Nokian Renkaat - Half Year financial report

Nokian Tyres plc Half Year Financial Report January–June 2017: Strong first half of the year with solid full year expectations

Nokian Tyres plc Half Year Financial Report January–June 2017, August 8, 2017,
8:00 a.m.

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

April–June 2017

  · Net sales increased by 16.5% to EUR 393.0 million (337.4 in 4–6/2016).
Currency exchange rate changes affected net sales positively by EUR 10.9 million
compared with the rates in 4–6/2016.
  · Operating profit increased by 21.5% to EUR 94.1 million (77.5). Operating
profit percentage was 24.0% (23.0%).
  · The profit for the period increased by 16.0% to EUR 71.1 million (61.3).
  · Earnings per share were EUR 0.52 (0.46).
  · Cash flow from operating activities was EUR -5.9 million (21.3).

January–June 2017

  · Net sales increased by 17.2% to EUR 718.9 million (613.3 in 1–6/2016).
Currency exchange rate changes affected net sales positively by EUR 32.2 million
compared with the rates in 1–6/2016.
  · Operating profit increased by 19.6% to EUR 153.0 million (128.0). Operating
profit percentage was 21.3% (20.9%).
  · The profit for the period increased by 15.1% to EUR 116.4 million (101.2).
  · Earnings per share were EUR 0.86 (0.75).
  · Cash flow from operating activities was EUR -46.0 million (-40.0).

Financial guidance (Updated)
In 2017, with the current exchange rates, net sales and operating profit are
expected to grow by at least 10% compared to 2016.

Previous guidance (May 3, 2017)
In 2017, with the current exchange rates, net sales are expected to grow by at
least 10% and operating profit is expected to grow by over 5% compared to 2016.

Key figures, EUR million

+-------------------------+-----+-----+------+-----+-----+------+-------+
|                         |4–6  |4–6  |Change|1–6  |1–6  |Change|2016   |
|                         |/17  |/16  |%     |/17  |/16  |%     |       |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Net sales                |393.0|337.4|16.5  |718.9|613.3|17.2  |1,391.2|
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Operating profit         |94.1 |77.5 |21.5  |153.0|128.0|19.6  |310.5  |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Operating profit %       |24.0 |23.0 |      |21.3 |20.9 |      |22.3   |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Profit before tax        |87.1 |74.8 |16.5  |146.0|123.2|18.5  |298.7  |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Profit for the period    |71.1 |61.3 |16.0  |116.4|101.2|15.1  |251.8  |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Earnings per share, EUR  |0.52 |0.46 |14.7  |0.86 |0.75 |13.8  |1.87   |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Equity ratio, %          |     |     |      |76.4 |72.0 |      |73.8   |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Cash flow from operating |-5.9 |21.3 |      |-46.0|-40.0|      |364.4  |
|activities               |     |     |      |     |     |      |       |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Gearing, %               |     |     |      |-2.6 |6.6  |      |-19.7  |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Interest-bearing net debt|     |     |      |-36.0|79.6 |      |-287.4 |
+-------------------------+-----+-----+------+-----+-----+------+-------+
|Capital expenditure      |42.6 |25.3 |68.4  |60.0 |44.4 |35.0  |105.6  |
+-------------------------+-----+-----+------+-----+-----+------+-------+

Hille Korhonen, President and CEO:
“In H1/2017 Nokian Tyres demonstrated strong performance in all of its main
markets. Our net sales and operating profit improved.

The Passenger Car Tyres business unit showed strong growth during H1/2017. Net
sales and operating profit increased clearly year-over-year, and we were able to
increase our market shares in our main markets. The growth was driven by Russia
due to its stronger currency, price increases and low carry-over stocks from
2016. The growth in Russia will be moderate in H2/2017, as H2/2016 was already
strong. We have been responding to the growing demand by increasing the
production volumes at both factories and by building a new production line at
the Russian factory. The new production line will be taken into use by the end
of the year. Raw material costs continued to go up during H1. We estimate, that
raw material costs will increase by approximately 20% for the full year 2017
compared with 2016. We have already implemented the necessary price increases in
all markets, and the full effect of these increases will be seen from H2 onwards
due to the seasonality of Nokian Tyres’ business model. We have been building
the foundation for future growth by renewing our product range with new winter
tyre range: the Nokian Hakkapeliitta 9 and Nokian Hakkapeliitta 9 SUV, along
with Nokian Nordman 7 and Nokian Nordman 7 SUV.

Heavy Tyres increased its sales and production volume especially in the forestry
business. We have been investing in production technology, people and marketing
activities in order to support further growth. Heavy Tyres has announced several
new products, including the Nokian E-Truck series of all-season truck and bus
tyres and Nokian HTS G2 – the second generation of terminal tyres.

Vianor’s (own equity) sales were impacted by the atypical spring season, and its
profitability was affected by non-recurring expenses. However, a profitability
improvement program is proceeding according to plan. Our branded distribution
network, including Vianor, NAD, and N-Tyre stores, grew by 145 stores during
H1/2017.

In May, we announced an investment in a new greenfield factory in Dayton,
Tennessee, USA. This factory will enable us to further enhance our position in
the North American market with a wider product range and better customer
service.

Our personnel have been doing a great job everywhere. As the company’s new
President and CEO, I am very proud of all of them. A strong position in our core
markets, investments in growth markets, a strong distribution network,
competitive products, and the whole organization delivering excellent results
provide us a solid foundation for future growth. We have returned to a growth
track and intend to stay on this track also in the future.”

BUSINESS UNIT REVIEWS

Passenger Car Tyres

+-----------------+-----+-----+------+-----+-----+------+-----+
|                 |4–6  |4–6  |Change|1–6  |1–6  |Change|2016 |
|                 |/17  |/16  |%     |/17  |/16  |%     |     |
+-----------------+-----+-----+------+-----+-----+------+-----+
|Net sales, M€    |276.4|230.1|20.1  |524.4|432.6|21.2  |981.1|
+-----------------+-----+-----+------+-----+-----+------+-----+
|Operating profit,|84.8 |64.7 |31.0  |160.7|127.0|26.6  |305.8|
|M€               |     |     |      |     |     |      |     |
+-----------------+-----+-----+------+-----+-----+------+-----+
|Operating profit,|30.7 |28.1 |      |30.6 |29.4 |      |31.2 |
|%                |     |     |      |     |     |      |     |
+-----------------+-----+-----+------+-----+-----+------+-----+

Heavy Tyres

+-----------------+----+----+------+----+----+------+-----+
|                 |4–6 |4–6 |Change|1–6 |1–6 |Change|2016 |
|                 |/17 |/16 |%     |/17 |/16 |%     |     |
+-----------------+----+----+------+----+----+------+-----+
|Net sales, M€    |44.0|38.7|13.5  |83.8|76.3|9.8   |155.3|
+-----------------+----+----+------+----+----+------+-----+
|Operating profit,|9.1 |6.1 |50.1  |14.8|15.0|-1.2  |28.2 |
|M€               |    |    |      |    |    |      |     |
+-----------------+----+----+------+----+----+------+-----+
|Operating profit,|20.8|15.7|      |17.7|19.7|      |18.2 |
|%                |    |    |      |    |    |      |     |
+-----------------+----+----+------+----+----+------+-----+

Vianor

Equity operations

+------------------+----+----+------+-------+-----+------+-----+
|                  |4–6 |4–6 |Change|1–6    |1–6  |Change|2016 |
|                  |/17 |/16 |%     |/17    |/16  |%     |     |
+------------------+----+----+------+-------+-----+------+-----+
|Net sales, M€     |89.8|89.4|0.4   |146.1  |143.2|2.0   |334.8|
+------------------+----+----+------+-------+-----+------+-----+
|Operating profit, |4.0*|5.5 |-27.6 |-11.8**|-9.2 |-29.0 |-8.1 |
|M€                |    |    |      |       |     |      |     |
+------------------+----+----+------+-------+-----+------+-----+
|Operating profit, |4.5*|6.2 |      |-8.1** |-6.4 |      |-2.4 |
|%                 |    |    |      |       |     |      |     |
+------------------+----+----+------+-------+-----+------+-----+
|Equity stores, pcs|    |    |      |205    |202  |      |212  |
+------------------+----+----+------+-------+-----+------+-----+

* Excluding non-recurring items: Operating profit EUR 5.8 million, operating
profit percentage 6.5%.
** Excluding non-recurring items: Operating profit EUR -10.0 million, operating
profit percentage -6.8%.

Press and analyst meetings
Nokian Tyres published its half year financial report for January–June 2017 on
August 8, 2017 at 8:00 a.m. Finnish time.

The result presentation for analysts and media will be held on August 8, 2017 at
10:00 a.m. Finnish time at Hotel Kämp (address Pohjoisesplanadi 29, Helsinki).
President and CEO Hille Korhonen will present the half year financial report and
answer questions from the audience.

The presentation can be listened to as an audiocast over the internet at
www.nokiantyres.com/resultinfo-Q2-2017 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: +358981710495
UK: +442031940552
SE: +46856642702
US: +18557161597

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

Reporting schedule
The Interim Report January–September 2017 will be published on November 1, 2017.
Releases and company information will be available at:
www.nokiantyres.com/company/investors/.

Further information:
Hille Korhonen, 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’ Half Year Financial Report January–June 2017
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 stores 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:

08076163.pdf