Nokian Tyres plc Financial Statement Release 2018: Good performance with strong growth in Russia and North America, headwind from currencies

Nokian Tyres plc Financial Statement Release 2018, February 5, 2019, 2:00 p.m.

This release is a summary of Nokian Tyres’ Financial Statement Release 2018. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.

October–December 2018

  • Net sales decreased by 3.4% to EUR 473.6 million (490.4 in 10–12/2017). With comparable currencies, net sales decreased by 1.0%.
  • Operating profit decreased to EUR 117.2 million (122.6), negatively impacted by currencies.
  • Profit for the period was EUR 96.0 million (94.7). 
  • Earnings per share increased to EUR 0.70 (0.69).
  • Cash flow from operating activities was EUR 460.0 million (368.3).

January–December 2018

  • Net sales increased by 1.5% to EUR 1,595.6 million (1,572.5 in 2017). With comparable currencies, net sales increased by 5.7%.
  • Operating profit increased to EUR 372.4 million (365.4), negatively impacted by currencies.
  • Profit for the period was EUR 295.2 million (221.4. In 2017, profit was negatively impacted by EUR 59 million in additional taxes and interest related to tax year 2011). 
  • Earnings per share increased to EUR 2.15 (1.63).
  • Cash flow from operating activities was EUR 536.9 million (234.1). Cash flow in 2018 and in 2017 was impacted by the tax disputes concerning the years 2007−2011, more information on page 19.
  • The Board of Directors proposes a dividend of EUR 1.58 (1.56) per share.

Guidance

In 2019, net sales with comparable currencies are expected to grow and operating profit to be approximately at the level of 2018. In line with Nokian Tyres updated 2018 strategy, the company is targeting further growth in Russia, Central Europe and North America. As a result of ongoing investment programs to support the growth, operating profit in 2019 will include significant additional operating costs.

Hille Korhonen, President and CEO:

“In 2018, we made good progress especially in Russia and North America. With comparable currencies, Nokian Tyres’ net sales increased by 5.7%. The growth was driven by Passenger Car Tyres, despite the negative impact of a delayed summer and lower new car sales in Sweden and Norway. Operating profit increased, although the negative currency impact was significant.  

The construction work at our new US factory as well as Heavy Tyres’ capacity increase in Finland are proceeding as planned. The test center project in Spain is ongoing and on schedule. All these investments will be major assets to us as we have now entered our next phase of growth. We are aiming at doubling our sales in North America and growing our sales by 50% in Central Europe in the next 5 years, as well as maintaining our market leader positions in the Nordics and Russia.

The tire market in Central Europe got highly competitive in 2018. At the end of 2018, we split Business Area Europe into two separate Business Areas, Central Europe and Nordics, in order to have even more focus on these regions. Utilization rate of increased capacity in Finland is planned to be adjusted as the Central European car tire market is not as robust as we estimated a year ago.  

In November, we published our new financial targets for 2019–2021. Our targets are as follows: growing faster than the market, healthy profitability, and dividend above 50% of net earnings. These targets will guide us in reaching our strategic ambitions.

Nokian Tyres is a life driven company, facilitating safe driving. As people drive home in their everyday lives, we offer peace of mind in all conditions. Our mission is powerful, giving all of us at Nokian Tyres a high purpose for our work, every day. I would like to thank our customers, employees, and other stakeholders for another successful year in 2018. We have an impressive 120 year history and are committed to continue building on our success together in years to come. 

 

Key figures, EUR million

10–12
/18
10–12
/17
Change
%
CC*
Change
%
2018 2017 Change
%
CC*
Change
%
Net sales 473.6 490.4 -3.4 -1.0 1,595.6 1,572.5 1.5 5.7
Operating profit 117.2 122.6 372.4 365.4
Operating profit % 24.7 25.0 23.3 23.2
Profit before tax 113.5 118.9 361.7 332.4
Profit for the period 96.0 94.7 295.2 221.4
Earnings per share, EUR 0.70 0.69 2.15 1.63
ROCE, % 23.3 22.4
Equity ratio, % 71.0 78.2
Cash flow from operating activities 460.0 368.3 536.9 234.1
Gearing, % -21.2 -14.2
Interest-bearing
net debt
-315.2 -208.3
Capital expenditure 112.3 39.6 226.5 134.9

* Comparable currencies

BUSINESS UNIT REVIEWS  

Passenger Car Tyres  

10–12
/18
10–12
/17
Change
%
CC*
Change
%
2018 2017 Change
%
CC*
Change
%
Net sales, M€ 316.8 338.3 -6.3 -3.4 1,150.8 1,138.8 1.0 6.1
Operating profit, M€ 96.5 100.9 356.5 359.9
Operating profit, % 30.5 29.8 31.0 31.6

* Comparable currencies

Heavy Tyres

10–12
/18
10–12
/17
Change
%
CC*
Change
%
2018 2017 Change
%
CC*
Change
%
Net sales, M€ 53.0 46.5 14.1 15.1 187.7 172.3 8.9 10.7
Operating profit,
M€
9.6 9.4 28.6 32.2
Operating profit,
%
18.0 20.3 15.2 18.7

* Comparable currencies

Vianor, own operations

10–12
/18
10–12
/17
Change
%
CC*
Change
%
2018 2017 Change
%
CC*
Change
%
Net sales, M€ 122.3 124.7 -1.9 -0.4 337.2 339.4 -0.6 1.9
Operating profit,
M€
11.7 13.1 1.6 -5.8
Operating profit,
%
9.6 10.5 0.5 -1.7
Own service centers, pcs, at period end 188 188 194

* Comparable currencies

CONFERENCE CALL

A conference call for investors, analysts and media will be held on February 5, 2019 at 3:00 p.m. Finnish time. In the call, President and CEO Hille Korhonen and CFO Teemu Kangas-Kärki will present the financial results.

To participate, please dial in 5−10 minutes before the beginning of the event:

Finland: +358 981710310
Sweden: +46 856642651
UK: +44 3333000804
US: +1 6319131422

PIN: 18888377#

The call can also be listened live via www.nokiantyres.com/resultinfo-Q4-2018 

A recording of the conference call and a transcript will be available on the company’s website later.  

FINANCIAL REPORTING

Nokian Tyres Financial Review for 2018 will be available in English and Finnish at www.nokiantyres.com the week commencing March 11.

Interim Report January–March 2019: May 8.

THE ANNUAL GENERAL MEETING

The Annual General Meeting of Nokian Tyres plc is scheduled for April 9.

Releases and company information are available at www.nokiantyres.com/company/investors/.

Nokian Tyres plc 
Päivi Antola, SVP, Communications and IR

Further information:
Hille Korhonen, President and CEO, tel: +358 10 401 7733
Teemu Kangas-Kärki, CFO, tel: +358 10 401 7750
Päivi Antola, SVP, Communications and IR, tel: +358 10 401 7327 

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

Attachment: Nokian Tyres’ Financial Statement Release 2018

Nokian Tyres is the world’s northernmost tire manufacturer and one of the most sustainable companies in the industry. We offer peace of mind in all conditions by developing high-quality, safe and eco-friendly tires for passenger cars, trucks and heavy machinery. We are especially well known for our innovative winter tires. Our group also includes the Vianor chain, specializing in vehicle maintenance and tire services. In 2018, the company’s turnover was approximately EUR 1.6 billion and it employed some 4,800 people. Nokian Tyres is listed on Nasdaq Helsinki. Further information: www.nokiantyres.com  

About Us

Nokian Tyres is the world’s northernmost tyre manufacturer and one of the most sustainable companies in the industry. We offer peace of mind in all conditions by developing high-quality, safe and eco-friendly tyres for passenger cars, trucks and heavy machinery. We are especially well known for our innovative winter tyres. Our group also includes the Vianor chain, specialising in vehicle maintenance and tyre services. In 2017, the company’s turnover was approximately EUR 1.6 billion and it employed some 4,600 people. Nokian Tyres is listed on Nasdaq Helsinki. Further information: www.nokiantyres.com