2011-11-04 07:00:00 CET
2011-11-04 07:00:17 CET
REGULATED INFORMATION
Nokian Renkaat - Interim report (Q1 and Q3)
NOKIAN TYRES PLC INTERIM REPORT JANUARY-SEPTEMBER 2011: Strong third quarter results - high order book
Nokia, Finland, 2011-11-04 07:00 CET (GLOBE NEWSWIRE) -- Nokian Tyres plc
Interim Report 4 November 2011, 8 a.m.
NOKIAN TYRES PLC INTERIM REPORT JANUARY-SEPTEMBER 2011:
Strong third quarter results - high order book
Nokian Tyres group's net sales increased by 41.3 % to EUR 974.3 million (EUR
689.4 million in
1-9/2010). Operating profit grew to EUR 261.0 million (EUR 130.4 million) and
Earnings per share increased to EUR 1.66 (EUR 0.85).
Outlook:
Car tyre deliveries have increased clearly and demand remains strong for all
2011 on Nokian Tyres' core markets, despite uncertainties in the global
economy. Low inventories in distribution combined with improved car sales and a
clear growth in winter tyre sales in Europe and Russia/CIS offer further growth
potential. Heavy tyre demand is healthy for 2011 but the growth in order intake
is levelling off.
Financial guidance (updated):
In 2011, the company is positioned to provide strong sales growth and to
improve operating profit significantly compared to 2010.
Previous financial guidance (Q2/2011):
In 2011, the company is positioned to provide strong sales growth and to
improve operating profit clearly compared to 2010.
Key figures, EUR million:
7-9/11 7-9/10 Change% 1-9/11 1-9/10 Change 2010
%
Net sales 346.3 245.2 41.2 974.3 689.4 41.3 1,058.1
Operating profit 95.4 48.3 97.4 261.0 130.4 100.2 222.2
Profit before tax 89.1 39.6 124.7 244.4 122.5 99.5 208.8
Profit for the period 78.1 34.5 126.4 214.6 107.1 100.4 169.7
Earnings per share, 0.60 0.27 122.5 1.66 0.85 96.7 1.34
EUR
Equity ratio, % 61.4 58.2 68.4
Cash flow from -150.9 -12.0 -1,159.4 -253.1 -39.3 -544.2 318.8
operations
RONA,% (rolling 12 26.8 13.9 17.8
months)
Gearing, % 35.6 44.9 0.1
Kim Gran, President and CEO:
“A successful first semester was followed by strong growth in Q3 in sales,
production output and productivity.
Sales in all our core markets grew significantly and we continued to win market
share. The successful launch of our new test winning Central European winter
tyre Nokian WR D3 combined with strong sales of Nordic/Russian Hakkapeliitta
winter tyre range fuelled growth and improved ASP. An improved sales mix
combined with additional price increases improved margins. We continue to
expand our distribution network spearheaded by Vianor which has this year
recorded 102 new stores totalling 873 by end of September.
Our production output (tons) increased by 51% YOY both factories running full
utilization, but not enough to fully satisfy the growth in demand. The start-up
of new production lines 9 and 10 in Russia was completed as planned. The
ramp-up of capacities continues in Q4, which will further improve output,
productivity and service levels.
The visibility to this year sales and results is good. Our sales will correlate
closely with our growing production output. ASP will be strong due to
seasonality and raw material prices and cost are levelling off, which will help
to maintain healthy profitability.
In 2011 our sky seems reasonably clear and our sails continue to bulge with
tailwind. We will go in to 2012 stronger than ever and well prepared to take on
opportunities and challenges whatever they may be.”
Market situation
The growth rate of the global economy started to slow down during the review
period. GDP growth was slower than expected in many countries causing downward
revisions of economic forecasts. Major economies are still expected to grow,
although at a slower pace, backed by easy monetary policies and low interest
rates. Growth in Nokian Tyres' core markets, Northern European economies and
especially Russia, has shown comparatively positive development. In Europe
uncertainty related to the governmental borrowing and its effects to financial
markets continue and the outcome is still not fully visible. So far it has had
minor effect on the private sector's spending. The uncertainty in
macroeconomics has increased globally and may convert into weaker demand in
2012.
Drivers for growth in Nokian Tyres' core markets are still intact. Annual GDP
growth averaged approximately 4% in both the Nordic countries and in Russia at
the end of the review period. The new car sales increased in the Nordic
countries by approximately 11% year-over-year. In Russia the new car sales were
up by 44% in January-September compared to the corresponding period in 2010.
Sales of new cars in Russia are expected to continue to grow with an estimated
total growth of 30% in 2011 year-over-year.
The replacement market sales volume for car tyres in the review period
increased in the Nordic countries by an estimated 4% and in Europe by 5%
year-over-year. Tyre industry deliveries to distributors increased by over 30%
in Russia, trailing the improving economy, lower stocks of distributors and
strong consumer confidence.
The second consecutive true winter with heavy snowfall prolonged well into 2011
in all Europe and Russia resulted in strong winter tyre consumer sales and left
retailers with low inventories. Summer tyre market was stable in Europe but
increased significantly in Russia. Due to a rapid recovery of demand tyre
stocks are still low in distribution especially for winter tyres and at times
there will be shortage at wholesale and retail level. In the tyre industry
strong demand as well as improved sales and ASP for 2011 are expected.
The demand for special heavy tyres remain good for 2011 in the forestry
machine, harbour and mining industry. Signs of demand levelling off are
starting to appear, which derives from weakened demand and prices of pulp,
sawmill products, metals and food raw materials.
The demand for truck tyres has remained strong and there is some short supply
in the replacement market.
Overall, the market environment in Nokian Tyres' core markets is healthy and
demand exceeds supply in car and truck tyres.
The prices for natural rubber and oil-based materials rose significantly from
early 2009 to mid-2011 and some materials were in short supply. In early 2011
raw material costs continued to go up triggering additional price increases
from the tyre industry. At the end of the review period raw material prices
have dropped and availability is back to normal. The tyre industry raw material
costs have still risen slightly in Q3/2011 due to stocks purchased with higher
prices. The industry has continued to implement price increases, although at a
slower pace. Tyre industry pricing discipline appears to be good.
July-September 2011
In the third quarter of 2011 Nokian Tyres Group recorded net sales of EUR 346.3
million (245.2), showing an increase of 41.2% on the corresponding period a
year earlier. Sales increased in the Nordic countries by 23.5% and in Russia by
63.2%. The consolidated sales in Russia and CIS grew by 81.3%. In Central and
Eastern Europe sales grew by 45.3% while in North America sales decreased by
37.8%.
Raw material costs (EUR/kg) in manufacturing increased in the third quarter by
21.7% year-over-year and increased 3.2% versus the second quarter of 2011.
Fixed costs were EUR 78.8 million (70.3), accounting for 22.8% (28.7%) of net
sales.
Nokian Tyres Group's Operating profit was EUR 95.4 million (48.3). Net
financial expenses were EUR 6.3 million (8.7). Net interest expenses were EUR
3.9 million (4.3) including EUR 2.2 million (2.1) in non-cash expenses related
to convertible bonds. Net financial expenses include EUR 2.5 million (4.4) of
exchange rate differences.
Profit before tax was EUR 89.1 million (39.6). Profit for the period amounted
to EUR 78.1 million (34.5), and EPS were EUR 0.60 (EUR 0.27).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR -150.9 million
(-12.0).
January-September 2011
Nokian Tyres Group recorded net sales of EUR 974.3 million (689.4), showing an
increase of 41.3% on the corresponding period a year earlier. In the Nordic
countries sales increased by 22.9% representing 37% (42%) of the group's total
sales. Sales in Russia increased by 93.9%. Russia and CIS consolidated sales
grew by 94.9% and formed 29% (21%) of the group's total sales. In Central and
Eastern Europe sales were up by 39.6% year-over-year representing 26% (27%) of
the group's total sales. In North America sales decreased by 5.8% and were 6%
(9%) of the group's total sales.
Sales of passenger car tyres were up by 48.5% representing 70% (65%) of the
group's total sales. Heavy tyres' sales increased by 50.5% and were 8% (7%) of
the group's total sales. Vianor's sales decreased by 2.3% forming 17% (24%) of
the group's total sales. The sales of Other operations were up by 57.7%
representing 4% (4%) of the group's total sales.
Raw material cost (EUR/kg) in manufacturing increased in the review period by
30.2% year-over-year. Fixed costs amounted to EUR 244.7 million (217.9),
accounting for 25.1% (31.6%) of net sales. Total salaries and wages were EUR
128.1 million (102.2).
Nokian Tyres Group's Operating profit amounted to EUR 261.0 million (130.4).
The Operating profit was negatively affected by the IFRS 2 -compliant option
scheme write-off of EUR 6.3 million (4.7) and expensed credit losses and
provisions of EUR 3.0 million (0.5).
Net financial expenses were EUR 16.6 million (7.9). Net interest expenses were
EUR 10.4 million (14.3) including EUR 6.3 million (6.0) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 6.2 million
(-6.4) of exchange rate differences.
Profit before tax was EUR 244.4 million (122.5). Profit for the period amounted
to EUR 214.6 million (107.1), and EPS were EUR 1.66 (EUR 0.85).
Return on net assets (RONA, rolling 12 months) was 26.8% (13.9%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR -253.1 million (-39.3).
The Group employed an average of 3,774 (3,262) people, and 3,961 (3,411) at the
end of the period. The equity-owned Vianor tyre chain employed 1,382 (1,395)
people and Russian operations 1,039 (815) people at the end of the period.
Financial position by 30 September 2011
Gearing ratio was 35.6% (44.9%). Interest-bearing net debt amounted to EUR
383.3 million (382.9). Equity ratio was 61.4% (58.2%).
The Group's interest-bearing liabilities totalled EUR 463.0 million (430.0) of
which current interest-bearing liabilities amounted to EUR 260.2 million
(226.9). The average interest rate of interest-bearing liabilities was 3.5%
(3.2%). The average interest rate of interest-bearing liabilities was 1.8%
(1.4%) with calculatory non-cash expenses related to the convertible bond
eliminated.
At the end of the review period the company had unused credit limits amounting
to EUR 310.7 million (322.2) of which EUR 255.8 million (235.9) 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
The Group's tax rate in 2010 was 18.7%. It is estimated to be slightly below
that in 2011.The tax rate is effected by tax relieves 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 tax benefits and incentives for 9 years.
PASSENGER CAR TYRES
7-9/11 7-9/10 Change% 1-9/11 1-9/10 Change% 2010
Net sales, m€ 264.2 174.7 51.3 732.7 493.3 48.5 714.7
Operating profit, m€ 94.0 48.7 92.9 262.0 135.6 93.2 205.5
Operating profit, % 35.6 27.9 35.8 27.5 28.8
RONA,% (roll.12 m.) 37.0 18.2 23.3
The net sales of Nokian Passenger Car Tyres in January-September totalled EUR
732.7 million (493.3), up by 48.5% from previous year. Operating profit
increased to EUR 262.0 million (135.6). Operating profit percentage improved to
35.8% (27.5%).
The demand for car tyres continued to grow. Nokian Tyres' sales were strong in
all core markets, majority of the sales increase coming from Russia. Among
product groups the SUV tyres showed the strongest growth. Nokian car tyres'
market share improved in the Nordic countries, Russia and Europe. High demand
exceeded the company's supply capacity and some sales shifted to the last
quarter of the year and to 2012.
The new summer tyre range with the spearhead product Nokian Hakka Green, a tyre
giving clear savings in fuel-consumption, won car magazines' tyre tests in the
core markets, which boosted sales. A new Central European winter tyre family
Nokian WR A3/D3 was successfully launched. The autumn 2011 magazine test
results have been successful for Nokian Tyres with several victories in studded
and non-studded Nordic winter tyres as well as in Central European winter
tyres.
Sales mix improved clearly, which together with successful price increases
raised the Average Selling Price year-over-year, thus compensating for the raw
material cost increase of 30.7% versus the corresponding period a year earlier.
Production output (pcs) grew by 47% compared with the corresponding period a
year earlier, boosted by the increased capacity in Russia. Productivity
improved along with high utilization and capacity increases. The production
output will increase further as the lines 9 and 10 in Russia are now on stream.
The plant in Nokia has been back to 7 days/week full capacity as from August
2011.
Fixed costs increased moderately compared to the sales growth which helped to
improve margins.
Earth work for the new plant and warehouse next to the current ones in Russia
has started. The new plant is estimated to commence production with two
additional production lines during 2012 and further capacity increase by two
lines taking place during 2013-2014.
The order book for 2011 is strong and the inventories are low. Tyre raw
materials' availability has improved and material prices have levelled off. The
most important challenges in 2011 will be to secure the tyre supply capacity
and to optimise the logistics for growing deliveries.
HEAVY TYRES
7-9/11 7-9/10 Change% 1-9/11 1-9/10 Change% 2010
Net sales, m€ 26.6 18.3 45.8 83.3 55.4 50.5 81.0
Operating profit, m€ 4.2 1.7 140.9 14.2 9.5 49.9 13.7
Operating profit, % 15.6 9.5 17.0 17.1 16.9
RONA,% (roll.12 m.) 23.4 18.4 21.0
The net sales of Nokian Heavy Tyres totalled EUR 83.3 million (55.4) in the
review period, up by 50.5% year-over-year. Operating profit was EUR 14.2
million (9.5), and the Operating profit percentage 17.0% (17.1%).
Demand for heavy tyres improved trailing the increased activity in machine
building and a stronger replacement market. Sales of Nokian Heavy Tyres
improved clearly in all product groups. Forestry, mining and radial tyres
showed strongest growth. Sales in Russia improved clearly. The order book was
healthy at the end of the review period, although the demand growth seems to be
levelling off.
Price increases were implemented in order to offset the higher raw material
cost.
The production was at full utilization and volume (tons) increased by 40%
year-over-year. Further investment to open bottlenecks in production and to
increase capacity in 2012-2013 by approximately 20% from present level have
been taken. Installation of machinery has started in Q3/2011.
A new product category, Beyond All-Steel Radial (BAS) developed by Nokian Tyres
was launched targeting harbour and mining end use applications. Sales were
started challenging traditional all-steel tyres.
VIANOR
Equity-owned operations
7-9/11 7-9/10 Change% 1-9/11 1-9/10 Change% 2010
Net sales, m€ 60.6 64.5 -6.1 181.1 185.3 -2.3 307.9
Operating result, m€ -3.5 -2.8 -22.8 -10.7 -7.9 -35.9 4.0
Operating result, % -5.8 -4.4 -5.9 -4.3 1.3
RONA,% (roll.12 m.) -2.0 -1.5 2.6
At the end of the review period Vianor had 180 (170) equity-owned stores in
Finland, Sweden, Norway, USA, Switzerland and Russia. In the review period 11
stores were acquired and one store was closed. Vianor's net sales in
January-September amounted to EUR 181.1 million (185.3), down by 2.3% compared
with the corresponding period in 2010. Operating result was EUR -10.7 million
(-7.9) and the Operating result percentage was -5.9% (-4.3%). The Operating
result was negative due to seasonality. As in previous years, the last quarter
with winter tyre consumer season will be decisive for Vianor's results.
In 2011 the focus will be on improving sales and market shares further,
developing the car services business and improving cost efficiency.
Franchising and partner operations
Vianor expanded the network on Nokian Tyres' core markets by 53 stores in Q3
and by 102 stores during the review period. At the end of September 2011, the
global Vianor network comprised of 873 stores of which 693 were partners.
Vianor operated in 23 countries; most extensively in the Nordic countries, in
Russia and in Ukraine. In the third quarter Romania joined as a new country in
the network. Nokian Tyres' market shares improved as a result of the expansion.
Expanding the partner franchise network will continue according to plans; the
target is to have more than 900 stores by the end of 2011, out of which 180 are
equity-owned.
OTHER OPERATIONS
Truck Tyres
The net sales of Nokian Truck Tyres were EUR 44.6 million (28.3), up by 57.7%
from the previous year. Nokian truck tyres' market share increased in the
Nordic countries, in Russia as well as in Central and Eastern Europe due to an
improved product range in both premium and standard tyres. Sales of retreading
materials improved due to a higher utilization rate in the transport sector and
restocking by customers.
Due to the improved market there has been a global shortage of truck tyres.
Nokian Tyres will continue to get more capacity in order to meet higher demand.
In 2011 the focus will also be on streamlining logistics and expanding the
product range. The expansion to Russia, CIS and Eastern Europe utilizing the
“Vianor Truck” service concept will continue.
RUSSIA AND THE CIS COUNTRIES
Nokian Tyres' sales in Russia increased year-over-year by 93.9% to EUR 274.3
million (141.4). Sales in CIS countries (excluding Russia) were EUR 27.4
million (13.4). Consolidated sales in Russia and CIS increased by 94.9% to EUR
301.7 million (154.8).
Sales in Russia grew significantly due to a recovered consumer demand,
distributors' low inventory levels and improved credit capability. Summer and
winter tyre sales increased substantially, both in premium and standard tyres.
Nokian Tyres improved its market shares in premium tyres in Russia.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. There were a total of 474 Vianor
stores in 283 cities in Russia and CIS countries at the end of the review
period.
A total of 8 production lines have been operating since September 2010 with an
annualized capacity of 8 million tyres. During 2011 two new production lines (9
and 10) in the Russian factory have increased the annual capacity to
approximately 11 million tyres. The company commenced building a new plant next
to the current one, which will increase the annual car tyre capacity further by
5-6 million tyres. All required agreements with Russian authorities about tax
relieves and infrastructure investments have been signed, which will prolong
the incentive period by 9 years. The new plant is estimated to commence
production during 2012 and the capacity increase during 2012-2014.
Russian economy recovered at an estimated real GDP growth of 4% in 1-9/2011
versus 1-9/2010. Consumer confidence was strong and purchasing power improved.
Russia is expected to show a healthy GDP growth of 4% in 2011.
New car sales, the main driver for premium tyres, increased by 45% in 1-9/2011
compared to 1-9/2010. The new car sales was supported by the credit rates
offered by banks (including loans subsidized by car manufacturers) returning to
pre-crisis values. New sertificates of the car scrappage incentive program are
no longer granted, but the program's positive effect on car sales still
continues. The car sales annual growth in 2011 is forecasted to be
approximately 30% with a gradual return to pre-crisis volume. The sales of used
cars is also strong with demand exceeding supply. Western cars that were
acquired in large volumes 3-4 years ago are now in need for both summer and
winter replacement tyres.
The market potential with strong underlying consumer demand in Russia is
evident with strong growth in car and tyre sales. Tyre industry deliveries to
distributors increased by over 30% in 1-9/2011 year-over-year.
The Nokian Tyres plant located in Russia inside the customs borders (duty 20%
for imported tyres) combined with an expanding Vianor chain provides a
significant competitive edge on the market.
INVESTMENTS
Investments in January-September amounted to EUR 108.2 million (30.6). This
comprises of production investments in the Russian and Finnish factories,
moulds for new products and the Vianor expansion projects.
OTHER MATTERS
1. Stock options on the NASDAQ OMX Helsinki Stock Exchange
The total number of stock options 2007C is 2,250,000. Each stock option 2007C
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2007C during 1 March 2011 - 31 March 2013.
In the aggregate, the stock options 2007C entitle their holders to subscribe
for 2,250,000 shares. The present share subscription price with stock options
2007C is EUR 7.56/share. The dividends payable annually shall be deducted from
the share subscription price.
2. Shares subscribed with option rights
After 14 December, 2010 registered new shares a total of 1,146,301 Nokian Tyres
plc's shares have been subscribed with the 2007A option rights and 250 with the
2007B option rights. These option rights are attached to the Nokian Tyres plc's
Option Programs of 2007. New shares have been registered into the Trade
Register on 24 February, 2011. After the subscription, the number of Nokian
Tyres shares was 128,849,012 and the share capital remained EUR 25,437,906.00.
After 24 February 2011 registered new shares a total of 448,867 Nokian Tyres
plc's shares have been subscribed with the 2007A option rights and 175 with the
2007B option rights and 177,790 with the 2007C option rights. These option
rights are attached to the Nokian Tyres plc's Option Programs of 2007. New
shares have been registered into the Trade Register on 12 May 2011. After the
subscription, the number of Nokian Tyres plc shares increased to 129,475,844
shares.
After 12 May 2011 registered new shares a total of 50 Nokian Tyres plc's shares
have been subscribed with the 2007B option rights and 92,811 with the 2007C
option rights. These option rights are attached to the Nokian Tyres plc's
Option Programs of 2007. New shares have been registered into the Trade
Register on 11 August 2011, as of which date the new shares will establish
shareholder rights. The share capital will not increase with subscriptions made
by 2007 option rights. The entire subscription price of EUR 705,616.49 will be
entered in the invested unrestricted equity reserve. As a result of the share
subscriptions, the number of Nokian Tyres plc shares will increase to
129,568,705 shares.
3. Share price development
The Nokian Tyres' share price was EUR 22.58 (EUR 25.19) at the end of the
review period. The volume weighted average share price during the period was
EUR 28.50 (EUR 19.68), the highest EUR 37.45 (EUR 25.38) and the lowest EUR
21.21 (EUR 15.89). A total of 149,402,622 shares were traded during the period
(134,973,979), representing 115% (107) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 2.926 billion
(EUR 3.191 billion).The company's percentage of Finnish shareholders was 39.2%
(37.1) and 60.8% (62.9) were foreign shareholders registered in the nominee
register. This figure includes Bridgestone's ownership of approximately 15.5%.
4. Decisions made at the Annual General Meeting
On 7 April 2011, Nokian Tyres Annual General Meeting accepted the financial
statements for 2010 and discharged the Board of Directors and the President and
CEO from liability.
The meeting decided that a dividend of EUR 0.65 per share shall be paid for the
period ending on 31 December, 2010. The dividend was decided to be paid to
shareholders included in the shareholder list maintained by Euroclear Finland
Ltd on the record date of 12 April 2011. The proposed dividend payment date was
decided to be 27 April 2011.
4.1. Members of the Board of Directors and Auditor
The meeting decided that the Board of Directors has six members. Kim Gran,
Hille Korhonen, Hannu Penttilä, Petteri Walldén and Aleksey Vlasov continued in
the Nokian Tyres' Board of Directors. Benoit Raulin was elected as a new member
of the Board. Authorised public accountants KPMG Oy Ab was decided to 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
70,000 per year, while that paid to Board members is set at EUR 35,000 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, 60% of the annual fee be paid in cash and 40% in company shares,
such that in the period from 8 April to 29 April 2011, EUR 28,000 worth of
Nokian Tyres plc shares will be purchased at the stock exchange on behalf of
the Chairman of the Board and EUR 14,000 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.
5. Signing of credit facility
Nokian Tyres plc signed a EUR 100 million Multicurrency Revolving Credit
Facility for 5 years with international banks on the 31st of March 2011. The
Facility will be used to refinance the existing EUR 180 million Multicurrency
Revolving Credit Facility that was signed 4th of November 2009 and for general
corporate purposes. Mandated Lead Arrangers and Bookrunners for the facility
are: HANDELSBANKEN CAPITAL MARKETS, SVENSKA HANDELSBANKEN AB (PUBL),NORDEA
BANK FINLAND PLC, POHJOLA BANK PLC and SAMPO BANK PLC. The coordinator and
facility agent for the facility was Nordea.
6. Changes in ownership
Nokian Tyres received a notification from The Goldman Sachs Group, Inc. on 12
April 2011, according to which the total ownership of Goldman Sachs & Co.,
Goldman Sachs International and Goldman Sachs Asset Management L.P. increased
above the level of 5% of the share capital in Nokian Tyres plc as a result of a
share transaction concluded on 11 April 2011. The Goldman Sachs Group held on
deal date a total of 7,829,934 Nokian Tyres' shares representing 6,08% of
company's 128,849,012 shares and voting rights.
Nokian Tyres received a notification from The Goldman Sachs Group, Inc. on 14
April 2011, according to which the total ownership of Goldman Sachs & Co.,
Goldman Sachs International and Goldman Sachs Asset Management L.P. fell below
the level of 5% of the share capital in Nokian Tyres plc as a result of a share
transaction concluded on 13 April 2011.
Nokian Tyres received a notification from BlackRock, Inc. on 17th August 2011,
according to which the ownership of Black Rock Investment Management (UK)
Limited has decreased under the level of 5% of the share capital in Nokian
Tyres plc as a result of a share transaction concluded on 15th August 2011.
Black Rock Investment Management (UK) Limited held on deal date a total of
6,374,263 Nokian Tyres' shares representing 4.92% of company's 129,568,705
shares and voting rights.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
Ongoing uncertainty related to governmental borrowing in Europe may from time
to time cause disruption in the financial markets. The increased uncertainty in
macroeconomics globally may convert into weaker demand, sales and results.
Inventories and receivables have increased during the review period in line
with seasonality and the business model. Special attention will be drawn to
controlling net working capital. Inventory and trade receivable rotation have
improved compared to previous year in all business units. Russian trade
receivables account for 37.5% of the Group's total trade receivables.
Around 35% of the Group's net sales are 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 prices of raw
materials. The maintaining of profitability depends on company's ability to
raise 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 2011
Car tyre deliveries have increased clearly and demand remains strong for all
2011 on Nokian Tyres' core markets, despite uncertainties in the global
economy. Low inventories in distribution combined with improved car sales and a
clear growth in winter tyre sales in Europe and Russia/CIS offer further growth
potential. Heavy tyre demand is healthy for 2011 but the growth in order intake
is levelling off.
Nokian Tyres have added to production capacity more than 30% in 2011 versus
2010. Production has been increased by investment and start-up of two new lines
in the Russian plant and by shifting the plant in Nokia back to 7 days/week
full capacity. The company is also building a new plant in Russia next to the
current one, which will increase the annual car tyre capacity by 5-6 million
tyres. The new plant is estimated to commence production during 2012 and the
capacity increase during 2012-2014. All required agreements with Russian
authorities about tax relieves and infrastructure investments have been signed,
which will prolong the incentive period by 9 years.
Nokian Tyres' raw material cost is gradually levelling off, but for full year
2011 it is estimated to increase by approximately 29% compared to 2010. In
order to compensate the company is targeting an ASP increase of 9% for 2011.
The year-over-year ASP development in the review period exceeded the target.
Strong demand, a healthy order book, expanding distribution channel, fluent
seasonal logistics, an improved cost structure with majority of production
inside duty borders of Russia and CIS as well as new test winner products will
give Nokian Tyres a good chance to strengthen its market leadership in the core
markets and to continue strong profitable growth.
Financial guidance (updated):
In 2011, the company is positioned to provide strong sales growth and to
improve operating profit significantly compared to 2010.
Previous financial guidance (Q2/2011):
In 2011, the company is positioned to provide strong sales growth and to
improve operating profit clearly compared to 2010.
INVESTMENTS IN 2011
Nokian Tyres' budget for total investments in 2011 is approximately EUR 150
million (50.5). Roughly EUR 87 million will be invested in Russia, including
the start of construction of the new production facilities. The balance
comprises of investments in Nokia plant and processes EUR 29 million, moulds
for new products EUR 20 million and Vianor chain including acquisitions EUR 14
million.
Nokia, 4 November 2011
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.
***
This financial statements bulletin has been
prepared in
accordance with IFRS compliant recognition and measurement
principles
and the same accounting policies as in the most recent annual
financial
statements, but it has not been prepared in compliance
with all
requirements set out in IAS 34 'Interim Financial
Reporting'.
NOKIAN TYRES
CONSOLIDATED INCOME STATEMENT
Million euros 7-9/11 7-9/10 1-9/11 1-9/10 Last 12 1-12/10
months
Net sales 346.3 245.2 974.3 689.4 1,343.0 1,058.1
Cost of sales -189.5 -144.6 -526.3 -398.8 -731.5 -604.0
Gross profit 156.8 100.6 448.0 290.6 611.5 454.1
Other operating income 0.3 0.5 1.5 3.3 2.5 4.3
Selling and marketing expenses -48.7 -43.3 -152.0 -133.7 -211.1 -192.9
Administration expenses -6.3 -6.2 -20.8 -18.8 -29.7 -27.6
Other operating expenses -6.6 -3.3 -15.6 -11.0 -20.4 -15.8
Operating profit 95.4 48.3 261.0 130.4 352.8 222.2
Financial income 13.5 25.6 63.2 71.7 87.8 96.3
Financial expenses -19.9 -34.3 -79.8 -79.6 -109.9 -109.7
Profit before tax 89.1 39.6 244.4 122.5 330.7 208.8
Tax expense (1 -11.0 -5.2 -29.7 -15.4 -53.5 -39.1
Profit for the period 78.1 34.5 214.6 107.1 277.2 169.7
Attributable to:
Equity holders of the parent 78.1 34.5 214.6 107.1 277.2 169.7
Non-controlling interest 0.0 0.0 0.0 0.0 0.0 0.0
Earnings per share from the
profit
attributable to equity holders
of the
parent
basic, euros 0.60 0.27 1.66 0.85 1.34
diluted, euros 0.60 0.27 1.65 0.84 1.32
CONSOLIDATED OTHER COMPREHENSIVE
INCOME 7-9/11 7-9/10 1-9/11 1-9/10 1-12/10
Million euros
Profit for the period 78.1 34.5 214.6 107.1 169.7
Other comprehensive income,
net of tax:
Gains/Losses from hedge of net
investments in foreign operations 4.0 4.9 4.6 -15.5 -17.9
Cash flow hedges -1.1 -0.1 -0.4 -0.9 -0.6
Translation differences
on foreign operations -33.2 -45.1 -28.8 24.0 37.0
Total other comprehensive income
for the period, net of tax -41.4 -40.4 -24.6 7.7 18.5
Total comprehensive income
for the period 36.7 -5.9 190.0 114.8 188.2
Total comprehensive income
attributable to:
Equity holders of the parent 36.7 -5.9 190.0 114.8 188.2
Non-controlling interest 0.0 0.0 0.0 0.0 0.0
1)Tax expense in the consolidated income statement is based on the
taxable
profit for the period.
KEY RATIOS 30.9.11 30.9.10 31.12.10
Equity ratio, % 61.4 58.2 68.4
Gearing, % 35.6 44.9 0.1
Equity per share, euro 8.31 6.71 7.34
Interest-bearing net debt,
mill. euros 383.3 382.9 0.7
Capital expenditure,
mill. euros 108.2 30.6 50.5
Depreciation, mill. euros 53.2 52.1 69.4
Personnel, average 3,774 3,262 3,338
Number of shares (million units)
at the end of period 129.57 127.19 127.70
in average 128.97 126.56 126.75
in average, diluted 135.77 132.59 132.96
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION 30.9.11 30.9.10 31.12.10
Million euros
Non-current assets
Property, plant and equipment 515.9 490.5 483.6
Goodwill 62.9 57.9 58.8
Other intangible assets 22.2 17.1 19.7
Investments in associates 0.1 0.1 0.1
Available-for-sale
financial assets 0.3 0.2 0.3
Other receivables 19.7 17.3 20.6
Deferred tax assets 6.2 34.4 22.3
Total non-current assets 627.2 617.6 605.2
Current assets
Inventories 353.6 224.1 210.6
Trade receivables 601.7 464.1 258.9
Other receivables 93.2 115.6 80.4
Cash and cash equivalents 79.7 47.1 216.6
Total current assets 1,128.2 850.9 766.3
Equity
Share capital 25.4 25.4 25.4
Share premium 181.4 181.4 181.4
Translation reserve -95.3 -81.6 -71.1
Fair value and hedging reserves 0.0 -0.9 -0.6
Paid-up unrestricted equity reserve 35.1 0.0 8.0
Retained earnings 930.2 728.7 793.9
Non-controlling interest 0.3 0.0 0.0
Total equity 1,077.1 853.1 937.2
Non-current liabilities
Deferred tax liabilities 13.8 29.9 39.3
Provisions 0.1 1.4 0.1
Financial liabilities 202.8 203.1 204.2
Other liabilities 2.1 3.1 1.9
Total non-current liabilities 218.7 237.6 245.5
Current liabilities
Trade payables 96.4 65.2 81.0
Other current payables 100.8 85.1 92.7
Provisions 2.2 0.7 2.2
Short-term financial liabilities 260.2 226.9 13.0
Total current liabilities 459.6 377.9 189.0
Total assets 1,755.4 1,468.5 1,371.6
Changes in net working capital arising from operative business are
partly
covered by EUR 250 million domestic commercial paper
programme.
CONSOLIDATED STATEMENT OF CASH FLOWS 1-9/11 1-9/10 1-12/10
Million euros
Cash flows from operating activities:
Cash generated from
operations -165.2 9.0 372.7
Financial items and taxes -42.9 -62.1 -45.4
Net cash from operating
activities -208.1 -53.2 327.2
Cash flows from investing activities:
Net cash used in investing
activities -107.6 -27.2 -33.7
Cash flows from financing activities:
Proceeds from issue of share
capital 27.1 26.6 34.7
Change in current financial
receivables and debt 246.5 183.8 -29.8
Change in non-current financial
receivables and debt -8.7 -95.9 -95.2
Dividends paid -83.7 -50.7 -50.7
Net cash from financing
activities 181.1 63.8 -141.0
Net change in cash and cash
equivalents -134.6 -16.5 152.6
Cash and cash equivalents at
the beginning of the period 216.6 62.5 62.5
Effect of exchange rate changes -2.3 1.1 1.5
Cash and cash equivalents at
the end of the period 79.7 47.1 216.6
-134.6 -16.5 152.6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
A = Share capital
B = Share premium
C = Translation reserve
D = Fair value and hedging
reserves
E = Paid-up unrestricted equity
reserve
F = Retained earnings
G = Non-controlling
interest
H = Total equity
Equity attributable to equity holders
of the parent
Million euros A B C D E F G H
Equity, Jan 1st 2010 25.0 155.2 -90.2 0.0 0.0 667.6 0.0 757.6
Profit for the period 107.1 107.1
Other comprehensive income,
net of tax:
Cash flow hedges -0.9 -0.9
Net investment hedge -15.5 -15.5
Translation differences 24.0 24.0
Total comprehensive
income for the period 8.6 -0.9 107.1 114.8
Dividends paid -50.7 -50.7
Exercised warrants 0.5 26.1 26.6
Share-based payments 4.7 4.7
Total transactions with
owners
for the period 0.5 26.1 -46.0 -19.4
Equity, Sep 30th 2010 25.4 181.4 -81.6 -0.9 0.0 728.7 0.0 853.1
Equity, Jan 1st 2011 25.4 181.4 -71.1 -0.6 8.0 793.9 0.0 937.2
Profit for the period 214.6 214.6
Other comprehensive income,
net of tax:
Cash flow hedges -0.4 -0.4
Net investment hedge 4.6 4.6
Translation differences -28.8 -28.8
Total comprehensive
income for the period -24.2 -0.4 214.6 190.0
Dividends paid -83.7 -83.7
Exercised warrants 27.1 27.1
Share-based payments 6.3 6.3
Total transactions with
owners
for the period 27.1 -77.4 -50.3
Change in non-controlling 0.3 0.3
interest
Equity, Sep 30th 2011 25.4 181.4 -95.3 -1.0 35.1 931.2 0.3 1,077.1
SEGMENT INFORMATION
Million euros 7-9/11 7-9/10 1-9/11 1-9/10 1-12/10 Change
%
Net sales
Passenger car tyres 264.2 174.7 732.7 493.3 714.7 48.5
Heavy tyres 26.6 18.3 83.3 55.4 81.0 50.5
Vianor 60.6 64.5 181.1 185.3 307.9 -2.3
Other operations 21.8 12.4 54.0 28.5 41.6 89.4
Eliminations -26.9 -24.5 -76.8 -73.1 -87.2 -5.1
Total 346.3 245.2 974.3 689.4 1,058.1 41.3
Operating result
Passenger car tyres 94.0 48.7 262.0 135.6 205.5 93.2
Heavy tyres 4.2 1.7 14.2 9.5 13.7 49.9
Vianor -3.5 -2.8 -10.7 -7.9 4.0 -35.9
Other operations 3.3 2.1 2.6 1.6 -1.6 64.9
Eliminations -2.6 -1.4 -7.1 -8.4 0.6 16.2
Total 95.4 48.3 261.0 130.4 222.2 100.2
Operating result, % of net
sales
Passenger car tyres 35.6 27.9 35.8 27.5 28.8
Heavy tyres 15.6 9.5 17.0 17.1 16.9
Vianor -5.8 -4.4 -5.9 -4.3 1.3
Total 27.6 19.7 26.8 18.9 21.0
Cash Flow II
Passenger car tyres -117.5 2.8 -154.2 -7.7 291.2 -1,906.6
Heavy tyres -6.0 -1.8 -19.2 -3.1 8.5 -517.3
Vianor -22.1 -13.2 -42.2 -22.3 12.4 -89.2
Total -150.9 -12.0 -253.1 -39.3 318.8 -544.2
CONTINGENT LIABILITIES 30.9.11 30.9.10 31.12.10
Million euros
FOR OWN DEBT
Mortgages 1.0 1.0 1.1
Pledged assets 0.1 0.0 0.0
OTHER OWN COMMITMENTS
Guarantees 2.3 6.0 6.2
Leasing and rent commitments 95.6 102.4 102.1
Purchase commitments 2.2 1.7 2.2
DERIVATIVE FINANCIAL INSTRUMENTS 30.9.11 30.9.10 31.12.10
Million euros
INTEREST RATE DERIVATIVES
Interest rate swaps
Notional amount 89.2 90.8 30.7
Fair value -1.4 -1.8 -1.3
FOREIGN CURRENCY DERIVATIVES
Currency forwards
Notional amount 497.8 360.9 563.2
Fair value 8.4 9.5 -3.3
Currency options, purchased
Notional amount 57.9 43.1 0.0
Fair value 1.6 0.8 0.0
Currency options, written
Notional amount 92.3 86.6 0.0
Fair value -1.1 -0.6 0.0
ELECTRICITY DERIVATIVES
Electricity forwards
Notional amount 16.3 - -
Fair value -0.3 - -
DEFINITIONS OF CONSOLIDATED KEY FINANCIAL INDICATORS
Earnings per share, euro:
Profit for the period attributable to the equity holders of the
parent / Average adjusted number of shares during the period
Earnings per share (diluted), euro:
Profit for the period attributable to the equity holders of the
parent / Average adjusted and diluted number of shares during
the period
The share options affect the dilution as the average share market
price for the period exceeds the defined subscription price.
Equity ratio, %:
Total equity x 100 / (Total assets - advances received)
Gearing, %:
Interest-bearing net debt x 100 / Total equity
Equity per share, euro:
Equity attributable to equity holders of the parent / Adjusted
number of shares on the reporting date
DEFINITIONS OF SALES AREAS
Nordic countries: Finland, Norway, Sweden.
Russia and CIS:
Russia, Armenia, Belarus, Georgia, Kazakhstan, Moldova, Ukraine.
Central and Eastern Europe:
Albania, Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania,
The Former Yugoslav Republic of Macedonia, Montenegro, Netherlands, Poland,
Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Switzerland, Turkey,
United Kingdom.
North America: Canada, USA.
Core markets: Nordic countries, Russia and CIS.
*****
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 plc interim report January-September 2011 was published on Friday
4 November, 2011 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/resultinfo2011q3
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 0025. Password: 905043
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 result 2011 will be published on February, 2012. Releases and
company information will be found from http://www.nokiantyres.com
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