Nokian Renkaat - Financial Statement Release

Nokian Tyres plc Financial Statement Release 2016: Strong performance in challenging market environment

Nokian Tyres plc Financial Statement Release 2016, February 2, 2017, 8.00 a.m.

This release is a summary of Nokian Tyres’ Financial Statement Release 2016. The
complete report is attached to this release. It is also available on the company
website at https://www.nokiantyres.com/company/investors/.

October–December 2016

  · Net sales increased by 9.1% to EUR 460.7 million (422.3 in 10–12/2015).
Currency exchange rate changes affected net sales positively by EUR 4.1 million
compared with the rates in 10–12/2015.
  · Operating profit increased by 14.4% to EUR 108.5 million (94.8). Operating
profit percentage was 23.5% (22.5%).
  · The profit for the period increased by 643% to EUR 91.2 million (-16.8,
including additional taxes and punitive interest of EUR 94.1 million in 2015).
  · Earnings per share were EUR 0.67 (-0.13).
  · Cash flow from operating activities was EUR 456.9 million (398.9).

January–December 2016

  · Net sales increased by 2.3% to EUR 1,391.2 million (1,360.1 in 2015).
Currency exchange rate changes affected net sales negatively by EUR 29.9 million
compared with the rates in 2015.
  · Operating profit increased by 4.9% to EUR 310.5 million (296.0). Operating
profit percentage was 22.3% (21.8%).
  · The profit for the period increased by 4.6% to EUR 251.8 million (240.7).
The net effect of the Finnish Tax Authorities’ tax decisions related to the
2007–2010 tax dispute was positive by EUR 4.9 million for the full financial
year 2016. The tax dispute for 2007–2010 is thoroughly described in the section
“Tax rate”.
  · Earnings per share were EUR 1.87 (1.80).
  · Cash flow from operating activities was EUR 364.4 million (283.4), which was
affected by the payment of EUR 51.0 million in additional taxes with punitive
tax increases and interest concerning the tax years 2007–2010. The company paid
the amount in January 2016.

Dividend

The Board of Directors proposes a dividend of EUR 1.53 (1.50) per share.

Financial guidance

In 2017, with the current exchange rates, net sales and operating profit are
expected to grow by at least 5% compared to 2016.

Key figures, EUR million

+-----------------------------------+-----+-----+------+-------+-------+-------+
|                                   |10–12|10–12|Change|2016   |2015   |Change%|
|                                   |/16  |/15  |%     |       |       |       |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Net sales                          |460.7|422.3|9.1   |1,391.2|1,360.1|2.3    |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Operating profit                   |108.5|94.8 |14.4  |310.5  |296.0  |4.9    |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Operating profit %                 |23.5 |22.5 |      |22.3   |21.8   |       |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Profit before tax                  |106.3|72.9 |45.8  |298.7  |274.2  |8.9    |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Profit for the period              |91.2 |-16.8|643   |251.8  |240.7  |4.6    |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Earnings per share, EUR            |0.67 |-0.13|621   |1.87   |1.80   |3.6    |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Equity ratio, %                    |     |     |      |73.8   |70.8   |       |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Cash flow from operating activities|456.9|398.9|14.6  |364.4  |283.4  |28.6   |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Gearing, %                         |     |     |      |-19.7  |-16.9  |       |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Interest-bearing net debt          |     |     |      |-287.4 |-209.7 |       |
+-----------------------------------+-----+-----+------+-------+-------+-------+
|Capital expenditure                |31.1 |29.0 |7.2   |105.6  |101.7  |3.8    |
+-----------------------------------+-----+-----+------+-------+-------+-------+

Andrei Pantioukhov, Interim President and CEO:

“In 2016, Nokian Tyres demonstrated strong performance in all its main market
areas despite quite challenging market environment. Our net sales and
profitability improved, along with the market shares.

The fourth quarter exceeded our expectations. Sales in all our main markets
increased compared to the same period in the previous year. Russia was the
biggest contributor to the growth in sales in Q4 – for the first time in a few
years. The first encouraging signals that we reported in connection with the Q3
results continued to come from Russia. Russia’s economy and consumer markets
continue to gradually stabilize, but we expect the growth in 2017 to be
moderate.

The winter season started early and continued strongly, especially in CE, the
Nordic countries and Russia. We have succeeded in improving our market share in
our target areas despite all the challenges, especially in Russia and Central
Europe. Our overall performance in the fourth quarter was excellent, and led to
a strong full-year result.

Our production volumes were higher than last year, and productivity continued to
develop positively. Raw material costs started to increase, as forecasted. We
estimate that the raw material costs will increase by approximately 15–20% for
the full year 2017 vs. 2016. This development will definitely lead to price
increases in the whole industry. We have already started to implement the
necessary price increases in order to maintain our profitability.

The cash flow from operating activities was EUR 81 million better than last
year. Investments in 2016 amounted to EUR 105.6 million. Profitability was
weakened by bad debt provisions of EUR 18.6 million, most of which related to
customer bankruptcies originated in year 2015 in Russia (EUR 16.9 million).
However, the collection rate of 2016 current receivables in Russia was 100%.

The fourth quarter net sales in Passenger car tyres went up from last year, and
so did the operating profit. ASP decreased only slightly this quarter, mainly
due to currency effects. In Heavy Tyres, we continued making the necessary
investments for the future. Net sales and operating profit were practically flat
year-over-year.

Vianor’s net sales increased slightly, but profitability was below the targeted
level driven by operational challenges and non-recurrent items (ICT development
project write-offs). In order for Vianor to achieve a positive result, a
comprehensive profit improvement program will be launched in 2017. The growth of
our distribution network was positive, despite large-scale tyre shop closures in
Russia caused by difficult economic situation in Russia. The number of Vianor,
NAD, and N-Tyre outlets in our network grew by 286 in 2016. Currently, the
network includes 3,102 stores in total.

We launched top quality products during 2016, and our products continued to
perform very well in magazine tests. The new flagship products for our winter
tyre range, the Nokian Hakkapeliitta 9 and  Nokian Hakkapeliitta 9 SUV, along
with new value-for-money products Nokian Nordman 7 and Nokian Nordman 7 SUV,
will make our product portfolio even stronger.

Nokian Tyres is in great shape, and I am proud to be the interim President & CEO
to lead the company forward. High customer satisfaction, an engaged
organization, and the upcoming flow of new world’s safest tyres create an
excellent ground for future growth. In 2017, we expect net sales and operating
profit to grow by at least 5% compared to 2016.”

BUSINESS UNIT REVIEWS

Passenger Car Tyres

+-----------------+-----+-----+------+-----+-----+------+
|                 |10–12|10–12|Change|2016 |2015 |Change|
|                 |/16  |/15  |%     |     |     |%     |
+-----------------+-----+-----+------+-----+-----+------+
|Net sales, M€    |314.0|276.5|13.6  |981.1|951.5|3.1   |
+-----------------+-----+-----+------+-----+-----+------+
|Operating profit,|94.4 |80.3 |17.6  |305.8|285.5|7.1   |
|M€               |     |     |      |     |     |      |
+-----------------+-----+-----+------+-----+-----+------+
|Operating profit,|30.1 |29.0 |      |31.2 |30.0 |      |
|%                |     |     |      |     |     |      |
+-----------------+-----+-----+------+-----+-----+------+

Heavy Tyres

+-----------------+-----+-----+------+-----+-----+-------+
|                 |10–12|10–12|Change|2016 |2015 |Change%|
|                 |/16  |/15  |%     |     |     |       |
+-----------------+-----+-----+------+-----+-----+-------+
|Net sales, M€    |41.7 |41.8 |-0.2  |155.3|155.3|0.0    |
+-----------------+-----+-----+------+-----+-----+-------+
|Operating profit,|7.2  |6.7  |7.7   |28.2 |28.7 |-1.8   |
|M€               |     |     |      |     |     |       |
+-----------------+-----+-----+------+-----+-----+-------+
|Operating profit,|17.2 |15.9 |      |18.2 |18.5 |       |
|%                |     |     |      |     |     |       |
+-----------------+-----+-----+------+-----+-----+-------+

Vianor

Equity-owned operations

+-----------------+-----+-----+------+------+-----+---------+
|                 |10–12|10–12|Change|2016  |2015 |Change % |
|                 |/16  |/15  |%     |      |     |         |
+-----------------+-----+-----+------+------+-----+---------+
|Net sales, M€    |125.0|119.4|4.6   |334.8 |327.6|2.2      |
+-----------------+-----+-----+------+------+-----+---------+
|Operating profit,|7.8* |11.1 |-29.8 |-8.1**|-1.9 |-330.4   |
|M€               |     |     |      |      |     |         |
+-----------------+-----+-----+------+------+-----+---------+
|Operating profit,|6.2* |9.3  |      |-2.4**|-0.6 |         |
|%                |     |     |      |      |     |         |
+-----------------+-----+-----+------+------+-----+---------+

 * Excluding non-recurring items: Operating profit EUR 10.4 million, operating
profit percentage 8.3%.
** Excluding non-recurring items: Operating profit EUR -4.5 million, operating
profit percentage -1.3%.

The proposal for the use of profits by the Board of Directors

The distributable funds in the Parent company total EUR 608.6 million.

The Board of Directors proposes to the Annual General Meeting that

the distributable funds be used as follows:

A dividend of          1.53 EUR/share
be paid out, totaling  EUR 207.9 million
retained in equity     EUR 400.7 million
Total                  EUR 608.6 million

No material changes have taken place in the financial position of the company
since the end of the financial year. The liquidity of the company is good, and
the proposed distribution of profits does not compromise the financial standing
of the company, as perceived by the Board of Directors.

Press and analyst meetings

The result presentation for analysts and media will be held on February 2, 2017
at 10.00 a.m. Finnish time at Hotel Kämp (address Pohjoisesplanadi 29,
Helsinki). Interim President and CEO Andrei Pantioukhov will present the result
for 2016 and answer questions from the audience.

The presentation can be listened through audiocast via internet at
www.nokiantyres.com/resultinfo-Q4-2016 starting at 10 a.m.

The event can also be attended via conference call. Please dial in 5-10 minutes
before the beginning of the event: FI: +358 9 8171 0495, UK: +44 20 3194 0552,
SE: +46 8 5664 2702, US: +1 855 7161 597.

An audio file of the event will be available on the company’s website later same
day.

Reporting schedule

The 2016 Annual Report, Annual Financial Report, Corporate Governance Statement
and Remuneration Statement for 2016 will be published on week 11 at the latest.

Interim Report January–March 2017 will be published on May 3, 2017. Releases and
company information will be available at:
https://www.nokiantyres.com/company/investors/.

Further information:
Andrei Pantioukhov, Interim President and CEO, tel: +358 10 401 7733

Nokian Tyres plc

Antti-Jussi Tähtinen, Vice President, Marketing and Communications

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

Attachment: Nokian Tyres’ Financial Statement Release 2016
Nokian Tyres is the world’s northernmost tyre manufacturer. The company promotes
and facilitates safe driving in demanding conditions. It supplies innovative
tyres for cars, trucks and special heavy machinery mainly in areas with special
challenges on tyre performance: snow, forests and harsh driving conditions in
different seasons. Nokian Tyres’ product development is consistently aiming
for sustainable solutions for safety and the environment, taking into account
the whole life cycle of the tyre. A part of the Nokian Tyres group, the tyre
chain Vianor has  approximately 1,500 outlets in 27 countries. In 2016 Nokian
Tyres had approximately 4,400 employees and net sales of approximately 1,4
billion euros. Nokian Tyres’ share is listed on the Nasdaq Helsinki. Further
information: www.nokiantyres.com

Attachments:

02010776.pdf