05 Financial performance Report of the Managers Segment operating income amounted to €864 million or 14.6% of sales, versus €1,130 million and 17.3% the year before (at comparable scope of reporting). Tire volumes sold fell a sharp 9.1% over the year, dragged down by the steep decline in Beyond-road Original Equipment markets (led by Agriculture and Construction tires) and by one-off events impacting the mining tire segment (inventory drawdowns at certain mining companies, closure of a large mine in Panama and tightening of export controls). The price effect was slightly negative over the year, despite a favorable second half, due to the segment’s relatively high proportion of contractual indexation clauses. On the other hand, there were positive effects from (i) the mix, thanks to the faster growth in Replacement sales than in Original Equipment sales and the priority focus on higher valueadded segments, and (ii) the segment’s operating performance. Polymer Composite Solutions operating income edged back somewhat year-on-year, mainly due to comparison with the very strong earnings reported in 2023, particularly in the conveyor belt business. In line with first-half trends, sales were hurt by relatively low capital spending, particularly in the construction and mining infrastructure segments, and by a correction in the rigid inflatable boats and other leisure marine markets following the post-Covid boom. Nevertheless, operating margin integrity was preserved over the year, thanks to the business’ flexible organization and the diversity of its destination markets. Exchange rate movements had a negative impact on segment operating income. 5.1.3 c) Other income statement items Raw materials The cost of raw materials reported in cost of sales was estimated at €5.6 billion in 2024 versus €5.9 billion in 2023. The decline in these costs over the year reflected: n the price and mix of the Group's raw materials purchases; n the decrease in both volumes sold and output, accentuated by inventory drawdowns; n the valuation of raw materials, semi-finished and finished product inventories using the weighted average cost method. This method tends to spread fluctuations in purchase costs over time and delay their recognition in cost of sales, due to timing differences between the purchase of the raw materials and the sale of the finished product; n exchange rate movements, which correspond to (i) the impact of converting local currency purchasing costs into the consolidation currency; and (ii) a residual currency effect resulting from the difference between the purchasing companies' local currency and the currency used to purchase their raw materials. Changes in natural rubber and butadiene prices feed through to the income statement around three to six months later. Based on estimated 2024 production volumes, the sensitivity of cash purchasing outlays to fluctuations in natural rubber and oil prices is as follows: n a $0.10 per kg decrease in natural rubber prices would feed through to around an $87 million reduction in fullyear purchasing costs; n a $1.00 per barrel decline in oil prices would feed through to a $7 million decrease in full-year purchasing costs. RAW MATERIALS RECOGNIZED IN 2024 COST OF SALES (€5.6 BILLION) NATURAL RUBBER PRICES (SICOM) (USD/kg) 26% Natural rubber 6% Textile 23% Fillers 13% Chemicals 9% Steelcord 23% Synthetic rubber RSS 3 TSR 20 0;5 1.0 1.5 2.0 2.5 3.0 Jan. 2023 Jan. 2024 Dec. 2024 Jan. 2019 Jan. 2021 Jan. 2022 Jan. 2020 335 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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