Nokian Tyres plc Financial Statement Release 2019: Soft market in Passenger Car Tyres in Europe, good development in Heavy Tyres and Vianor

Nokian Tyres plc Financial Statement Release 2019, February 4, 2020, 2:00 p.m.

This release is a summary of Nokian Tyres’ Financial Statement Release 2019. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.

October–December 2019

• Net sales were EUR 475.8 million (473.6 in 10−12/2018). With comparable currencies, net sales decreased by 0.4%.
• Operating profit was EUR 101.0 million (117.2), with no significant currency impact.
• Profit for the period was EUR 81.1 million (96.0).
• Earnings per share were EUR 0.58 (0.70).
• Cash flow from operating activities was EUR 398.2 million (460.0).

January–December 2019

• Net sales were EUR 1,595.8 million (1,595.6 in 2018). With comparable currencies, net sales decreased by 0.3%.
• Operating profit was EUR 316.5 million (372.4), negatively impacted by the US factory ramp-up costs of approximately EUR 20 million as well as currencies by approximately EUR 7 million.
• Profit for the period was EUR 399.9 million (295.2), positively impacted by EUR 149.6 million related to the rulings on the tax disputes concerning the years 2007−2011.
• Earnings per share were EUR 2.89 (2.15), positively impacted by EUR 1.08 related to the rulings on the tax disputes.
• Cash flow from operating activities was EUR 219.8 million (536.9; positively impacted by EUR 148 million due to the rulings on the tax disputes).
• The Board of Directors proposes a dividend of EUR 1.58 (1.58) per share.

Guidance for 2020

In 2020, net sales with comparable currencies are expected to decline and operating profit to be significantly below the level of 2019. In line with Nokian Tyres’ updated 2018 strategy, the company is targeting further growth in Russia, Central Europe, and North America. In 2020 however, net sales and operating profit in Russia are expected to decline substantially due to the changed market dynamics. Operating profit in 2020 will include costs related to the North American expansion and other investment programs to support long-term growth, as communicated in 2018.

Hille Korhonen, President and CEO:

“In 2019, the car and tire markets continued to be soft in Europe, which resulted in tightening competition. Winter tire demand in October-December was negatively impacted by the warm winter in Nokian Tyres’ key markets. During the year, the Russian market declined against expectations, driven by low new car sales and consumer spending.

Our net sales were on the previous year’s level and operating profit decreased due to the weaker markets and increased expansion costs of approximately EUR 20 million in Passenger Car Tyres in the US. Heavy Tyres and Vianor continued to perform well.

During the year, we continued with our important strategic projects to support Nokian Tyres’ long-term growth: we successfully started ramping up our new US factory, continued the construction of our new testing center in Spain, and proceeded with the Heavy Tyres capacity increase with great results. These growth projects lay an important basis for our future.

In line with our strategy, we are targeting growth in Russia, Central Europe and North America. In 2020 however, net sales and operating profit in Russia are expected to decline substantially, which will have a negative impact on Passenger Car Tyres in 2020 especially during the first and second quarters of the year. Carry-over stocks in the distribution in Russia are on a high level, and in 2020, our focus in Russia is on increasing our sell-out and decreasing distributors’ stock levels. In addition, our B segment winter products in Russia will be repositioned in order to make them more competitive. In 2020, growth in Central Europe and North America will be supported by several new product launches and related go-to-market activities. We have actions in place to grow with existing and new customers both in the summer and all-season segments in addition to our core business in winter products.

In the short term, we are facing headwind in Russia. Nevertheless, in line with our strategy, we continue to build a more balanced portfolio across the Nordics, Russia, Central Europe and North America, which will lead to a sustainable, positive impact on our long-term performance.”

Key figures, EUR million

* Comparable currencies
** EPS 2019 excl. the impact of the rulings on the tax disputes of EUR 1.08 were EUR 1.81

IFRS 16 Leases

The new IFRS 16 standard became effective on 1 January 2019 onwards and replaced the previous standard IAS 17. Nokian Tyres chose to use the exemption provided by the standard not to account lease liability for leases, which have a lease term of 12 months or less and not to account lease liability for leases in which the underlying asset is not material to Nokian Tyres. The majority of leases recognized as Right-of-use assets under IFRS 16 are comprised of Vianor chain real estate and warehouses.

The IFRS 16 standard had a minor impact on the 2019 income statement (EBIT impact EUR 1.1 million, net income impact EUR -2.7 million). Interest-bearing net debt on December 31, 2019 increased by EUR 124.8 million and assets by EUR 122.9 million due to the recognition of right-of-use assets. 

BUSINESS UNIT REVIEWS

Passenger Car Tyres

* Comparable currencies

Heavy Tyres

* Comparable currencies

Vianor, own operations

* Comparable currencies
** Including EUR 2.0 million profit from sale of real estate

CONFERENCE CALL

A conference call for investors, analysts and media will be held on February 4, 2020 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: +358 981 710 310
Sweden: +46 856 642 651
UK: +44 333 300 08 04
US: +1 855 857 06 86

PIN: 52821796#

The call can also be listened live via www.nokiantyres.com/resultinfo-Q4-2019

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 2019 will be available in English and Finnish at www.nokiantyres.com the week commencing March 9, 2020 at the latest.

Interim Report January–March 2020: May 5.

THE ANNUAL GENERAL MEETING 2020

The Annual General Meeting of Nokian Tyres plc is scheduled for April 2, 2020.

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

Nokian Tyres develops and manufactures premium tires for people who value safety and sustainability. Inspired by our Scandinavian heritage, we craft innovative products for passenger cars, trucks and heavy machinery that give you peace of mind in all driving conditions. Our Vianor chain provides tire and car services. In 2019, the company’s net sales were EUR 1.6 billion and it employed some 4,700 people. Nokian Tyres is listed on Nasdaq Helsinki. Further information: www.nokiantyres.com