Financial performance 2024 consolidated financial statements 05 6.3 Inventories ACCOUNTING POLICIES Inventories are carried at the lower of cost and net realizable value. The cost of raw materials, supplies and purchased finished goods includes the purchase price and other costs directly attributable to the acquisition. The cost of work in progress and manufactured finished goods comprises direct labor costs, other direct costs and production overheads based on the normal capacity of production facilities. Borrowing costs are expensed as incurred. The measurement of inventories and cost of sales using the standard cost method put in place by the Group, taking variances into account, is close to what would be obtained using the actual cost method. Net realizable value is the estimated selling price less the estimated costs of completion and sale. An impairment loss is recognized when net realizable value is lower than cost and is reversed when it becomes apparent that the circumstances which previously caused inventories to be written down below cost no longer exist. Indications of impairment include physical damage, obsolescence, slow‑moving items, and market changes. Inventories include the following: (in € millions) December 31, 2024 December 31, 2023 Raw materials and work in progress 1,700 1,594 Supplies 584 567 Finished products 3,602 3,434 Total gross inventory 5,886 5,595 Impairment of raw materials and work in progress (24) (22) Impairment of supplies (58) (28) Impairment of finished products (105) (97) Total impairment (187) (148) NET INVENTORIES 5,699 5,447 Changes in impairment losses on inventory are as follows: (in € millions) 2024 2023 At January 1 (148) (145) Translation adjustments and other (3) 5 Changes in scope of consolidation (0) 11 Impairment of inventories recognized as an expense in the period (101) (69) Impairment reversals 65 50 AT DECEMBER 31 (187) (148) 372 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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