2013-08-09 07:00:03 CEST
2013-08-09 07:00:19 CEST
REGULATED INFORMATION
Nokian Renkaat - Interim report (Q1 and Q3)
Nokian Tyres plc Interim Report January-June 2013: Sales and EBIT growth in Q2, improving position in core markets
Nokia, Finland, 2013-08-09 07:00 CEST (GLOBE NEWSWIRE) -- Nokian Tyres plc
Interim Report 9 August 2013, 8 a.m.
Nokian Tyres plc Interim Report January-June 2013:
Sales and EBIT growth in Q2, improving position in core markets
4-6/2013:
Nokian Tyres Group's net sales increased by 1.3% to EUR 419.1 million (EUR
413.8 million in
4-6/2012). Operating profit grew by 6.7% to EUR 120.2 million (112.7). Profit
for the period amounted to EUR 85.6 million (95.4). Earnings per share amounted
to EUR 0.65 (EUR 0.73).
1-6/2013:
Nokian Tyres Group's net sales decreased by 5.7% to EUR 752.2 million (EUR
798.0 million in
1-6/2012). Operating profit was EUR 196.6 million (217.7). Profit for the
period amounted to EUR 149.2 million (182.9). Earnings per share amounted to
EUR 1.13 (EUR 1.40).
Outlook:
The demand for replacement car tyres in 2013 is expected to be on previous
year's level in Nordic countries with winter tyre demand showing growth. In
Russia demand is estimated to show growth in winter tyres but to decrease in
summer tyres. In Central Europe total tyre demand is estimated to be down
compared to 2012, but winter tyre demand is expected to show growth during
H2/2013. The pricing environment for 2013 is challenging for all tyre
categories. Margins, however, will be supported by easing of raw material costs
(€/kg) by approximately 9.5%, a tailwind of some EUR 45 million, in the full
year 2013. Nokian Tyres' sales are expected to show flat to some growth during
2013. Sales in Russia, Nordic countries and North America are expected to show
some growth full year 2013 and sales in Central Europe to pick up in H2/2013
year-over-year.
Financial guidance (updated):
In 2013, the company is positioned to show flat to some growth in Net sales and
Operating profit compared to 2012.
Key figures, EUR 4-6/13 4-6/12 Change% 1-6/13 1-6/12 Change% 2012
million:
Net sales 419.1 413.8 1.3 752.2 798.0 -5.7 1,612.4
Operating profit 120.2 112.7 6.7 196.6 217.7 -9.7 415.0
Operating profit % 28.7 27.2 26.1 27.3 25.7
Profit before tax 98.8 108.0 -8.5 171.7 210.3 -18.4 387.7
Profit for the period 85.6 95.4 -10.2 149.2 182.9 -18.4 330.9
Earnings per share, 0.65 0.73 -11.2 1.13 1.40 -19.5 2.52
EUR
Equity ratio, % 67.6 62.8 71.2
Cash flow from -0.9 -42.5 97.9 -96.0 -163.9 41.4 262.3
operations
RONA,% (roll. 12 21.1 26.4 23.0
months)
Gearing, % 22.4 25.9 -4.5
Kim Gran, President and CEO:
“Our strong market leader position in the core markets in Russia and Nordic
countries is intact and we managed again to increase market share in all our
markets. Pre-season sales of our new Hakkapeliitta winter tyre range were good
and helped us to book reasonably good results with growth in sales and EBIT
during Q2. Headwind continued to be heavy in the European economy, car sales
and replacement tyre market being clearly down. We do not foresee any major
improvement in the market for 2013 but target to grow and excel on the back of
our renewed winter tyre range, expanding distribution and our strong industrial
structure.
In the second quarter our strongest cards were Russia and the Nordic countries.
Our sales in Russia, our biggest market, continue to exceed last year's numbers
and we managed again to grow winter tyre sales clearly more than average market
growth. The best growth rate in Q2, however, came from the Nordic countries
supported by the renewed winter tyre range and expanding distribution.
Our profitability remained good, price €/kg was flat due to an improved mix. A
strong tailwind from material cost supported margins and offset higher
depreciation costs.
We expect the good performance to continue with our new winter tyres
spearheaded by Hakkapeliitta 8 being launched to consumers in the second half
of the year. The Russian tyre market is growing modestly in 2013, however, car
and tyre sales are expected to start to improve during H2 with recently
launched state financing support. The Central European winter tyre market has
been weak and competitive, but we expect some improvement and an upturn in
H2/2013.
During the present phase of slower market growth we continue to develop and
improve productivity and our industrial structure. In Q1 we commissioned
another line (line 12) in the Russian factory and followed up in Q2 with
installation of line 13. This is taking the annualized capacity in Russia to
more than 15 million tyres by end of 2013.
We continue to expand our distribution network spearheaded by Vianor. We opened
84 new Vianor stores in the first half of the year, now totalling 1,121 stores
in 26 countries. In Russia and CIS Nokian Hakka Guarantee dealership program
includes over 2,700 tyre stores and car dealers. A new softer partner franchise
model Nokian Authorized Dealer (NAD) has also been rolled out in H1 with 217
shops contracted in Italy, Germany and China.
We are looking into the rest of 2013 with confidence and fighting Hakkapeliitta
spirit. After a slow start for the year we managed to improve operations in Q2
and expect to be able to improve our sales and EBIT in H2. With the newly
launched next generation of Hakkapeliitta winter tyres and test winner winter
and summer tyres, our product offering will be by far the best ever. Our tyre
chains Vianor and NAD are to be expanded and our market geography in Russia and
Northern Europe is looking comparatively healthy offering us a good base for
profitable business. A stronger than expected raw material tailwind will help
to offset softer prices and additional costs.”
Market situation
The global economy continues to be characterized by uncertainty and slow
growth. While old risks remain, new risks have emerged threatening the growth
in emerging markets. The growth in the USA is estimated to be slightly above 1%
in 2013 and the improved housing sector and improving employment are giving
fuel for further GDP growth. Slower growth of 7.5% in China and continued
problems in Europe have reduced confidence and economic activity. The recession
in Europe has been deeper than expected with slightly below zero growth
estimated for 2013. The expectation is that global economy will turn for the
better late 2013 with further improvement in 2014-2015 with the exception of
Europe which remains weak.
Economies in Nokian Tyres' core markets continue to show slow but comparatively
stable development. GDP growth in the first half-year was approximately 1.7% in
Russia with full year growth estimated at 2.4%. In Nordic countries the full
year 2013 GDP growth is estimated to be 1%.
In Russia consumer confidence has been on a healthy level, but consumer
spending has been held back by increased interest rates and uncertainty
relating to global economic turmoil. The sales of new cars in H1 in Russia
decreased by 6% compared to H1/2012. On the back of government's recent program
to subsidize car loan interest rates, the new car sales in 2013 are estimated
to take an upturn during H2/2013 with full year sales being still down by 2-5%
year-over-year. In 2013 demand for tyres is expected to be flat compared to
2012, with growing winter and decreasing summer tyre sales. Tyre prices have
decreased slightly due to soft summer tyre sell-out to consumers and stagnated
new car sales.
In Europe the weak economy has had a clear negative effect on consumer
confidence and spending. In the first half of 2013 the sales of new cars
dropped by 7%. Replacement car tyre sales decreased by 6%, with winter tyre
sell-in to distributors down by 23% year-over-year. There is pricing pressure
both in premium and economy tyres in Central Europe and sell-in prices of the
tyre industry have declined due to the challenging market situation. The demand
for winter tyres is expected to pick up in H2 due to seasonality and pent up
demand.
In the Nordic countries the new car sales decreased by 8% in H1/2013
year-over-year. The market volume of car tyres showed a slight decrease of 2%.
The sales of new cars and tyres started to pick up in Q2 and the volumes are
expected to reach the previous year's level, with winter tyre sales growing
seasonally in H2.
The demand for heavy tyres remains comparatively weak. Demand for mining
machinery tyres has decreased along with the weakening prices of metals.
Forestry tyre markets have been relatively soft in H1/2013, but are showing
signs of improvement for the rest of the year.
At the beginning of 2013 there have been some signs of recovery in truck tyre
demand. In Europe the demand for premium truck tyres was up by 5%, and in
Russia the demand increased by 19% in H1 year-over-year. In the Nordic
countries, however, the demand was still down by 17%.
Raw materials
Tyre industry raw material prices have continued to decrease in the first half
of 2013, and the tailwind is expected to continue all 2013. The raw material
cost (€/kg) for Nokian Tyres was down 9.6% in H1/2013 year-over-year. The raw
material cost is estimated to decrease 1.5% in Q3/2013 versus Q2/2013, and 9.5%
full year offering a tailwind of some EUR 45 million in 2013 vs. 2012.
April-June 2013
Nokian Tyres Group recorded Net sales of EUR 419.1 million (413.8), showing an
increase of 1.3% compared with Q2/2012. In the Nordic countries sales increased
by 14.5%. Sales in Russia increased by 2.4%. Russia and CIS consolidated sales
grew by 5.5%. In Other Europe sales were down by 7.1% year-over-year. In North
America sales decreased by 2.4%.
Raw material cost (EUR/kg) in manufacturing decreased in the second quarter by
10.2% year-over-year and decreased by 6.4% versus the first quarter of 2013.
Fixed costs amounted to EUR 101.8 million (94.3), accounting for 24.3% (22.8%)
of net sales.
Nokian Tyres Group's Operating profit amounted to EUR 120.2 million (112.7).
The Operating profit was negatively affected by expensed credit losses and
provisions of EUR 3.3 million (1.4).
Net financial expenses were EUR 21.4 million (4.7). Net interest expenses were
EUR 3.9 million (3.8) including EUR 2.3 million (2.2) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 17.5 million
(0.9) of exchange rate differences of which EUR 15.6 million is unrealized
related to internal lending in rouble due in the end of the year.
Profit before tax was EUR 98.8 million (108.0). Profit for the period amounted
to EUR 85.6 million (95.4), and EPS were EUR 0.65 (EUR 0.73).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR -0.9 million
(-42.5).
January-June 2013
Nokian Tyres Group recorded Net sales of EUR 752.2 million (798.0), showing a
decrease of 5.7% compared with 1-6/2012. In the Nordic countries sales
increased by 2.6% representing 31.1% (29.3%) of the group's total sales. Sales
in Russia increased by 2.6%. Russia and CIS consolidated sales grew by 4.3% and
formed 43.3% (40.1%) of the group's total sales. In Other Europe sales were
down by 24.4% year-over-year representing 17.9% (22.8%) of the group's total
sales. In North America sales decreased by 4.5% and were 7.2% (7.2%) of the
group's total sales.
Sales of Passenger Car Tyres were down by 6.5% representing 74.7% (75.2%) of
the group's total sales. Heavy Tyres' sales decreased by 11.4% and were 6.0%
(6.4%) of the group's total sales. Vianor's sales increased by 0.5% forming
16.4% (15.4%) of the group's total sales. The sales of Other operations were
down by 11.5% representing 2.8% (3.0%) of the group's total sales.
Raw material cost (EUR/kg) in manufacturing decreased by 9.6% year-over-year.
Fixed costs amounted to EUR 202.2 million (187.0), accounting for 26.9% (23.4%)
of net sales. Total salaries and wages were EUR 93.0 million (98.3).
Nokian Tyres Group's Operating profit amounted to EUR 196.6 million (217.7).
The Operating profit was negatively affected by the IFRS 2 -compliant option
scheme write-off of EUR 7.0 million (5.2) and expensed credit losses and
provisions of EUR 3.4 million (4.9).
Net financial expenses were EUR 24.9 million (7.4). Net interest expenses were
EUR 7.8 million (6.5) including EUR 4.6 million (4.4) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 17.1 million
(1.0) of exchange rate differences of which EUR 15.5 million is unrealized
related to internal lending in rouble due in the end of the year.
Profit before tax was EUR 171.7 million (210.3). Profit for the period amounted
to EUR 149.2 million (182.9), and EPS were EUR 1.13 (EUR 1.40).
Return on net assets (RONA, rolling 12 months) was 21.1% (26.4%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR -96.0 million (-163.9).
The Group employed an average of 4,138 (4,078) people, and 4,184 (4,155) at the
end of the period. The equity-owned Vianor tyre chain employed 1,489 (1,413)
people and Russian operations 1,309 (1,187) people at the end of the period.
Exchange rate differences
Net Financial expenses include EUR 17.1 million (1.0) of exchange rate
differences of which EUR 15.5 million is unrealized related to internal
RUB-nominated loans granted by the Finnish parent company to Russian
subsidiaries maturing in the end of year 2013. Amount of RUB 3,000 million were
hedged with option strategies where call options were sold on level 42.50 at
the end of the review period.
Investments
Investments in the review period amounted to EUR 88.8 million (109.8). This
comprises of production investments in the Russian and Finnish factories,
moulds for new products and the Vianor expansion projects.
Financial position on 30 June 2013
Gearing ratio was 22.4% (25.9%). Interest-bearing net debt amounted to EUR
307.2 million (329.3). Equity ratio was 67.6% (62.8%).
The Group's interest-bearing liabilities totalled EUR 422.3 million (530.6) of
which current interest-bearing liabilities amounted to EUR 234.9 million
(194.6). The average interest rate of interest-bearing liabilities was 4.2%
(3.5%). The average interest rate of interest-bearing liabilities was 2.3%
(1.0%) with calculatory non-cash expenses related to the convertible bond
eliminated. Cash and cash equivalents amounted to EUR 115.1 million (201.4).
At the end of the review period the company had unused credit limits amounting
to EUR 616.7 million (490.4) of which EUR 305.9 million (306.0) were committed.
The current credit limits and the commercial paper program are used to finance
inventories, trade receivables, subsidiaries in distribution chains and thus
control the typical seasonality in the Group's cash flow due to changes in the
working capital.
Tax rate
In the review period the Group's tax rate was 13.1% (13.0%). In 2012 the tax
rate was 14.7%. The tax rate is affected by tax incentives in Russia based on
present investments and further investment-related incentive agreements. A new
agreement has been completed with authorities in Russia concerning additional
investment in the existing factory and building the new factory. The agreement
will prolong the benefits and incentives until approximately 2020. The
estimated tax rate going forward for the next 5 years is 17%.
The authorities' final approvals of the new factory building in Russia took
place at the end of 2012 and the new agreed tax benefits and incentives came
into force in the beginning of January 2013.
PASSENGER CAR TYRES
4-6/13 4-6/12 Change% 1-6/13 1-6/12 Change% 2012
Net sales, m€ 317.9 317.1 0.3 591.6 633.0 -6.5 1,220.1
Operating profit, m€ 114.6 110.0 4.2 207.0 228.7 -9.5 410.8
Operating profit, % 36.0 34.7 35.0 36.1 33.7
RONA,% (roll.12 m.) 29.4 38.2 32.5
4-6/2013:
The net sales of Nokian Passenger Car Tyres was EUR 317.9 million (317.1).
Operating profit improved to EUR 114.6 million (110.0). Operating profit
percentage was up to 36.0% (34.7%).
Nokian car tyres' sales and Operating profit increased in the second quarter on
the back of strong winter tyre sales in the core markets. The company continues
to win market share in Russia and in the Nordic countries, and the company is
the clear market leader in the premium and mid segment winter tyres.
1-6/2013:
The net sales of Nokian Passenger Car Tyres totalled EUR 591.6 million (633.0),
down by 6.5% from the corresponding period a year earlier. Operating profit
amounted to EUR 207.0 million (228.7). Operating profit percentage was 35.0%
(36.1%).
The negative sales growth in January-June related mainly to weak demand in
Central Europe and to Nokian Tyres ending contract manufacturing of tyres for
Bridgestone after 2012.
Average Selling Price (€/kg) was on par with H1/2012 although the share of mid
segment tyres was high and the pricing environment for tyres was tight. Winter
tyres represented 73% (64%) of the company's sales volume in H1/2013, which
improved mix and supported ASP.
Raw material costs were down 9% year-over-year, which supported margins.
The new summer tyre range with the spearhead products Nokian Hakka Blue, Hakka
Green and Nokian Line won several car magazines' tests in the core markets and
in Central Europe in 2012 and spring 2013. In October 2012 Nokian Tyres
dominated the winter tyre tests with several victories in Nordic and Russian
car magazines. Also the Central European winter tyre test results have been a
success for Nokian Tyres with test wins in key markets. A major overhaul of key
winter product offering, altogether five new product ranges, is being done in
2013. The biggest launch ever includes the new generation of studded
Hakkapeliitta 8, non-studded Hakkapeliitta R2 and Hakkapeliitta R2 SUV
targeting further growth in core markets. In addition to the Nordic product
range, Nokian Tyres is also introducing two new winter tyres for the Central
European and North American markets: Nokian WR G3 and Nokian WR SUV 3.
Fixed costs increased due to the commissioning of the new factory in Russia
which increased depreciation, and due to increased marketing costs relating to
the launch of new products. Inventories and Capex decreased resulting in an
improved cash flow.
Production output (pcs) was cut in Q1 compared to 2012, but the output
increased in Q2 year-over-year with commissioning of an additional line in the
new plant (line 12) in Russia in March. Yet another line (line 13) in Russia
has been installed in Q2. In the first half of the year 82% of Nokian car tyres
(pcs) were manufactured in the Russian factories. The company aims to utilize
full capacity in Q3/2013.
The target for 2013 is to increase sales, to win market share in core markets
with new products, to expand distribution further and to improve productivity
and the utilization of capacities.
HEAVY TYRES
4-6/13 4-6/12 Change% 1-6/13 1-6/12 Change% 2012
Net sales, m€ 25.3 26.5 -4.6 47.4 53.6 -11.4 104.4
Operating profit, m€ 2.7 2.6 4.0 4.9 6.3 -23.1 11.3
Operating profit, % 10.5 9.6 10.3 11.9 10.8
RONA,% (roll.12 m.) 11.1 15.2 12.5
The net sales of Nokian Heavy Tyres totalled EUR 47.4 million (53.6), down by
11.4% year-over-year. Operating profit was EUR 4.9 million (6.3), and the
Operating profit percentage 10.3% (11.9%).
Nokian Heavy Tyres' sales decreased due to weak demand in mining, forestry and
harbour tyres and slowing down of machine building in Europe in most of the
heavy end use product groups. Average Selling Price remained on the same level
year-over-year despite a challenging market situation. Margins were supported
by lower raw material cost and improved productivity.
The production volume was cut in H1 by reducing working days to match a lower
demand and to control the inventory level. In the review period the production
output (tonnes) decreased 11%. The low utilization rate with fixed structure
penalized the profits.
An investment program is in progress to modernize the factory, to open
bottlenecks in production and to increase radial tyre output. The upgrade of
the factory will be completed in the beginning of 2014. The structural changes
in manufacturing have already reduced manning and improved product quality,
flexibility, and productivity in H1/2013.
The outlook in 2013 remains challenging with demand at a comparatively low
level, although the forestry machine building is showing some signs of
improvement. The focus for 2013 is to maximize sales and to optimize production
output.
VIANOR
Equity-owned operations
4-6/13 4-6/12 Change% 1-6/13 1-6/12 Change% 2012
Net sales, m€ 86.4 79.4 8.8 130.0 129.4 0.5 315.3
Operating result, m€ 6.0 3.2 87.0 -9.9 -7.2 -38.0 0.0
Operating result, % 7.0 4.0 -7.6 -5.5 0.0
RONA,% (roll.12 m.) -1.5 1.4 0.0
At the end of the review period Vianor had 183 (180) equity-owned stores in
Finland, Sweden, Norway, USA, Switzerland and Russia. Vianor's net sales
amounted to EUR 130.0 million (129.4), up by 0.5% compared with 1-6/2012.
Operating result was EUR -9.9 million (-7.2) and the Operating result
percentage was -7.6% (-5.5%).
Vianor succeeded in its strategic task of expanding distribution and setting
market prices for Nokian products and was able to win market shares in a
challenging market situation. Sales and Operating result improved in Q2/2013
year-over-year. However, operating result was negative in January-June due to
normal seasonality; it is expected to turn positive in H2 and full year 2013
due to sales and profit generation during the winter tyre season and increased
service revenues.
The gradual change of operating model from tyre sales to full car service in
the stores continues with investments and local acquisitions of car service
shops. At the end of H1/2013 a total of 40 car service operations had been
acquired and integrated to existing Vianor stores, which has caused some
consolidation costs.
In 2013 there are on-going special projects in expanding the network,
developing consumer tyre sales and the car services business, improving the
customer experience further, updating all the processes (Vianor Way) and
renewing the ERP-system.
Franchising and partner operations
Vianor expanded the shop network in Nokian Tyres' key markets by 84 stores
during H1/2013. At the end of the review period the Vianor network comprised of
totally 1,121 stores of which 938 were partners. Vianor operates in 26
countries; most extensively in the Nordic countries, Russia and Ukraine. Nokian
Tyres' market shares improved as a result of the expansion in each respective
country. Expanding the partner franchise network will continue according to
plans; the target is to have more than 1,180 Vianor stores by the end of 2013.
A new softer partner franchise model Nokian Authorized Dealer (NAD) was rolled
out in H1/2013 with first 217 shops contracted in Italy, Germany and China.
OTHER OPERATIONS
Truck Tyres
The net sales of Nokian Truck Tyres were EUR 22.4 million (25.3), down by 11.5%
compared to 1-6/2012. Operating profit and cash flow improved and were on a
healthy level.
The truck tyre market was challenging in H1/2013 in the Nordic countries with
overall tyre industry sales down by 17%. However, in the core markets, Nordic
countries and Russia, Nokian Tyres' market share increased due to an improved
product range in both premium and standard tyres.
The distributors' low truck tyre inventories in the Nordic countries, a growing
demand for premium truck tyres in Russia in combination with winter tyre season
are expected to support sales in H2/2013.
In 2013 the focus will be on increasing sales and improving market shares in
the core markets. Expansion to Russia and CIS utilizing the “Vianor Truck”
service concept will continue.
RUSSIA AND THE CIS COUNTRIES
Nokian Tyres' sales in Russia increased year-over-year by 2.6% to EUR 336.4
million (327.9). Sales in CIS countries (excluding Russia) were EUR 20.3
million (14.1). Consolidated sales in Russia and CIS increased by 4.3% to EUR
356.7 million (342.0).
Nokian Tyres' sales in Russia grew although economic uncertainty has somewhat
increased and the new car sales decreased in H1/2013. Nokian winter tyre sales
increased clearly with a growing share of mid-price segment tyres. Summer tyre
sales were slower due to distributors' carry-over stocks and the company
selling a bulk of summer tyres for 2013 already in Q4/2012. Nokian winter tyre
market shares improved clearly and the company strengthened its market leader
position in Russia. Payments of customers' trade receivables and governmental
tax incentives came in as planned.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. There were a total of 581 Vianor
stores in 344 cities in Russia and CIS countries at the end of the review
period. The Hakka Guarantee retail network in Russia, working closely with
Nokian Tyres, comprised of 2,528 tyre stores, Vianor shops, car dealers, and
web shops. Totally 409 points of sale were added to the network in Q2/2013,
including 292 web shops. Nokian Tyres' e-commerce development proceeded
according to plans.
The second line in the new factory (line 12) became on stream in Q1/2013,
increasing annual capacity in the Russian factories to approximately 14 million
tyres. Capacity has increased further as machinery for line 13 has been
installed during Q2/2013. The completion of line 13 during H2 will increase the
annual capacity to in excess of 15 million tyres by end 2013. The utilization
rate in 2013 will depend on tyre demand.
The Nokian Tyres plant located in Russia inside the customs borders (duty 20%
for imported tyres) combined with strong brands and an expanding Vianor chain
provides a significant competitive edge on the market. By Russia joining WTO,
the tyre duties will go down gradually; duty of car and van tyres will decrease
from 20% to 18% in 2013 and gradually to 10% in 5 years.
OTHER MATTERS
1. Stock options on the NASDAQ OMX Helsinki Stock Exchange
The total number of stock options 2010A is 1,320,000. Each stock option 2010A
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010A during 1 May 2012 - 31 May 2014. In
the aggregate, the stock options 2010A entitle their holders to subscribe for
1,320,000 shares. The present share subscription price with stock options 2010A
is EUR 14.84/share. The dividends payable annually shall be deducted from the
share subscription price.
The total number of stock options 2010B is 1,340,000. Each stock option 2010B
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010B during 1 May 2013 - 31 May 2015. In
the aggregate, the stock options 2010B entitle their holders to subscribe for
1,340,000 shares. The present share subscription price with stock options 2010B
is EUR 30.25/share. The dividends payable annually shall be deducted from the
share subscription price.
2. Shares subscribed with option rights
After 17 December 2012 registered new shares a total of 116,427 Nokian Tyres
plc's shares have been subscribed with the 2007C option rights and 248,376 with
the 2010A option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007 and 2010. New shares have been registered into
the Trade Register on 19 February 2013, as of which date the new shares have
established shareholder rights. As a result of the share subscriptions, the
number of Nokian Tyres plc shares increased to 132,321,930 shares.
After 19 February 2013 registered new shares a total of 160,246 Nokian Tyres
plc's shares have been subscribed with the 2007C option rights and 127,320 with
the 2010A option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007 and 2010. The subscription time with the 2007C
option rights ended on 31 March 2013. New shares have been registered into the
Trade Register on 14 May 2013, as of which date the new shares have established
shareholder rights.
As a result of the share subscriptions, the number of Nokian Tyres plc shares
increased to 132,609,496 shares.
3. Share price development
The Nokian Tyres' share price was EUR 31.31 (EUR 29.86) at the end of the
review period. The volume weighted average share price during the period was
EUR 33.05 (EUR 32.19), the highest EUR 36.63 (EUR 38.20) and the lowest EUR
29.85 (EUR 24.84). A total of 73,565,503 shares were traded during the period
(107,451,845), representing 56% (81%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 4.143 billion
(EUR 3.937 billion). The company's percentage of Finnish shareholders was 37.8%
(36.4%) and 62.2% (63.6%) were foreign shareholders registered in the nominee
register. This figure includes Bridgestone's ownership of approximately 15.1%.
4. Decisions made at the Annual General Meeting
On 11 April 2013, Nokian Tyres Annual General Meeting accepted the financial
statements for 2012 and discharged the Board of Directors and the President and
CEO from liability.
The meeting decided that a dividend of EUR 1.45 per share shall be paid for the
period ending on 31 December, 2012. The dividend shall be paid to shareholders
included in the shareholder list maintained by Euroclear Finland Ltd on the
record date of 16 April 2013. The dividend payment date was decided to be 26
April 2013.
4.1. Members of the Board of Directors and Auditor
The meeting decided that the Board of Directors has six members. Current
members Kim Gran, Hille Korhonen, Risto Murto, Hannu Penttilä, Aleksey Vlasov
and Petteri Walldén will continue in the Nokian Tyres' Board of Directors.
Authorised public accountants KPMG Oy Ab continue as auditors.
4.2. Remuneration of the Members of the Board of Directors
The meeting decided that the fee paid to the Chairman of the Board is EUR
80,000 per year, while that paid to Board members is set at EUR 40,000 per
year. With the exception of the President and CEO, members of the Board and the
Nomination and Remuneration Committee are also granted an attendance fee of EUR
600 per meeting.
In addition, 50% of the annual fee be paid in cash and 50% in company shares,
such that in the period from 12 April to 30 April 2013, EUR 40,000 worth of
Nokian Tyres plc shares will be purchased at the stock exchange on behalf of
the Chairman of the Board and EUR 20,000 worth of shares on behalf of each
Board member. This means that the final remuneration paid to Board members is
tied to the company's share performance. No separate compensation will be paid
to the President and CEO for Board work.
4.3. Issue of stock options
The Board of Directors decided that stock options will be issued by the General
Meeting of Shareholders to the personnel of the Nokian Tyres Group as well as
to a wholly owned subsidiary of Nokian Tyres plc.
The Company has a weighty financial reason for the issue of stock options,
since the stock options are intended to form part of the incentive and
commitment program for the personnel. The purpose of the stock options is to
encourage the personnel to work on a long-term basis to increase shareholder
value. The purpose of the stock options is also to commit the personnel to the
Company.
The maximum total number of stock options issued will be 3,450,000 and they
will be issued gratuitously. Of the stock options, 1,150,000 are marked with
the symbol 2013A, 1,150,000 are marked with the symbol 2013B and 1,150,000 are
marked with the symbol 2013C. The stock options entitle their owners to
subscribe for a maximum total of 3,450,000 new shares in the Company or
existing shares held by the Company. The stock options now issued can be
exchanged for shares constituting a maximum total of 2.5 percent of all of the
Company's shares and votes of the shares, after the potential share
subscription, if new shares are issued in the share subscription.
The share subscription period for stock options 2013A, will be 1 May 2015 - 31
May 2017, for stock options 2013B, 1 May 2016 - 31 May 2018 and for stock
options 2013C, 1 May 2017 - 31 May 2019.
The share subscription price for stock option 2013A is the trade volume
weighted average quotation of the Company's share on NASDAQ OMX Helsinki Ltd.
during 1 January - 30 April 2013, for stock option 2013B, the trade volume
weighted average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1
January - 30 April 2014, and for stock option 2013C, the trade volume weighted
average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1 January -
30 April 2015. The share subscription price will be credited to the reserve for
invested unrestricted equity.
The Board of Directors will decide on the distribution of stock options
annually in spring 2013, 2014 and 2015.
A share ownership plan shall be incorporated with the 2013 stock options,
obliging the Group's senior management to acquire the Company's shares with a
proportion of the income gained from the stock options.
Terms and conditions of the Stock options and the Share ownership plan are
presented in the appendix of the press release dated 11 April 2013.
4.4. Authorizing the Board of Directors to resolve to repurchase treasury shares
The Annual General Meeting of Shareholders authorized the Board of Directors to
resolve to repurchase a maximum of 300,000 shares in the Company by using funds
in the unrestricted shareholders' equity. The proposed number of shares
corresponds 0.2 per cent of all shares of the Company.
The price paid for the shares repurchased under the authorization shall be
based on the market price of the Company's share in public trading. The minimum
price to be paid would be the lowest market price of the share quoted in public
trading during the authorization period and the maximum price the highest
market price quoted during the authorization period.
The Board decides how treasury shares will be repurchased. Treasury shares can
be repurchased otherwise than in proportion to the shareholdings of the
shareholders (directed repurchase).
The authorization will be used for purposes determined by the Board of
Directors, among other things, for the Company's incentive plans.
The authorization be effective until the next Annual General Meeting of
Shareholders, however, at most until 11 October 2014.
5. Corporate social responsibility
Nokian Tyres plc is qualified to the OMX GES Sustainability Finland index. The
index is designed to provide investors with a liquid, objective and reliable
benchmark for responsible investment. The benchmark index comprises of the 40
leading NASDAQ OMX Helsinki listed companies in terms of sustainability. The
index criteria are based upon international guidelines for environmental,
social and governance (ESG) issues. The index is calculated by NASDAQ OMX in
cooperation with GES Investment Services.
Nokian Tyres published its Corporate Responsibility Report in June, 2013.
6. Changes in ownership
Nokian Tyres plc received an announcement from Bridgestone Europe NV and
Bridgestone Corporation on 2nd May 2013, according to which Bridgestone Europe
NV has concluded an agreement with Bridgestone Corporation to transfer
Bridgestone Europe NV's shares in the capital of Nokian Tyres plc to
Bridgestone Corporation on 7th May 2013. This agreement decreases the ownership
of Bridgestone Europe NV under the level of 5% of the share capital in Nokian
Tyres plc and increases the ownership of Bridgestone Corporation over the level
of 15% of the share capital in Nokian Tyres plc.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
The global economy continues to be characterized by uncertainty and slow
growth. While old risks remain, new risks have emerged threatening the growth
in emerging markets. The recession in Europe area has been deeper than expected
with slightly below zero growth estimated for 2013. Economies in Nokian Tyres'
core markets continue to show slow but comparatively stable development. GDP
growth in the first half-year was approximately 1.7% in Russia with full year
growth estimated at 2.4%. In Nordic countries the full year 2013 GDP growth is
estimated to be 1%. All in all the economic uncertainties may weaken future
demand for tyres and increase credit risk.
The company's receivables increased in the review period due to seasonality and
business model. Tyre inventories are on a planned level. The company follows
the development of NWC very closely. At the end of the review period Russian
trade receivables accounted for 48% of the Group's total trade receivables.
Around 32% of the Group's Net sales in 2013 are estimated to be generated from
Euro-denominated sales. The most important sales currencies in addition to the
Euro are the Russian Rouble, the Swedish and Norwegian Krona, the US Dollar and
the Ukrainian Hryvnia.
Nokian Tyres' other risks and uncertainty factors relate to the challenging
pricing environment of tyres. The maintaining of profitability in case of
rising raw material prices depends on the company's ability to raise tyre
prices in line with the increasing raw material cost. An efficient ramp-up of
new production lines in Russia will depend on the success of recruiting and
retaining work force in a tightening labour market.
Nokian Tyres Group has no pending disputes or litigations expected to have
material effect on the performance or future outlook of the Group.
OUTLOOK FOR 2013
The expectation is that global economy will turn for the better late 2013 with
further improvement in 2014-2015 with the exception of Europe which remains
weak. Economies in Nokian Tyres' core markets continue to show slow but
comparatively stable development. GDP growth in the first half-year was
approximately 1.7% in Russia with full year growth estimated at 2.4%. In Nordic
countries the full year 2013 GDP growth is estimated to be 1%.
The demand for replacement car tyres in 2013 is expected to be on previous
year's level in Nordic countries with winter tyre demand showing growth. In
Russia demand is estimated to show growth in winter tyres but to decrease in
summer tyres. In Central Europe total tyre demand is estimated to be down
compared to 2012, but winter tyre demand is expected to show growth during
H2/2013. The pricing environment for 2013 is challenging for all tyre
categories. Margins, however, will be supported by easing of raw material costs
(€/kg) by approximately 9.5%, a tailwind of some EUR 45 million, in the full
year 2013. Nokian Tyres' sales are expected to show flat to some growth during
2013. Sales in Russia, Nordic countries and North America are expected to show
some growth full year 2013 and sales in Central Europe to pick up in H2/2013
year-over-year.
Nokian Tyres' growing car tyre production capacity in Russia offers growth
potential, productivity gains, and a moderate growth of fixed costs supports
profitability. Production output in Nokia, Finland has been cut to support
growth of production in Russia. The Russian factory has 12 production lines
operational with line 13 installed during Q2/2013. The combined annualized
capacity of the Nokia and Vsevolozhsk plants in the beginning of the year was
18 million pcs with present shift patterns. The production utilization rate in
2013 will depend on tyre demand.
The demand for heavy tyres remains comparatively weak. The outlook for Nokian
Heavy Tyres for 2013 remains stable compared to 2012. The focus for 2013 is in
sales and in optimizing production output.
Vianor is expected to add more than 140 stores to the retail network in 2013
and to reach 1,180 stores, increase sales, develop service business further and
to show a positive operating result in full year 2013.
A strong position in the core markets, an expanding distribution channel, an
improved cost structure with majority of production inside duty borders of
Russia and CIS combined with new test winner Hakkapeliitta products give Nokian
Tyres opportunities to strengthen its market leadership in the core markets and
to show growth also in the more challenging market environment.
Financial guidance (updated)
In 2013, the company is positioned to show flat to some growth in Net sales and
Operating profit compared to 2012.
Previous guidance from 30 April 2013
In 2013, the company is positioned to show some growth in Net sales and
Operating profit compared to 2012. On the back of Q1 results, Net Sales and
Operating profit in H1 are, however, still going to be weaker than in 2012.
INVESTMENTS IN 2013
Nokian Tyres' budget for total investments in 2013 is EUR 144 million (209.2).
EUR 83 million will be invested in Russia. The balance comprises of investments
in Nokia plant (automation, moulds, ICT, R&D) EUR 44 million, Heavy tyres EUR 6
million and sales companies including Vianor chain with its acquisitions EUR 11
million.
Nokia, 9 August 2013
Nokian Tyres plc
Board of Directors
***
The above-said information contains forward-looking statements relating to
future events or future financial performance of the company. In some cases,
such forward-looking statements can be identified by terminology such as ”may”,
”will”, ”could”, ”expect”, ”anticipate”, ”believe” ”estimate”, ”predict”, or
other comparable terminology. Such statements are based on the current
expectations, known factors, decisions and plans of the management of Nokian
Tyres. Forward-looking statements involve always risks and uncertainties,
because they relate to events and depend on circumstances that may or may not
occur in the future. Future results may thus vary even significantly from the
results expressed in, or implied by, the forward-looking statements.
***
Nokian Tyres plc
Antti-Jussi Tähtinen, Vice President, Marketing and Communications
Further information: Mr. Kim Gran, President and CEO, tel: +358 10 401 7336
Distribution: NASDAQ OMX, media, www.nokiantyres.com
*****
Nokian Tyres Interim Report January-June was published on Friday 9 August, 2013
at 8.00 a.m. Finnish time.
The result presentation to analysts and media will be held in Hotel Kämp in
Helsinki at 10.00 a.m. Finnish time. The presentation can be listened through
audiocast via internet at http://www.nokiantyres.com/resultinfoq22013
To be able to ask questions during the event you can participate in the
conference call. Please dial in 5-10 minutes before the beginning of the
event+44 (0)20 7162 0077. Password: 934933.
Stock exchange release and presentation material will be available before the
event from http://www.nokiantyres.com/ir-calendar
After the event the audio recording can be downloaded from the same page.
Nokian Tyres interim report January-September will be published on Thursday 31
October, 2013. Releases and company information will be found from
http://www.nokiantyres.com
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