Nokian Tyres plc Interim Report January–March 2019: Softness in Europe, progress in Heavy Tyres and Vianor
Nokian Tyres plc Interim Report January–March 2019, May 8, 2019, 2:00 p.m.
This release is a summary of Nokian Tyres’ Interim Report January–March 2019. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.
January–March 2019
- Net sales increased by 2.3% to EUR 343.7 million (336.0 in 1−3/2018). With comparable currencies, net sales increased by 3.8%.
- Operating profit decreased to EUR 53.9 million (61.2), negatively impacted by currencies.
- Profit for the period was EUR 194.6 million (46.6), and was positively impacted by EUR 149.6 million related to the rulings on the tax disputes concerning the years 2007−2011.
- Earnings per share increased to EUR 1.41 (0.34), and were positively impacted by EUR 1.08 related to the rulings on the tax disputes.
- Cash flow from operating activities was EUR -68.9 million (-18.3).
Guidance for 2019 (unchanged)
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:
“Nokian Tyres had a diverse start to the year. With comparable currencies, our net sales increased by 3.8% with good progress in Heavy Tyres and Vianor. Car tire sell-in in the Nordics and Central Europe declined which, together with the timing of deliveries in North America, had a negative effect on Passenger Car Tyres’ net sales. This was partly offset by earlier deliveries in Russia. Operating profit decreased due to the highly competitive tire market in Central Europe, as well as currencies.
In March 2019, we received the final ruling on the tax dispute for 2007−2010, as well as concerning the year 2011. Both decisions were positive for the company, and adjustments to the financial reporting have been done during the first quarter of 2019.
Sustainability is an important part of our strategy, and I am particularly proud that in February the company received the Silver Class distinction in the RobecoSAM Sustainability Yearbook 2019. As a premium tire brand, we want to set an example as a responsible company that aims for sustainable growth.
In 2019, we continue to pursue our growth agenda, despite softness in the car and tire market in Europe. Our focus is on executing our strategic projects, especially the US factory ramp-up which is proceeding according to plan, and commercial production is expected to start in early 2020.”
Key figures, EUR million
| 1–3 /19 |
1–3 /18 |
Change % |
CC* Change % |
2018 | |
| Net sales | 343.7 | 336.0 | 2.3% | 3.8% | 1,595.6 |
| Operating profit | 53.9 | 61.2 | 372.4 | ||
| Operating profit % | 15.7% | 18.2% | 23.3% | ||
| Profit before tax | 90.7 | 60.0 | 361.7 | ||
| Profit for the period | 194.6 | 46.6 | 295.2 | ||
| Earnings per share, EUR ** | 1.41 | 0.34 | 2.15 | ||
| ROCE, % *** | 20.2% | 21.7% | 23.3% | ||
| Equity ratio, % | 75.7% | 79.1% | 71.0% | ||
| Cash flow from operating activities | -68.9 | -18.3 | 536.9 | ||
| Gearing, % | -3.2% | -11.6% | -21.2% | ||
| Interest-bearing net debt |
-54.9 | -174.1 | -315.2 | ||
| Capital expenditure | 54.3 | 17.5 | 226.5 |
* Comparable currencies
** EPS excl. the impact of the rulings on the tax disputes of EUR 1.08 were EUR 0.33
*** Rolling 12 months
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.
IFRS 16 standard had minor impact to Q1 income statement (EBIT impact EUR +0.7 million, net income impact EUR -0.4 million). Interest-bearing net debt at 31.3.2019 increased by EUR 132.6 million and assets by EUR 132.2 million due to the recognition of right-of-use assets.
BUSINESS UNIT REVIEWS
Passenger Car Tyres
| 1–3 /19 |
1–3 /18 |
Change % |
CC* Change % |
2018 | |
| Net sales, M€ | 256.3 | 259.1 | -1.1% | 0.7% | 1,150.8 |
| Operating profit, M€ |
63.2 | 74.0 | 356.5 | ||
| Operating profit, % | 24.7% | 28.6% | 31.0% |
* Comparable currencies
Heavy Tyres
| 1–3 /19 |
1–3 /18 |
Change % |
CC* Change % |
2018 | |
| Net sales, M€ | 48.3 | 43.1 | 11.9% | 12.1% | 187.7 |
| Operating profit, M€ |
9.0 | 8.3 | 28.6 | ||
| Operating profit, % |
18.7% | 19.2% | 15.2% |
* Comparable currencies
Vianor, own operations
| 1–3 /19 |
1–3 /18 |
Change % |
CC* Change % |
2018 | |
| Net sales, M€ | 57.0 | 53.3 | 7.0% | 8.4% | 337.2 |
| Operating profit, M€ |
-12.0 | -14.7 | 1.6 | ||
| Operating profit, % |
-21.0% | -27.5% | 0.5% | ||
| Own service centers, pcs, at period end | 187 | 193 | 188 |
* Comparable currencies
CONFERENCE CALL
A conference call for investors, analysts and media will be held on May 8, 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: 99569516#
The call can also be listened live via www.nokiantyres.com/resultinfo-Q1-2019
A recording of the conference call and a transcript will be available on the company’s website later.
FINANCIAL REPORTING
Half Year Financial Report: August 6, 2019.
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’ Interim Report January–March 2019
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