Nokian Tyres plc Interim Report January–March 2017: Strong start of the year and good prospects for steady growth

Nokian Tyres plc Interim Report January March 2017, May 3, 2017, 8.00 a.m.

This release is a summary of Nokian Tyres’ Interim Report January March 2017 . The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/ .

January–March 2017

  • Net sales increased by 18.2% to EUR 325.9 million (275.8 in 1–3/2016). Currency exchange rate changes affected net sales positively by EUR 21.3 million compared with the rates in 1–3/2016.
  • Operating profit increased by 16.6% to EUR 58.9 million (50.5). Operating profit percentage was 18.1% (18.3%).
  • The profit for the period increased by 13.6% to EUR 45.3 million (39.9).
  • Earnings per share were EUR 0.33 (0.30).
  • Cash flow from operating activities was EUR -40.1 million (-61.4).

Financial guidance (updated)
In 2017, with the current exchange rates, net sales are expected to grow by at least 10% and operating profit is expected to grow by over 5% compared to 2016.

Previous guidance (Feb 2, 2017)
In 2017, with the current exchange rates, net sales and operating profit are expected to grow by at least 5% compared to 2016. 

Key figures, EUR million

1–3
/17
1–3
/16
Change
%
4–6
/16
7–9
/16
10–12
/16
2016
Net sales 325.9 275.8 18.2 337.4 317.2 460.7 1,391.2
Operating profit 58.9 50.5 16.6 77.5 74.1 108.5 310.5
Operating profit % 18.1 18.3 23.0 23.3 23.5 22.3
Profit before tax 58.9 48.5 21.5 74.8 69.2 106.3 298.7
Profit for the period 45.3 39.9 13.6 61.3 59.4 91.2 251.8
Earnings per share, EUR 0.33 0.30 12.5 0.46 0.44 0.67 1.87
Equity ratio, % 74.5 74.5 73.8
Cash flow from operating activities -40.1 -61.4 21.3 -52.5 456.9 364.4
Gearing, % -16.4 -8.5 -19.7
Interest-bearing net debt   -253.4 -111.8 -287.4
Capital expenditure 17.3 19.1 -9.3 25.3 30.0 31.1 105.6

Andrei Pantioukhov, Interim President and CEO:

“Nokian Tyres had a strong start of the year. We demonstrated strong performance in all our main market areas. Both our net sales and operating profit improved compared to the same period in 2016.

The first quarter was positive in many aspects. Sales in all our main markets increased compared to the same period in the previous year. All our main market areas reached growth and Russia became the biggest contributor to this growth, like in Q4/2016.

Russia’s economy started growing again after seven consecutive quarters of recession. In Russia, the market is expected to return to growth, but the pace of the recovery is likely to be quite moderate.

Our production volumes were higher than last year. Raw material costs continued to increase in Q1/2017 compared to Q4/2016. We estimate that the raw material costs will increase by approximately 20 % for the full year 2017 vs. 2016. We have already implemented necessary price increases in all markets, and the full effect of these increases will be seen in the following quarters due to the seasonality of Nokian Tyres’ business model.

The cash flow from operating activities was EUR 21 million better than for Q1/2016. Investments in Q1/2017 amounted to EUR 17.3 million.

Passenger Car Tyres performed very well during the first quarter, and net sales and operating profit increased year-over-year. ASP increased mainly due to improved product mix and positive currency impact. In Heavy Tyres, net sales increased but operating profit decreased clearly year-over-year due to the raw material cost increases, timing of price increases and fixed costs, bigger share of OE sales, and continued investments into future sales and production.

Vianor’s net sales increased slightly but were affected by the delayed summer tyre season. The profit improvement program started according to plan, including equity-owned network optimization in all countries. The number of Vianor, NAD, and N-Tyre stores in our network grew by 63 in Q1/2017. Currently, the network includes 3,165 stores in total.

Our products continued to perform very well in magazine tests. The new flagship products for our winter tyre range, the Nokian Hakkapeliitta 9 and Nokian Hakkapeliitta 9 SUV, along with new value-for-money products Nokian Nordman 7 and Nokian Nordman 7 SUV, will strengthen our product portfolio for our core market areas in the Nordic countries and Russia.

The Board has made a principal decision on the investment in the third factory and authorized the management of the Company to sign a Letter of Intent with the respective authorities in the USA. The new factory will be located in Dayton (Rhea County), Tennessee, USA. The annual capacity of the factory will be 4 million tyres with an expansion potential in the future and the total investment amount at this phase is approximately USD 360 million. Construction is scheduled to begin in early 2018, and the first tyres are to be produced in 2020. 

Nokian Tyres is in great shape. A strong position in the core markets, investments in growth markets, a strong distribution and competitive products give Nokian Tyres an excellent ground for future growth. The company has clearly returned to the growth track and intends to stay on this track in the future. In 2017, with the current exchange rates, net sales are expected to grow by at least 10% and operating profit is expected to grow by over 5% compared to 2016.”  

BUSINESS UNIT REVIEWS

Passenger Car Tyres  

1–3
/17
1–3
/16
Change
%
4–6
/16
7–9
/16
10–12
/16
2016
Net sales, M€ 248.0 202.4 22.5 230.1 234.6 314.0 981.1
Operating profit,
M€
75.9 62.3 21.9 64.7 84.4 94.4 305.8
Operating profit,
%
30.6 30.8 28.1 36.0 30.1 31.2

Heavy Tyres

1–3
/17
1–3
/16
Change
%
4–6
/16
7–9
/16
10–12
/16
2016
Net sales, M€ 39.8 37.6 5.9 38.7 37.3 41.7 155.3
Operating profit,
M€
5.7 8.9 -36.2 6.1 6.0 7.2 28.2
Operating profit,
%
14.3 23.7 15.7 16.2 17.2 18.2

Vianor  

Equity operations

1–3
/17
1–3
/16
Change
%
4–6
/16
7–9
/16
10–12
/16
2016
Net sales, M€ 56.3 53.8 4.7 89.4 66.7 125.0 334.8
Operating profit,
M€
-15.8 -14.7 -7.7 5.5 -6.7 7.8 -8.1
Operating profit,
%
-28.1 -27.3 6.2 -10.0 6.2 -2.4
Equity stores, pcs 208 201 212


Press and analyst meetings  

The result presentation for analysts and media will be held on May 3, 2017 at 10.00 a.m. Finnish time at Hotel Kämp (address Pohjoisesplanadi 29, Helsinki). Interim President and CEO Andrei Pantioukhov will present the interim report and answer questions from the audience.

The presentation can be listened to via audiocast over the Internet at www.nokiantyres.com/resultinfo-Q1-2017 starting at 10 a.m.  

The event can also be attended via conference call. Please dial in 5-10 minutes before the beginning of the event:

FI: +358 9 81710495
UK: +44 20 31940552
SE: +46 8 56642702
US: +1 855 7161597
 

An audio file of the event will be available on the company’s website later same day.

***

Additional Q&A conference call regarding Q1 result will be held on May 3, 2017 at 6.00 p.m. Finnish time. Please dial in 5-10 minutes before the beginning of the event:  

FI: +358 9 81710495
UK: +44 20 31940552
SE: +46 8 56642702
US: +1 855 7161597

Reporting schedule 

Half Year Financial Report January June 2017 will be published on August 8, 2017. Releases and company information will be available at: www.nokiantyres.com/company/investors/ .

Further information:
Andrei Pantioukhov, Interim President and CEO, tel: +358 10 401 7733

Nokian Tyres plc
Antti-Jussi Tähtinen, Vice President, Marketing and Communications

Distribution: Nasdaq Helsinki, media, www.nokiantyres.com  

Attachment: Nokian Tyres’ Interim Report January–March 2017


Nokian Tyres is the world’s northernmost tyre manufacturer. The company promotes and facilitates safe driving in demanding conditions. It supplies innovative tyres for cars, trucks and special heavy machinery mainly in areas with special challenges on tyre performance: snow, forests and harsh driving conditions in different seasons. Nokian Tyres’ product development is consistently aiming for sustainable solutions for safety and the environment, taking into account the whole life cycle of the tyre. A part of the Nokian Tyres group, the tyre chain Vianor has  approximately 1,500 outlets in 27 countries. In 2016 Nokian Tyres had approximately 4,400 employees and net sales of approximately 1,4 billion euros. Nokian Tyres’ share is listed on the Nasdaq Helsinki. Further information:  www.nokiantyres.com

About Us

Nokian Tyres is the world’s northernmost tyre manufacturer. The company promotes and facilitates safe driving in demanding conditions. It supplies innovative tyres for cars, trucks and special heavy machinery mainly in areas with special challenges on tyre performance: snow, forests and harsh driving conditions in different seasons. Nokian Tyres’ product development is consistently aiming for sustainable solutions for safety and the environment, taking into account the whole life cycle of the tyre. A part of the Nokian Tyres group, the tyre chain Vianor has approximately 1,500 stores in 27 countries. In 2016 Nokian Tyres had approximately 4,400 employees and net sales of approximately 1,4 billion euros. Nokian Tyres’ share is listed on the Nasdaq Helsinki. Further information: www.nokiantyres.com