Nokian Tyres plc Financial Statement Release 2017: Strong performance in 2017. Positive outlook for 2018.
Nokian Tyres plc Financial Statement Release 2017, February 2, 2018, 8:00 a.m.
This release is a summary of Nokian Tyres’ Financial Statement Release 2017. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.
October–December 2017
- Net sales increased by 6.4% to EUR 490.4 million (460.7 in 10–12/2016). Currency exchange rate changes affected net sales negatively by EUR 10.3 million compared with the rates in 10–12/2016.
- Operating profit increased by 13.0% to EUR 122.6 million (108.5). Operating profit percentage was 25.0% (23.5%).
- The profit for the period increased by 3.8% to EUR 94.7 million (91.2).
- Earnings per share were EUR 0.69 (0.67).
- Cash flow from operating activities was EUR 368.3 million (456.9) and was affected by the payment of EUR 59 million in additional taxes with punitive tax increases and interest concerning the tax dispute related to tax year 2011. The company paid the amount in November 2017.
January–December 2017
- Net sales increased by 13.0% to EUR 1,572.5 million (1,391.2 in 2016). Currency exchange rate changes affected net sales positively by EUR 21.7 million compared with the rates in 2016.
- Operating profit increased by 17.7% to EUR 365.4 million (310.5). Operating profit percentage was 23.2% (22.3%).
- The profit for the period decreased by 12.1% to EUR 221.4 million (251.8). In Q3/2017, profit included additional taxes and punitive interest of EUR 59 million related to tax year 2011.
- Earnings per share were EUR 1.63 (1.87).
- Cash flow from operating activities was EUR 234.1 million (364.4) and was affected by the payment of EUR 59 million in additional taxes with punitive tax increases and interest concerning the tax dispute related to tax year 2011. The company paid the amount in November 2017. Cash flow from operating activities was also affected by the payment of EUR 18.5 million in additional taxes with punitive tax increases and interest concerning the tax dispute of Nokian Tyres U.S. Finance Oy and the years 2007–2013. The company paid the amount in August 2017.
Dividend
The Board of Directors proposes a dividend of EUR 1.56 (1.53) per share.
Financial guidance
In 2018, with the current exchange rates, net sales and operating profit are expected to grow compared with 2017.
Key figures, EUR million
| 10–12 /17 |
10–12 /16 |
Change % |
2017 | 2016 | Change % |
|
| Net sales | 490.4 | 460.7 | 6.4 | 1,572.5 | 1,391.2 | 13.0 |
| Operating profit | 122.6 | 108.5 | 13.0 | 365.4 | 310.5 | 17.7 |
| Operating profit % | 25.0 | 23.5 | 23.2 | 22.3 | ||
| Profit before tax | 118.9 | 106.3 | 11.9 | 332.4 | 298.7 | 11.3 |
| Profit for the period | 94.7 | 91.2 | 3.8 | 221.4 | 251.8 | -12.1 |
| Earnings per share, EUR | 0.69 | 0.67 | 2.8 | 1.63 | 1.87 | -13.0 |
| Equity ratio, % | 78.2 | 73.8 | ||||
| Cash flow from operating activities | 368.3 | 456.9 | 234.1 | 364.4 | ||
| Gearing, % | -14.2 | -19.7 | ||||
| Interest-bearing net debt | -208.3 | -287.4 | ||||
| Capital expenditure | 39.6 | 31.1 | 27.3 | 134.9 | 105.6 | 27.8 |
Hille Korhonen, President and CEO:
“Our year 2017 was successful in all aspects. Positive news and new initiatives stimulated our year, and we demonstrated strong performance in all of our main markets. These achievements are the result of determined work, and significant successes in several areas indicate our commitment to our strategy and goals.
The Passenger Car Tyres business unit performed well in 2017. Net sales increased in all markets. Market growth was exceeded in Russia due to our competitive product portfolio, price positioning and supply capability. Sales and marketing investments and new products generated sales growth in Other Europe and North America. We responded to the growing demand by increasing in a timely manner the production volumes at both factories and by commissioning a new production line at the Russian factory. Operating profit increased year-over-year. In Q4/2017, raw material costs decreased slightly compared with Q3/2017. We estimate that raw material costs will remain approximately at the same level for the full year 2018 compared with 2017.
In November 2017 we renewed an important local labor agreement for year 2018 at our Nokia factory regarding flexible working hours for the passenger car tyre personnel. The goal of the agreement is to prepare for the company’s growth, build flexibility for future seasons, and ensure employment for the duration of the agreement. The agreement further strengthens the role of the Nokia factory as a competitive center for expertise and production.
Heavy Tyres increased its sales, operating profit, production volume, and productivity in 2017. All market areas showed growth. Sales of agricultural tyres and forestry tyres increased, in particular. In December 2017, we announced that we are increasing Heavy Tyres’ production capacity by 50% by investing a total of approximately EUR 70 million in its factory in Nokia over the following three years. At the same time, we signed an agreement that encourages our heavy tyres personnel to increase production flexibility by means of multi-skilling. The aim of the investment is to further support our own growth as well as our customers’ growth.
Vianor’s (own equity) net sales increased slightly due to the challenging retail market situation in the Nordic countries. However, the profitability improvement program progressed according to plan. Our branded distribution network, including Vianor, NAD, and N-Tyre stores, grew by 346 stores in 2017.
In December 2017, we announced that we are accelerating profitable growth, customer orientation and innovative future solutions by renewing our leadership and operational model. The purpose of this change is also to create a market-focused and scalable structure and to increase efficiency through global functions and processes.
Nokian Tyres is in great shape, and we are ready for the construction work of our Dayton factory. High customer satisfaction, a new global structure, our safe and eco-friendly products, and competent personnel create an excellent ground for future growth. We are definitely on the right track and well positioned to further improve our sales and operations.”
BUSINESS UNIT REVIEWS
Passenger Car Tyres
| 10–12 /17 |
10–12 /16 |
Change % |
2017 | 2016 | Change % |
|
| Net sales, M€ | 338.3 | 314.0 | 7.7 | 1,138.8 | 981.1 | 16.1 |
| Operating profit, M€ |
100.9 | 94.4 | 6.9 | 359.9 | 305.8 | 17.7 |
| Operating profit, % |
29.8 | 30.1 | 31.6 | 31.2 |
Heavy Tyres
| 10–12 /17 |
10–12 /16 |
Change % |
2017 | 2016 | Change % |
|
| Net sales, M€ | 46.5 | 41.7 | 11.4 | 172.3 | 155.3 | 11.0 |
| Operating profit, M€ |
9.4 | 7.2 | 31.4 | 32.2 | 28.2 | 14.1 |
| Operating profit, % |
20.3 | 17.2 | 18.7 | 18.2 |
Vianor
Equity operations
| 10–12 /17 |
10–12 /16 |
Change % |
2017 | 2016 | Change % |
|
| Net sales, M€ | 124.7 | 125.0 | -0.2 | 339.4 | 334.8 | 1.4 |
| Operating profit, M€ |
13.1 | 7.8* | 68.4 | -5.8*** | -8.1** | -28.4 |
| Operating profit, % |
10.5 | 6.2* | -1.7*** | -2.4** | ||
| Equity service centers, pcs | 194 | 212 |
In 2016, non-recurring items amounting to EUR 3.6 million included the write-off of ICT development projects.
* Excluding non-recurring items: Operating profit EUR 10.4 million, operating profit percentage 8.3%.
** Excluding non-recurring items: Operating profit EUR -4.5 million, operating profit percentage -1.3%.
In 2017, non-recurring items amounting to EUR 1.8 million in total.
*** Excluding non-recurring items: Operating profit EUR -4.0 million, operating profit percentage -1.2%.
The proposal for the use of profits by the Board of Directors
The distributable funds in the Parent company total EUR 658.0 million.
The Board of Directors proposes to the Annual General Meeting that the distributable funds are to be used as follows:
| A dividend of | 1.56 EUR/share |
| be paid out, totaling | EUR 214.2 million |
| retained in equity | EUR 443.8 million |
| Total | EUR 658.0 million |
No material changes have taken place in the financial position of the company since the end of the financial year. The liquidity of the company is good, and the proposed distribution of profits does not compromise the financial standing of the company as perceived by the Board of Directors.
Press and analyst meetings
The result presentation for analysts and media will be held on February 2, 2018 at 10.00 a.m. Finnish time at Hotel Kämp (address Pohjoisesplanadi 29, Helsinki). President and CEO Hille Korhonen will present the result 2017 and answer questions from the audience.
The presentation can be listened to as an audiocast over the Internet at www.nokiantyres.com/resultinfo-Q4-2017 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: +358981710495
UK: +442031940552
SE: +46856642702
US: +18557161597
An audio file of the event will be available on the company’s website later same day.
Reporting schedule
The 2017 Annual Report, Annual Financial Report, Corporate Governance Statement and Remuneration Statement for 2017 will be published on week 11 at the latest.
The Interim Report for January–March 2018 will be published on May 9, 2018. Releases and company information will be available at: www.nokiantyres.com/company/investors/.
Annual General Meeting 2018
The Annual General Meeting of Nokian Tyres plc will be held on April 10, 2018. The Annual Report, including the company’s annual accounts, the Report of the Board of Directors and the Auditors Report is available on the company’s website no later than week 11, 2018. Read more at www.nokiantyres.com/annualgeneralmeeting2018
Further information:
Hille Korhonen, 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’ Financial Statement Release 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 stores in 26 countries. In 2017 Nokian Tyres had approximately 4,600 employees and net sales of approximately 1,6 billion euros. Nokian Tyres’ share is listed on the Nasdaq Helsinki. Further information: www.nokiantyres.com