_328 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 5 FINANCIAL PERFORMANCE Report of the Managers 5.1.1 e) Specialty tire markets in 2023 Mining tires: Mining tire purchases are growing at a relatively stable rate year after year, led by ever-increasing ore mining needs. Sell-in demand was somewhat volatile over the year, due to temporary inventory reductions or rebuilding by mine operators, but remains robust. Agricultural, Infrastructure and Materials Handling tires: Original Equipment demand rose overall during the year, buoyed by relatively high farm commodity prices and the wide array of infrastructure projects that are raising demand for equipment. Replacement demand, on the other hand, fell sharply over the period, dragged down by massive destocking in every dealer channel. By the year-end, inventories had returned to more or less normal levels. Two-wheel tires: Demand plunged in 2023, in both the motorcycle and bicycle tire segments, due to the sharp reduction in dealer inventories throughout the year. By year-end, inventories had returned to normal levels. Aircraft tires: The market is expanding and has exceeded 2019 levels, led by an upturn in passenger traffic on regional flights, particularly in China. Conveyor belts: The market for conveyor belts remains robust, both in the mining segment, driven by strong demand for commodities, and in the manufacturing segment, supported by high capital spending. Specialty polymers: Global demand flattened out as the economy cooled and inventories were reduced across the value chain. 5.1.2 Sales Sales for the year amounted to €28,343 million, down a slight 0.9% from €28,590 million in 2022. Sales were up 2.0% at constant exchange rates. The year-on-year change reflected the combined impact of the following factors: ● a 4.7% decline in tire volumes, stemming from extensive destocking across every segment and value chain as the uncertain economic environment and soaring interest rates prompted dealers and business customers alike to drastically draw down inventory and reduce their standard stock levels. The volume decline was partially offset by an increase in sales in the Group’s proprietary dealership networks, reflecting more resilient sell-out demand; ● a 5.7% increase from the positive price-mix effect. The €1,286 million positive price effect, comprising €1,130 million in the first half and €156 million in the second, resulted from the full-year impact of the price increases introduced in 2022 and early 2023 to cover the full range of cost inflation factors (raw materials, freight, energy, payroll, etc.). The price effect remained positive over the second half, it declined compared to first half 2023 due to prior-year comparatives and, to a lesser extent, the deferred impact on certain activities of raw materials-based and other indexation clauses. The highly positive €337 million mix effect reflected the priority focus on the MICHELIN brand and on high value-added products and services, as well as growth in sales of 18-inch and larger Passenger car tires; 28,590 28,343 -1,336 +131 +146 +1,623 - 811 29,154 2022 Volumes Scope Prix-mix Non-tire Currency 2023 at current exchange rate 2023 at constant exchange rate Tire Businesses
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