of sales for the year ended December 31, 2023, compared with €3,396 million and 11.9% in 2022. The €176 million improvement reflected the net impact of the following factors: ● a €32 million increase from changes in the scope of consolidation, primarily in the non-tire businesses, most notably the acquisition of Flex Composite Group in late September 2023; ● a €702 million decrease reflecting: ● the decline in volumes sold; ● the fixed cost shortfall resulting from the decline in output and the general under-utilization of production capacity; ● a €1,463 million increase from the highly favorable pricemix effect, led by: ● the full-year impact of the price increases introduced in 2022 and early 2023 in response to sharply rising costs. A significant proportion of these increases helped to offset the steep decline in certain very high inflation or hyperinflation currencies, ● a mix enhanced by the sustained growth in sales of 18-inch and larger tires in the Passenger car segment, offsetting a market mix impacted by robust gains in Original Equipment sales across every business; ● a €115 million increase from the decline in the cost of raw materials used in production from their peak in 2022; ● a slight €76 million decrease from the rise in manufacturing and logistics costs, as the reduction in finished product shipping costs did not fully offset the increase in payroll and other manufacturing costs; ● a €108 million decrease from the year-on-year growth in SG&A expenses (including research and development outlays) in the Tire operations, reflecting the impact of inflation, particularly on payroll costs; ● a €260 million decrease from other unfavorable cost factors, primarily comprising an adjustment in the variable compensation paid in respect to 2023; ● a €294 million decrease from exchange rate movements, led by the highly unfavorable impact of the increase in the euro against the US dollar, the Turkish lira, the Argentine peso and most other operating currencies. Other operating income and expenses unallocated to the operating segments represented a net expense of €920 million in 2023 versus a net expense of €375 million in 2022. The €545 million increase was mainly attributable to the impact of industrial restructuring projects in Germany and the United States. Other operating income and expenses are described in more detail in note 9 to the consolidated financial statements. 3,396 3,572 -294 Tire Businesses +32 +1,463 -76 3,866 +115 -108 -260 +6 -702 2022 operating income(1) Volumes Scope Raw materials Manufacturing and logistics Performance Price-mix SG&A tires Non-tire (contribution to change in SOI) Other Currency 2023 operating income(1) 2023 at constant exchange rate(1)
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