_336 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE Report of the Managers Automotive and related distribution – Analysis of segment operating income Automotive and related distribution (in € millions) 2023 2022 2023/2022 2023 (% of consolidated total) 2022 (% of consolidated total) Sales 14,339 14,138 +1.4% 50% 50% Change in volumes -1.9% Segment operating income 1,959 1,711 +14.5% 55% 50% Segment operating margin 13.7% 12.1% +1.6 pts Automotive segment operating income amounted to €1,959 million or 13.7% of sales, versus €1,711 million and 12.1% in 2022. Despite the 1.9% decline in volumes sold and an unfavorable market mix, the segment delivered excellent results, led primarily by the very robust mix effect. Prices were lifted by the full-year impact of the 2022 increases and the policy of targeted price adjustments, while the mix was improved by sustained growth in sales of 18-inch and larger tires and the solid results achieved in the most profitable regions, in both the Original Equipment and Replacement segments. Distribution operations contributed positively to segment operating income, with a significant year-on-year gain driven by growth in the service activities. Exchange rate movements had a negative impact on segment operating income. Road transportation and related distribution – Analysis of segment operating income Road transportation and related distribution (in € millions) 2023 2022 2023/2022 2023 (% of consolidated total) 2022 (% of consolidated total) Sales 6,975 7,462 -6.5% 25% 26% Change in volumes -8.5% Segment operating income 456 641 -28.9% 13% 19% Segment operating margin 6.5% 8.6% -2.1 pts Road transportation segment operating income totaled €456 million or 6.5% of sales, versus €641 million and 8.6% in 2022. At a time of steeply falling tire demand, shaped by massive inventory destocking across the entire value chain, volumes sold contracted by 8.5% over the year, resulting in a slowdown in production plant output that in turn had a highly unfavorable impact on fixed costs absorption. In addition, the mix was adversely affected by fast growth in Original Equipment demand, spurred by buying ahead of the introduction of new environmental standards in North America. On the other hand, the decline in raw material costs helped to maintain a favorable economic equation. The Services & Solutions operations, now combined under the Michelin Connected Fleet brand, continued to expand in 2023 and delivered higher year-on-year operating income, thanks in particular to more appropriate pricing for their solutions. Exchange rate movements had a negative impact on segment operating income. Specialty businesses and related distribution – Analysis of segment operating income Specialty businesses and related distribution (in € millions) 2023 2022 2023/2022 2023 (% of consolidated total) 2022 (% of consolidated total) Sales 7,029 6,990 +0.6% 25% 24% Change in volumes -4.6% Segment operating income 1,157 1,044 +10.8% 32% 31% Segment operating margin 16.5% 14.9% +1.6 pts Segment operating income from the Specialty businesses amounted to €1,157 million or 16.5% of sales, versus €1,044 million and 14.9% the year before. Mining tires: Volumes edged down over the year after secondhalf performance was dampened by unfavorable comparatives and inventory drawdowns at certain customers. However, with a large percentage of the mining operator contracts covered by
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