Nokian Tyres plc Half Year Financial Report January–June 2020: COVID-19 and Russia impacting second quarter – Strong balance sheet supporting in difficult times
Nokian Tyres plc Half Year Financial Report January–June 2020, August 4, 2020, 2:00 p.m.
This release is a summary of Nokian Tyres’ Half Year Financial Report January–June 2020. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.
April–June 2020
- Net sales were EUR 270.7 million (415.7 in April−June 2019). With comparable currencies, net sales decreased by 31.9% especially due to COVID-19 and measures taken to reduce high carry-over stocks in the Russian distribution channel.
- Segments operating profit was EUR 24.4 million (98.8), with no significant currency impact. The decline was driven by lower volumes and underabsorption of factory costs. EUR 47.3 million of expenses were booked as non-IFRS exclusions. Operating profit was EUR -22.8 million (94.1).
- Segments earnings per share were EUR 0.09 (0.57). Earnings per share were EUR -0.18 (0.53).
- Cash flow from operating activities was EUR 25.3 million (-20.8).
January–June 2020
- Net sales were EUR 550.5 million (756.1 in January−June 2019). With comparable currencies, net sales decreased by 25.0% especially due to COVID-19, measures taken to reduce high carry-over stocks in the Russian distribution channel, and mild winter in all main markets.
- Segments operating profit was EUR 40.8 million (155.5), with no significant currency impact. The decline was driven by lower volumes and underabsorption of factory costs. EUR 54.6 million of expenses were booked as non-IFRS exclusions. Operating profit was EUR -13.7 million (148.0).
- Segments earnings per share were EUR 0.16 (2.01, positively impacted by EUR 1.08 related to the rulings on the tax disputes). Earnings per share were EUR -0.16 (1.94; positively impacted by EUR 1.08 related to the rulings on the tax disputes).
- Cash flow from operating activities was EUR -13.6 million (-89.8).
- Guidance was withdrawn in March 2020 due to increased uncertainty in the car and tire market. Given the continuous uncertainties, the company refrains from giving a guidance for 2020.
Jukka Moisio, President and CEO:
“Nokian Tyres’ 2020 second quarter results were strongly impacted by the COVID-19 pandemic. While the wide-ranging restrictions have been necessary for health and safety reasons, lockdowns have led to a sharp drop in the global car and tire demand. Consequently, net sales of Passenger Car Tyres and Heavy Tyres declined in the second quarter. In addition, Passenger Car Tyres sales were negatively impacted by the measures taken in Russia to reduce high carry-over stocks in the distribution channel, as announced early 2020. Vianor’s performance was excellent in the difficult circumstances.
I am pleased that our rapidly implemented measures to prevent the COVID-19 spread and to maintain business continuity have proven to be effective. This would not have been possible without a high level of commitment and flexibility of our team members. Despite the exceptional situation, our strategy and short-term priorities are clear: We provide our customers with world-class products and services while keeping costs in strict control and protecting cash flow by cutting back investments, managing working capital, and delaying activities.
Nokian Tyres has a strong balance sheet, and we have further strengthened our liquidity position in the first half. In addition, cash flow from operations turned positive in the second quarter as we managed our cash flow and took manufacturing downtime to reduce inventory levels.
Looking beyond the current headwinds, there are many opportunities around us to develop business further. We have invested significantly in the past quarters, and the capacity and capability now available will help us increase sales when the market rebounds. With our valued brand and a strong, capable team that has performed well during this exceptional situation, we will be successful in quarters to come.”
Key figures, EUR million
|
4–6 |
4–6 /19 |
Change % |
CC* Change % |
1–6 /20 |
1–6 /19 |
Change % |
CC* Change % |
2019 | |
| Net sales | 270.7 | 415.7 | -34.9% | -31.9% | 550.5 | 756.1 | -27.2% | -25.0% | 1,585.4 |
| Operating profit | -22.8 | 94.1 | -13.7 | 148.0 | 316.5 | ||||
| Operating profit % | -8.4% | 22.6% | -2.5% | 19.6% | 19.8% | ||||
| Profit before tax | -26.9 | 88.9 | -21.2 | 179.5 | 336.7 | ||||
| Profit for the period | -24.8 | 73.0 | -22.4 | 267.6 | 399.9 | ||||
| EPS, EUR ** | -0.18 | 0.53 | -0.16 | 1.94 | 2.89 | ||||
| Segments operating profit | 24.4 | 98.8 | 40.8 | 155.5 | 337.2 | ||||
| Segments operating profit % | 9.0% | 23.8% | 7.4% | 20.6% | 21.3% | ||||
| Segments EPS, EUR** | 0.09 | 0.57 | 0.16 | 2.01 | 3.06 | ||||
| Segments ROCE, %*** | 10.6% | 17.2% | 18.6% | ||||||
| Equity ratio, % | 63.3% | 70.5% | 75.9% | ||||||
| Cash flow from operating activities | 25.3 | -20.8 | -13.6 | -89.8 | 219.8 | ||||
| Gearing, % | 16.3% | 15.7% | 2.3% | ||||||
| Interest-bearing net debt |
254.1 | 252.0 | 41.1 | ||||||
| Capital expenditure | 36.6 | 93.7 | 87.5 | 148.0 | 299.6 |
* Comparable currencies
** EPS 1-6/2019 excl. the impact of the rulings on the tax disputes of EUR 1.08 were EUR 0.86. Segments EPS 1-6/2019 excl. the impact were EUR 0.93.
*** Rolling 12 months
BUSINESS UNIT REVIEWS
Passenger Car Tyres
|
4–6 |
4–6 /19 |
Change % |
CC* Change % |
1–6 /20 |
1–6 /19 |
Change % |
CC* Change % |
2019 | |
| Net sales, M€ | 163.9 | 296.8 | -44.8% | -42.0% | 354.4 | 549.8 | -35.5% | -33.4% | 1,123.8 |
| Segment operating profit, M€ | 13.6 | 84.7 | 39.5 | 150.7 | 308.5 | ||||
| Segment operating profit % | 8.3% | 28.5% | 11.1% | 27.4% | 27.4% |
* Comparable currencies
Heavy Tyres
|
4–6 |
4–6 /19 |
Change % |
CC* Change % |
1–6 /20 |
1–6 /19 |
Change % |
CC* Change % |
2019 | |
| Net sales, M€ | 40.5 | 47.8 | -15.3% | -13.1% | 91.6 | 96.1 | -4.6% | -3.3% | 202.7 |
| Segment operating profit, M€ | 2.6 | 8.3 | 10.8 | 17.3 | 35.7 | ||||
| Segment operating profit % | 6.4% | 17.4% | 11.8% | 18.0% | 17.6% |
* Comparable currencies
Vianor, own operations
|
4–6 |
4–6 /19 |
Change % |
CC* Change % |
1–6 /20 |
1–6 /19 |
Change % |
CC* Change % |
2019 | |
| Net sales, M€ | 80.8 | 89.8 | -9.9% | -5.4% | 135.3 | 146.7 | -7.8% | -3.9% | 336.5 |
| Segment operating profit, M€ | 9.6 | 9.4 | -2.8 | -2.6 | 7.7** | ||||
| Segment operating profit % | 11.8% | 10.4% | -2.1% | -1.8% | 2.3% | ||||
| Number of own service centers at period end | 186 | 188 | 189 |
* 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 August 4, 2020 at 3:00 p.m. Finnish time. In the call, President and CEO Jukka Moisio 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: +1 631 913 1422
PIN: 66845506#
The call can also be listened live via www.nokiantyres.com/resultinfo-Q2-2020.
A recording of the conference call and a transcript will be available on the company’s website later.
FINANCIAL REPORTING
Interim report for January–September 2020: October 27, 2020.
Releases and company information are available at www.nokiantyres.com/company/investors/.
Nokian Tyres plc
Päivi Antola, SVP, Communications and IR
Further information:
Jukka Moisio, President and CEO, tel: +358 10 401 7742
Teemu Kangas-Kärki, CFO, tel: +358 10 401 7750
Päivi Antola, SVP, Communications and IR, tel: +358 10 401 7327
Distribution: Nasdaq Helsinki, media,
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