_340 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE Report of the Managers Cost of net debt (in € millions) 2023 2022 Change Cost of net debt 198 239 -41 At €198 million, the cost of net debt was down €41 million compared with 2022, mainly as a result of the following factors: ● a significant €123 million reduction in net interest expense to €172 million, reflecting the net impact of: ● relatively stable interest expense, due to the lack of any material change in either average debt or the interest rates on it, the majority of which have been fixed in recent years ● a sharp increase in interest income, to €118 million, as higher interest rates lifted the return on cash investments, most of which are euro-denominated and variable rate; ● an €89 million decline in the impact of exchange rate derivatives, due mainly to the drop in US dollar interest rates over the course of 2023 (compared with an increase in rates in 2022); ● an aggregate €7 million decrease from movements in other factors. Other financial income and expenses (in € millions) 2023 2022 Change Other financial income and expenses 2 (22) +24 Despite net exchange losses, due in part to unhedged currencies, other financial income and expenses represented a gain of €2 million in 2023, up €24 million on 2022, thanks to net income from financial assets, whose return was also improved by higher interest rates, and other financial items, whose favorable impact primarily stemmed from the treatment of hyperinflation in Argentina. Income tax (in € millions) 2023 2022 Change Income before taxes 2,490 2,656 -166 Income tax (507) (647) +140 Current tax (816) (586) -230 Withholding tax (33) (39) +6 Deferred tax 342 (22) +364 Income tax amounted to €507 million in 2023, a €140 million year-on-year decrease. However, current tax rose by €224 million to €849 million for the year. The difference reflected the increase in deferred taxes, due in large part to the restructuring provisions recognized in 2023. The effective tax rate for 2023 stood at 20.4%, versus 24.4% the year before. The four-point difference stemmed from the non‑recurring impact in 2023 of the share of profit from equity‑accounted companies, in particular the TBC joint venture (see note 17 to the consolidated financial statements). Restated for this non-recurring income, the year-on-year increase in the tax rate was 2.3 points. Consolidated net income and earnings per share (in € millions) 2023 2022 Change Net income 1,983 2,009 -26 As a % of sales 7.0% 7.0% 0.0 pts Attributable to the shareholders of the Company 1,983 2,001 -18 Attributable to the non-controlling interests 0 8 -8 Earnings per share (in €) Basic 2.77 2.81 -0.04 Diluted 2.75 2.79 -0.04
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