Financial performance Report of the Managers 05 5.1.3 a) Analysis of segment operating income (in € millions) (1) Segment operating income. Segment operating income amounted to €3,378 million or 12.4% of sales for the year ended December 31, 2024, compared with €3,572 million and 12.6% in 2023. The €194 million decrease reflected the net impact of the following factors: n a €28 million increase from changes in the scope of consolidation, corresponding primarily to the inclusion of Flex Composite Group since late September 2023; n a €756 million decrease reflecting: l the decline in volumes sold; l the fixed cost shortfall resulting from the general underutilization of production capacity as output declined and certain plants were ramped down over the year; n a €438 million increase from the favorable price-mix effect, led by: l a slight net increase in prices, stemming primarily from the application of contractual indexation clauses, whose impact swung to positive in the second half from negative in the first due to the time lag in applying the changes in their underlying raw materials and other price indexes; l a very favorable mix, shaped by a combination of three factors: (i) higher sales of 18-inch and larger Passenger car tires and, more generally, premium products; (ii) faster growth in Replacement tire sales than in the OE markets, which weakened over the year; and (iii) a positive geographic mix, thanks in particular to the Group’s careful management; n a €168 million increase from the first-half decline in the cost of raw materials used in production, which offset the secondhalf rebound in these costs; n a slight €34 million increase relating to manufacturing and logistics costs. The impact of inflation, particularly on payroll costs, and of the temporary closure of certain plants at yearend was partly cushioned by lower maritime shipping costs and improved operating performance; n a €162 million decrease from the year-on-year growth in SG&A expenses (including research and development expenses) in the Tire operations, reflecting the impact of inflation, particularly on payroll costs; n a €144 million increase from other favorable cost factors, primarily comprising an adjustment in the variable compensation paid in respect to 2024; n a €70 million decrease from exchange rate movements, led by the unfavorable impact of the gains in the euro against the Turkish lira, the Chilean peso, the Japanese yen and most other operating currencies. Other operating income and expenses unallocated to the operating segments represented a net expense of €747 million in 2024 versus a net expense of €920 million in 2023. The improvement primarily corresponded to the year-on-year reduction in provisions for industrial restructuring projects. Other operating income and expenses are described in more detail in note 7 to the consolidated financial statements. 3,572 3,378 - 70 2023 operating income (1) Volumes Scope Raw materials Manufacturing and logistics Performance Price-mix Tire Businesses SG&A tires Non-tire (contribution to change in SOI) Other Currency 2024 operating income (1) 2024 at constant exchange rate (1) + 28 + 438 3,448 + 168 + 34 - 162 + 144 - 18 - 756 332 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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