2010-08-05 07:00:00 CEST
2010-08-05 07:00:03 CEST
SÄÄNNELTY TIETO
Nokian Renkaat - Interim report (Q1 and Q3)
INTERIM REPORT FOR NOKIAN TYRES PLC JANUARY-JUNE 2010
Nokian Tyres plc Stock Exchange Release 5 August 2010, 8.00 a.m.
INTERIM REPORT FOR NOKIAN TYRES PLC JANUARY-JUNE 2010:
Rapid improvement in demand, sales and profitability
The Group's net sales increased by 28.1% to EUR 444.2 million (EUR 346.7
million in Jan-June 2009). Operating profit grew to EUR 82.0 million (EUR 17.5
million) and Earnings per share increased to EUR 0.58 (EUR 0.01).
Outlook and guidance (updated):
In 2010, the company is positioned to clearly improve net sales and operating
result compared to 2009.
Previous guidance from 6 May, 2010:
In 2010, the company is positioned to improve net sales and operating result
compared to 2009.
Key figures, EUR million:
4-6/10 4-6/09 1-6/10 1-6/09 2009
Net sales 260.4 191.1 444.2 346.7 798.5
Operating profit 60.9 20.3 82.0 17.5 102.0
Result before tax 60.6 12.0 82.8 -5.3 73.5
Result for the period 52.6 11.9 72.6 1.5 58.3
Earnings per share, EUR 0.42 0.10 0.58 0.01 0.47
Equity ratio,% 60.9 51.8 62.0
Cash flow from operations -2.5 7.4 -27.3 -88.6 123.1
RONA,% (rolling 12 months) 13.5 10.8 8.4
Gearing,% 37.3 68.0 34.8
Kim Gran, President and CEO:
”The positive current is gaining strength and our operations are ramped up
accordingly. The demand on Nokian Tyres' core products have recovered driven by
improving economies, higher car sales, better consumer confidence and strong
restocking by distributors. Sales during Q2 were strong in all tyre categories
and have left us with low inventories. Strong summer tyre sales, preseason
deliveries of winter tyres and OE demand for forestry tyres boosted top line
and allowed us to increase capacity utilization. Operating profit picked up due
to improved productivity, lower year-over-year raw material cost and beneficial
exchange rates of our main sales currencies.
Going in to the second half of 2010 our order book is good and it provides us
with a good possibility to increase sales and results and to provide a strong
cash flow. Our restructuring operations have left us with potential to further
increase capacity both in Russia and in Finland. An 8th production line will
come on stream during Q3 in Russia and it will, combined with increased
production in Finland, help us to improve output and productivity and to serve
a growing market.
However, many challenges remain and the second half of the year with consumer
winter tyre sales will be decisive for Nokian Tyres' results. Due to low
factory inventories production needs to be increased in order not to restrict
sales. Increased raw material prices present a major challenge and strong
headwind to us during the rest of the year. Our target is to further improve
sales mix and push for a price increase of 2-6% in all product groups during
summer and autumn.”
Market situation
The global economy turnaround that started in late 2009 has continued. Easier
monetary policies and low interest rates improved global macro indicators.
Growth rates of the developed countries were exceeded by those in the emerging
markets. In Europe the economic recovery is still slowed down by the
uncertainty related to the governmental borrowing and its effects to financial
markets.
Positive signs in the Nokian Tyres' core markets strengthened during the second
quarter. In the first half of 2010 the new car sales increased in the Nordic
countries by 34% year-over-year. In Russia the car sales development turned
positive in March with growth of 32% in Q2 and it is expected to increase by
10-15% in 2010 compared to 2009.
The aftermarket sales volume for car tyres increased in the Nordic countries by
an estimated 9% and in Europe by 10% in H1/2010 year-over-year. Tyre deliveries
increased more clearly in Russia, trailing the stabilizing economy, lower
stocks of distributors and improved consumer confidence. Strong winter tyre
consumer sales in Q1 and true winter with heavy snowfall in all Europe and
Russia have cut inventory levels and present good opportunities for sales
growth in 2010.
Excess supply of summer tyres in the European markets resulted in some price
erosion in early 2010. Prices for winter tyres have resisted the general price
erosion better than summer tyres. The tyre industry has announced price
increases in Europe and in North America, effective from early summer, to
offset the effect of increasing raw material costs. Raw material prices have
risen significantly since the second half of 2009. The price for natural rubber
has more than doubled since mid 2009. Oil-based materials have also risen
significantly and some materials are in short supply. Cheaper raw material
carry-over stocks and contracts from 2009 supported tyre industry results in
the first half of 2010.
Heavy tyres' demand has continued to recover supported by clear increase in
forest machine manufacture and some increase in special use machine
manufacture, i.e. container handling and mining. The increase derives from
improved demand and prices of pulp, sawmill products and metals.
Overall, the market environment has improved clearly and demand is expected to
exceed supply in some product groups and sizes.
April-June 2010
In the second quarter of 2010 Nokian Tyres Group recorded net sales of EUR
260.4 million (EUR 191.1 million), showing an increase of 36.2% on the
corresponding period a year earlier. Sales increased in the Nordic countries by
26.3% and in Russia by 118.5%. The consolidated sales in Russia and CIS grew by
122.8%. In Central and Eastern Europe sales grew by 45.9% while in North
America sales decreased by 10.7%.
Raw material costs (eur/kg) in manufacturing decreased in the second quarter
4.1% year-over-year and increased 15.0% versus the first quarter of 2010. Fixed
costs were EUR 74.6 million (65.6), accounting for 28.6% (34.3%) of net sales.
Nokian Tyres Group's operating profit was EUR 60.9 million (20.3). The
operating profit was positively affected by a real estate sales profit of EUR
1.8 million. Net financial expenses were EUR 0.3 million (8.3). Net interest
expenses were EUR 5.1 million including EUR 2.0 million in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 4.8 million
(-4.8) of exchange rate differences.
Result before tax was EUR 60.6 million (12.0). Result for the period amounted
to EUR 52.6 million (11.9), and EPS was EUR 0.42 (EUR 0.10).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR -2.5 million
(7.4).
January-June 2010
Nokian Tyres Group recorded net sales of EUR 444.2 million (346.7), showing an
increase of 28.1% on the corresponding period a year earlier. In the Nordic
countries sales increased by 24.1% representing 41.9% (43.2%) of the group's
total sales. Sales in Russia increased by 71.9%. Russia and CIS consolidated
sales grew by 41.4% and formed 21.8% (19.7%) of the group's total sales. In
Central and Eastern Europe sales were up by 39.7% year-over-year representing
26.6% (24.4%) of the group's total sales. In North America sales decreased by
5.6% and was 9.2% (12.4%) of the group's total sales.
Sales of passenger car tyres were up by 30.1% representing 64.7% (63.0%) of the
group's total sales. Heavy tyres' sales increased by 63.1% and were 7.5% (5.9%)
of the group's total sales. Vianor's sales grew by 8.5% forming 24.5% (28.7%)
of the group's total sales. The sales of Other operations was up by 66.7%
representing 3.2% (2.5%) of the group's total sales.
Raw material cost (eur/kg) in manufacturing decreased in the review period by
16.2% year-over-year. Fixed costs amounted to EUR 147.6 million (136.9),
accounting for 33.2% (39.5%) of net sales. Total salaries and wages were EUR
68.4 million (65.5).
Nokian Tyres Group's operating profit amounted to EUR 82.0 million (17.5). This
was negatively affected by the IFRS 2 -compliant option scheme write-off of EUR
2.9 million (5.6) but positively affected by expensed credit losses and
provisions of EUR -0.4 million (1.3).
Net financial income was EUR 0.8 million (-22.9). Net interest expenses were
EUR 9.9 million (7.9) including EUR 3.9 million (3.7) in non-cash expenses
related to convertible bonds. Net financial income includes EUR 10.7 million
(-15.1) of exchange rate differences.
Result before tax was EUR 82.8 million (-5.3). Result for the period amounted
to EUR 72.6 million (1.5), and EPS were EUR 0.58 (EUR 0.01).
Return on net assets (RONA, rolling 12 months) was 13.5% (10.8%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR -27.3 million (-88.6).
The Group employed an average of 3,221 (3,650) people, and 3,264 (3,509) at the
end of the period. The Vianor tyre chain employed 1,349 (1,386) people and
Russian operations 691 (644) people at the end of the period.
Financial position by 30 June 2010
Gearing ratio was 37.3% (68.0%). Interest-bearing net debt amounted to EUR
319.6 million (474.4). Equity ratio was 60.9% (51.8%)
The Group's interest-bearing liabilities totalled EUR 371.0 million (498.5) of
which current interest-bearing liabilities amounted to EUR 167.6 million
(196.9). The average interest rate of interest-bearing liabilities was 3.56%
(3.89%). The average interest rate of interest-bearing liabilities was 1.51%
(2.41%) 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 381.0 million of which EUR 235.8 million 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 is expected to fall below the rate of 2009
(20.7%). The tax rate is effected by tax relieves in Russia continuing for the
next two years based on present investments and thereafter subject to further
investment-related incentive agreements.
PASSENGER CAR TYRES
4-6/10 4-6/09 Change% 1-6/10 1-6/09 Change% 2009
Net sales, m€ 179.5 127.6 40.7 318.7 245.0 30.1 527.3
Operating result, m€ 51.5 18.7 174.9 86.9 34.8 150.0 106.2
Operating result,% 28.7 14.7 27.3 14.2 20.1
RONA,% 17.6 14.4 11.7
(rolling 12 months)
The net sales of Nokian Passenger Car Tyres in January-June totalled EUR 318.7
million (245.0), up by 30.1% from the corresponding period in 2009. Operating
result was EUR 86.9 million (34.8) and the operating result percentage was
27.3% (14.2%).
Most of the sales growth came from a significant increase in winter tyre
preseason sales in Russia as well as in Central and Eastern Europe. Sales were
up also in the Nordic Countries. Nokian Tyres increased its market share in all
three sales areas mentioned. The winter tyres' share of total sales grew
year-over-year.
The Average Selling Price increased compared with the corresponding period a
year earlier, despite that in Russia the somewhat weaker winter tyre sales mix
had a negative effect on the ASP.
At the end of the review period the car tyre inventory was significantly
smaller than a year earlier. Cash flow improved compared to 1-6/2009.
The increased production volumes and restructuring with a higher share of
production in Russia improved productivity. Profitability was boosted by a
lower raw material cost year-over-year. The currencies in the core markets were
stronger against the Euro, thus improving the operating profit.
The increasing raw material prices did not impact the financial result in the
review period; the effects will become evident in the second half of 2010. In
order to compensate for this, price increases for summer and some winter tyre
ranges are being implemented along with several other manufacturers. In winter
tyres Nokian Tyres has less room for price increases in 2010 due to a still
challenging pricing environment. Seasonally winter tyre prices will increase
during the second half of the year. An improving market together with strong
core market currencies will help to defend prices.
In the review period Nokian summer tyres achieved several significant test
victories in industry and car magazines in the Nordic countries, in Central
Europe and in Russia.
Due to the recovering economy and the distributors' low carry-over stocks
demand seems very healthy for the rest of 2010. The production capacity needs
to be ramped up further in order not to restrict Nokian car tyre sales during
the second half of 2010. The focus will be on ensuring sales growth and
adjusting production to increasing demand. Other main targets are optimizing
the tyre range and the tyre price levels as well as controlling the working
capital.
HEAVY TYRES
4-6/10 4-6/09 Change% 1-6/10 1-6/09 Change% 2009
Net sales, m€ 20.3 10.2 99.6 37.1 22.7 63.1 50.1
Operating result, m€ 3.9 -1.9 309.2 7.7 -4.0 291.1 0.0
Operating result,% 19.3 -18.4 20.8 -17.8 0.0
RONA,% 19.0 3.4 0.0
(rolling 12 months)
The January-June net sales of Nokian Heavy Tyres totalled EUR 37.1 million
(22.7), up by 63.1% year-over-year. Operating result was EUR 7.7 million
(-4.0), and the operating result percentage was 20.8% (-17.8%).
Demand for heavy tyres has continued to grow in the forestry, mining and
container handling sectors. Sales improved significantly in all special use
product groups during the review period, with forestry tyres showing strongest
growth. Tyre inventory decreased compared to June 2009.
The increase in product volumes improved capacity utilization and productivity.
Fixed costs were down supported by the production restructuring actions in
2009. The Average Selling Price decreased slightly due to a larger share of
sales to original equipment manufacturers.
Lower raw material cost year-over-year had a positive impact on profitability.
Raw material cost will increase significantly in H2/2010 versus H1/2010. Nokian
Heavy Tyres increased prices by 4-6% in July in order to compensate for the
rapidly growing raw material cost.
The demand for heavy tyres is healthy and the production capacity is ramped up
further in order not to restrict sales during the second half of 2010. The
focus is to further improve the utilization of the production capacity, to
bring in new customers and to speed up the development process for new products
and customer service concepts.
VIANOR
Equity-owned operations
4-6/10 4-6/09 Change% 1-6/10 1-6/09 Change% 2009
Net sales, m€ 78.7 71.1 10.6 120.9 111.4 8.5 273.2
Operating result, m€ 6.8 3.0 124.9 -5.1 -8.6 41.3 -3.0
Operating result,% 8.6 4.2 -4.2 -7.7 -1.1
RONA,% -1.0 0.3 -3.2
(rolling 12 months)
Vianor's net sales in January-June were EUR 120.9 million (111.4), up by 8.5%
on the previous year. Operating result improved to EUR -5.1 million (-8.6) but
was still negative due to seasonality. The operating result was positively
affected by a real estate sales profit of EUR 1.8 million. The operating result
percentage was -4.2% (-7.7%).
Tyre sales and the related service sales improved due to the prolonged winter
and a solid summer tyre season. Vianor's market shares in the core market areas
are estimated to have improved from previous year.
In 2010 focus will be on improving sales and market shares further, developing
the fast fit services business, increasing retail tyre prices as well as
improving cost efficiency.
Franchising and partner operations
In the second quarter Vianor expanded the franchise and partner network on
Nokian Tyres' core markets by 31 outlets. At the end of the review period,
Vianor operated in 19 countries; most extensively in the Nordic countries, in
Russia and in Ukraine. The global Vianor network comprised of 673 outlets of
which 503 were partners and 170 equity-owned. Market shares improved as a
result of the expansion.
Expanding the partner franchise network will continue according to earlier
plans; target is to have more than 740 outlets by the end of 2010.
OTHER OPERATIONS
Truck Tyres
The net sales of Nokian Truck Tyres were EUR 15.9 million (9.6), up by 66.7%
from the previous year. Sales development was good in all market areas. Nokian
Tyres increased its market share in the Nordic countries. Sales of retreading
materials improved due to better utilization rate in the transport sector and
restocking by customers.
Inventories were reduced year-over-year and reached the target level. Truck
Tyres benefited from the decreased raw material cost in both contract
manufacturing purchases and in the own retreading operations.
In 2010 the focus will be on utilizing the stronger winter product range,
especially the Nokian Hakkapeliitta Truck tyres for Nordic conditions. The
product range will be extended with new tyre sizes during the year. 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 by 71.9% to EUR 91.5 million (52.7).
Sales in CIS countries (excluding Russia) were EUR 9.9 million (18.5).
Consolidated sales in Russia and CIS increased by 41.4% to EUR 101.4 million
(71.7).
Sales in Russia grew significantly due to recovering consumer demand and
distributors' improving credit capability. Especially the winter tyre preseason
sales increased substantially. Nokian Tyres improved market shares in Russia
and maintains its position as the market and price leader in the A-segment of
premium branded tyres. Sales in other CIS countries declined due to the timing
of preseason sales and delivery restrictions relating to distributors'
carry-over stocks.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. The Vianor tyre chain was expanded
by 16 franchising outlets in Q2/2010 and there were a total of 378 Vianor
outlets in Russia and CIS countries at the end of the review period.
Seven production lines of the Russian plant were operating since early June.
The eighth production line is being installed, production to start during
Q3/2010. Productivity has improved along with the increased production volumes.
A significant share of the production was exported. Backed by the oil price the
Russian Rouble has strengthened against the Euro, thus bringing in more Euros
to the Nokian Tyres' result.
Russian economy recovered at a real GDP growth of 5.4% in Q2/2010 versus
Q2/2009. Russia is expected to show healthy growth of 5-6% already this year.
Consumer purchasing power is expected to improve in 2010.
New car sales, the main driver for premium tyres, increased by 32% in
Q2/2010 compared to Q2/2009. In June the car sales increased by 45%
year-over-year, supported by the scrappage incentive program and the credit
rates offered by banks (including loans subsidized by car manufacturers)
returning to pre-crisis values. A recovery of new car sales with growth
(estimated 15-20%) starting in 2010 and gaining momentum in 2011-2012 is
presently forecasted. In used car market the demand has exceeded the supply in
the beginning of the year. Western cars that were acquired in large amounts 2-4
years ago are now in need for both summer and winter replacement tyres.
The market potential with strong underlying consumer demand in Russia has
become more evident in the first half of 2010. 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-June 2010 amounted to EUR 27.6 million (59.7). This
comprises of production investments in the Russian factory, moulds for new
products and the Vianor expansion projects.
OTHER MATTERS
1. Stock options on the NASDAQ OMX Helsinki Stock Exchange
The Board of Directors of Nokian Tyres plc resolved to apply for listing of the
stock options 2007B on the NASDAQ OMX (Helsinki Stock Exchange) so that the
listing would commence on 1 March 2010.
The total number of stock options 2007B is 2,250,000. Each stock option 2007B
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2007B during 1 March 2010 - 31 March 2012.
In the aggregate, the stock options 2007B entitle their holders to subscribe
for 2,250,000 shares. The present share subscription price with stock options
2007B is EUR 22.97/share. The dividends payable annually shall be deducted from
the share subscription price.
2. Shares subscribed with option rights
After 15 December 2009 registered increase in share capital a total of
1,835,020 Nokian Tyres plc's shares have been subscribed with the 2004C option
rights. These option rights are attached to the Nokian Tyres plc's Option
Programs of 2004. An increase in share capital relating to 2004C option rights
totalling 367,004 euros was entered into the Trade Register on 25 February,
2010. The shares have been traded on the NASDAQ OMX Helsinki Ltd together with
the old shares as of 26 February, 2010. After the increase, the number of
Nokian Tyres shares was 126,686,410 and the share capital was EUR
25,337,222.00.
After 25 February 2010 registered increase in share capital a total of 503,420
Nokian Tyres plc's shares have been subscribed with the 2004C option rights.
These option rights are attached to the Nokian Tyres plc's Option Programs of
2004. An increase in share capital relating to 2004C option rights totalling
100,684 Euros was entered into the Trade Register on 20 May, 2010. The shares
have been traded on the NASDAQ OMX Helsinki Ltd together with the old shares as
of 21 May, 2010. After the increase, the number of Nokian Tyres shares was
127,189,830 and the share capital was EUR 25,437,906.00.
3. Share price development
The Nokian Tyres' share price was EUR 20.15 (EUR 13.40) at the end of the
review period. The volume weighted average share price during the period was
EUR 18.54 (EUR 10.54), the highest EUR 21.40 (EUR 14.58) and the lowest EUR
15.89 (EUR 7.00). A total of 101,452,569 shares were traded during the period
(135,454,384), representing 80% (108%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 2.553 billion
(EUR 1.673 billion). The company's percentage of Finnish shareholders was 37.4%
(40.2%) and 62.6% (59.8%) were foreign shareholders registered in the nominee
register. This figure includes Bridgestone's ownership of approximately 16%.
4. Decisions made at the Annual General Meeting
On 8 April, 2010, Nokian Tyres Annual General Meeting accepted the financial
statements for 2009 and discharged the Board of Directors and the President and
CEO from liability.
The meeting decided that a dividend of EUR 0.40 per share shall be paid for the
period ending on 31 December, 2009. The dividend shall be paid to shareholders
included in the shareholder list maintained by Euroclear Finland Ltd on the
record date of 13 April, 2010. The dividend payment date is 23 April, 2010.
4.1 Members of the Board of Directors and Auditor
The meeting decided that the Board of Directors has seven members. Kim Gran,
Hille Korhonen, Hannu Penttilä, Yasuhiko Tanokashira, Aleksey Vlasov, Petteri
Walldén and Kai Öistämö will continue as Nokian Tyres' Board of Directors. In a
meeting held after the Annual General Meeting, Petteri Walldén was elected
Chairman of the Board. 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
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 30 April, 2010, 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.
4.3 Granting of stock options and the management's share ownership plan
The meeting decided on the granting of stock options to the personnel of Nokian
Tyres Group and to its fully owned subsidiary. The company has a weighty
financial reason for issuing stock options since they are intended to form a
part of the incentive and commitment programme for the personnel. The purpose
of the issue is to encourage the personnel to work on a long-term basis to
increase shareholder value. Another purpose of the stock options is to increase
personnel commitment to the company. The stock options entitle their holders to
subscribe for a maximum total of 4,000,000 new shares in the company. The stock
options now issued can be exchanged for shares constituting a maximum total of
3 % of the company's shares and votes of the shares, after the potential sharesubscription.
The subscription price for stock options is based on the market price of Nokian
Tyres shares in NASDAQ OMX Helsinki Oy (Helsinki Stock Exchange) in April 2010,
April 2011 and April 2012.
The share subscription period for stock options 2010A shall be 1 May 2012 — 31
May 2014, for stock options 2010B, 1 May 2013 — 31 May 2015 and for stock
options 2010C, 1 May 2014 — 31 May 2016.
A share ownership plan shall be incorporated with the 2010 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. The stock option plan
and the management's share ownership plan have been introduced in more detail
in the enclosure of AGM decisions press release.
4.4 Amendment to the Articles of Association
The meeting decided that the article regarding the invitation to a General
Meeting of shareholders is amended, due to an amendment to the Finnish
Companies Act now in effect, as follows:
9§ Invitation to Annual General Meeting
The invitation to Annual General Meeting must be published, in accordance with
the Board of Directors' decision, on the company's website and in one national
and one Tampere region daily newspaper, no earlier than three months before the
record date referred to in Chapter 4, section 2, subsection 2 of the Finnish
Companies Act and no later than three weeks before the Annual General Meeting.
The invitation must, however, be delivered no later than nine days before the
record date of the Meeting.
4.5 Donations to the institutes of higher education
The meeting authorised the Board to donate a maximum of EUR 500,000 to support
universities and other institutes of higher education, and to decide on the
payment schedules of donations and other terms relating to donations.
5. Changes in share ownership
Nokian Tyres received an announcement from BlackRock, Inc. on 25 February,
2010, according to which the ownership of Black Rock Investment Management (UK)
Limited increased above the level of 10% of the share capital in Nokian Tyres
plc as a result of a share transaction concluded on 22 February, 2010. Black
Rock Investment Management (UK) Limited held on deal date a total of 12,565,454
Nokian Tyres' shares representing 10,06% of company's 124,851,390 shares and
voting rights.
An increase in Nokian Tyres' share capital relating to 2004C option rights
totalling 367,004 euros was entered into the Trade Register on 25 February,
2010. After the increase, the number of shares rose to 126,686,410, and thus
the ownership of Black Rock Investment Management (UK) Limited decreased below
the level of 10% to 9.92% of shares and voting rights.
Nokian Tyres received an announcement from BlackRock, Inc. on 4 May 2010,
according to which the ownership of Black Rock Investment Management (UK)
Limited had increased above the level of 10% of the share capital in Nokian
Tyres plc as a result of a share transaction concluded on 30 April 2010. Black
Rock Investment Management (UK) Limited held on deal date a total of 12,809,656
Nokian Tyres' shares representing 10.11% of company's 126,686,410 shares and
voting rights.
Nokian Tyres received an announcement from Invesco Limited on 24 June 2010,
according to which the ownership of Invesco Limited had decreased under the
level of 5% of the share capital in Nokian Tyres plc as a result of a share
transaction concluded on 18 June 2010. Invesco Limited held on deal date a
total of 6,321,453 Nokian Tyres' shares representing 4.97% of company's
127,189,830 shares and voting rights.
MATTERS AFTER THE REVIEW PERIOD
Changes in share ownership
Nokian Tyres received an announcement from Invesco Limited on 9 July 2010,
according to which the ownership of Invesco Limited had increased above the
level of 5% of the share capital in Nokian Tyres plc as a result of a share
transaction concluded on 5 July 2010. Invesco Limited held on deal date a total
of 6,365,866 Nokian Tyres' shares representing 5.00% of company's 127,189,830
shares and voting rights.
Nokian Tyres received an announcement from Invesco Limited on 20 July 2010,
according to which the ownership of Invesco Limited had decreased under the
level of 5% of the share capital in Nokian Tyres plc as a result of a share
transaction concluded on 12 July 2010. Invesco Limited held on deal date a
total of 6,318,941 Nokian Tyres' shares representing 4.97% of company's
127,189,830 shares and voting rights.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
Ongoing uncertainty related to governmental borrowing in Europe may cause
disruption in the financial markets. This with the somewhat worrying news from
U.S economy can still hurt GDP growth in Nokian Tyres' core markets during
2010.
Nokian Tyres other risks and uncertainty factors relate to significantly
increased raw material prices and to company's ability to raise prices in line
with the raw material cost in order to maintain profitability. An efficient
ramp up of the 7th and 8th production line in Russia will partly depend on the
success of recruiting new work force from a tightening labour market.
A little over 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 US dollar, the Swedish and Norwegian krona and the
Ukrainian hryvnia. The main risk facing Nokian Tyres in the near future is
related to the development of the Ukrainian hryvnia.
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 around 35% of the Group's
total trade receivables.
Nokian Tyres has certain pending legal proceedings and litigations in some
countries. At the moment, the company does not expect these proceedings to have
any material impact on the performance or future outlook.
OUTLOOK FOR 2010
Tyre demand and deliveries have increased clearly driven by restocking of
unusually low inventories of distributors, retailers and OE customers. A
recovery of consumer confidence, growth of GDP on Nokian Tyres' core markets,
growth in car sales and improved financing to distributors drive growth of
passenger car tyres. Higher industrial activity in machine building supports
growth of heavy tyre sales.
The improvement of productivity and profits at Nokian Tyres is supported by
higher sales volumes and an increasing share of Russian production.
High raw material cost presents a major challenge and headwind to Nokian Tyres'
margins during H2/2010. Raw material cost in 2010 is estimated to increase by
approximately 12% compared to 2009.
The pricing environment is expected to be challenging in Nokian Tyres' core
markets. Price increases are difficult to implement despite higher raw material
cost. Seasonal improvement of mix and pricing and price increases during summer
and autumn will help to defend ASP.
A strong expanding distribution, good seasonal logistics, an improved cost
structure with majority of production inside duty borders of Russia and CIS as
well as new products will give Nokian Tyres a good chance to strengthen its
market leadership in the core markets and to return to profitable growth in
2010.
Outlook and guidance (updated):
In 2010, the company is positioned to clearly improve net sales and operating
result compared to 2009.
Previous guidance from 6 May, 2010:
In 2010, the company is positioned to improve net sales and operating result
compared to 2009.
INVESTMENTS IN 2010
Nokian Tyres' total investments in 2010 will be approximately EUR 58 million
(86.5). About EUR 20 million will be spent on moulds and equipment for new
products and EUR 15 million (51.2) on the Russian plant's operations.
Nokia, 5 August 2010
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 interim report has been prepared in accordance with IAS 34
‘Interim Financial Reporting' and the same accounting policies as
in the most recent annual financial statements.
The interim report figures are unaudited.
NOKIAN TYRES
CONSOLIDATED INCOME STATEMENT
Million euros 4-6/10 4-6/09 1-6/10 1-6/09 Last 12 1-12/09
months
Net sales 260.4 191.1 444.2 346.7 896.0 798.5
Cost of sales -145.6 -122.0 -254.2 -224.7 -507.6 -478.0
Gross profit 114.8 69.1 190.0 122.1 388.4 320.4
Other operating income 1.9 0.6 2.8 1.0 4.0 2.2
Selling and marketing
expenses -45.8 -41.1 -90.4 -84.9 -179.6 -174.1
Administration expenses -6.5 -6.0 -12.5 -12.7 -24.3 -24.5
Other operating expenses -3.5 -2.4 -7.8 -7.9 -22.0 -22.1
Operating result 60.9 20.3 82.0 17.5 166.5 102.0
Financial income 16.7 -4.0 46.0 58.3 84.8 97.1
Financial expenses -17.0 -4.3 -45.2 -81.2 -89.7 -125.7
Result before tax 60.6 12.0 82.8 -5.3 161.6 73.5
Tax expense (1 -8.0 -0.1 -10.2 6.8 -32.2 -15.2
Result for the period 52.6 11.9 72.6 1.5 129.4 58.3
Attributable to:
Equity holders of the
parent 52.6 11.9 72.6 1.5 129.4 58.3
Non-controlling interest 0.0 0.0 0.0 0.0 0.0 0.0
Earnings per share from
the result attributable
to equity holders of the
parent
basic, euros 0.42 0.10 0.58 0.01 1.04 0.47
diluted, euros 0.41 0.10 0.57 0.03 1.03 0.49
CONSOLIDATED OTHER COMPREHENSIVE
INCOME 4-6/10 4-6/09 1-6/10 1-6/09 1-12/09
Million euros
Result for the period 52.6 11.9 72.6 1.5 58.3
Other comprehensive
income, net of tax:
Gains/Losses from hedge
of net investments in
foreign operations -4.3 -5.6 -20.4 -10.8 -24.4
Interest rate swaps -0.2 0.0 -0.8 0.0 0.1
Translation differences
on foreign operations 25.2 8.7 69.1 -25.3 -12.8
Total other comprehensive
income for the period,
net of tax 20.6 3.1 48.0 -36.1 -37.0
Total comprehensive
income for the period 73.2 15.0 120.7 -34.6 21.2
Total comprehensive income
attributable to:
Equity holders
of the parent 73.2 15.0 120.7 -34.6 21.2
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 result for the period.
KEY RATIOS 30.6.10 30.6.09 1-12/09
Equity ratio, % 60.9 51.8 62.0
Gearing, % 37.3 68.0 34.8
Equity per share, euro 6.74 5.59 6.07
Interest-bearing net debt,
mill. euros 319.6 474.4 263.7
Capital expenditure,
mill. euros 27.6 59.7 86.5
Depreciation, mill. euros 34.6 30.9 61.9
Personnel, average 3,221 3,650 3,503
Acquisitions and disposals of items
of property, plant and equipment 26.0 52.0 72.3
Number of shares (million units)
at the end of period 127.19 124.85 124.85
in average 126.25 124.85 124.85
in average, diluted 132.16 128.87 129.76
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION 30.6.10 30.6.09 31.12.09
Million euros
Non-current assets
Property, plant and equipment 524.9 508.5 507.6
Goodwill 57.4 54.0 55.0
Other intangible assets 18.1 20.0 19.2
Investments in associates 0.1 0.1 0.1
Available-for-sale
financial assets 0.3 0.2 0.2
Other receivables 11.8 11.1 9.9
Deferred tax assets 36.2 30.6 28.7
Total non-current assets 648.6 624.5 620.7
Current assets
Inventories 231.0 259.3 200.0
Trade receivables 369.8 301.8 248.0
Other receivables 106.5 136.7 90.7
Cash and cash equivalents 51.4 24.1 62.5
Total current assets 758.7 721.8 601.2
Equity
Share capital 25.4 25.0 25.0
Share premium 181.4 155.2 155.2
Translation reserve -41.4 -89.1 -90.2
Fair value and hedging reserves -0.8 -0.1 0.0
Paid-up unrestricted equity reserve 0.0 0.0
Retained earnings 692.5 606.6 667.6
Non-controlling interest 0.0 0.0 0.0
Total equity 857.1 697.6 757.6
Non-current liabilities
Deferred tax liabilities 30.4 26.6 29.4
Provisions 1.4 1.2 1.4
Interest bearing liabilities 203.5 301.6 253.8
Other liabilities 2.9 2.1 2.1
Total non-current liabilities 238.2 331.5 286.7
Current liabilities
Trade payables 60.5 39.4 33.8
Other current payables 83.1 79.9 70.7
Provisions 0.7 1.1 0.7
Interest-bearing liabilities 167.6 196.9 72.4
Total current liabilities 311.9 317.3 177.6
Total assets 1,407.3 1,346.4 1,221.9
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 1-6/10 1-6/09 1-12/09
Million euros
Cash flows from operating
activities: Cash generated
from operations 56.0 -46.6 228.5
Financial items and taxes -56.3 4.2 -34.3
Net cash from operating
activities -0.3 -42.4 194.2
Cash flows from investing activities:
Net cash used in investing
activities -24.1 -60.8 -92.8
Cash flows from financing activities:
Proceeds from issue of share
capital 26.6 0.0 0.1
Change in current financial
receivables and debt 125.6 156.0 -117.2
Change in non-current financial
receivables and debt -90.2 -91.6 15.4
Dividends paid -50.7 -49.9 -49.9
Net cash from financing
activities 11.4 14.4 -151.7
Net change in cash and cash
equivalents -13.1 -88.7 -50.2
Cash and cash equivalents at
the beginning of the period 62.5 113.2 113.2
Effect of exchange rate changes 1.9 -0.4 -0.5
Cash and cash equivalents at
the end of the period 51.4 24.1 62.5
-13.1 -88.7 -50.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Million euros
Paid-up Fair Non-
unrest- value Retai- cont-
Trans- ricted and ned rolling
Share Share lation equity hedging ear- inte-
capital premium reserve reserve reserves nings rest Tot.
Equity,
Jan 1st 2009 25.0 155.2 -53.0 -0.1 647.6 2.7 777.3
Dividends paid -49.9 -49.9
Exercised
warrants 0.0 0.0 0.0
Share-based
payments 5.6 5.6
Other changes 1.8 1.8
Total compre-
hensive income
for the period -36.1 0.0 1.5 0.0 -34.6
Change in
non-controlling
interest -2.7 -2.7
Equity,
Jun 30th 2009 25.0 155.2 -89.1 -0.1 606.6 0.0 697.6
Equity,
Jan 1st 2010 25.0 155.2 -90.2 0.0 0.0 667.6 0.0 757.6
Exercised
warrants 0.5 26.1 0.0 26.6
Share-based
payments 2.9 2.9
Total compre-
hensive income
for the period 48.8 -0.8 72.6 0.0 120.7
Equity,
Jun 30th 2010 25.4 181.4 -41.4 0.0 -0.8 692.5 0.0 857.1
SEGMENT INFORMATION
Million euros 4-6/10 4-6/09 1-6/10 1-6/09 1-12/09
Net sales
Passenger car tyres 179.5 127.6 318.7 245.0 527.3
Heavy tyres 20.3 10.2 37.1 22.7 50.1
Vianor 78.7 71.1 120.9 111.4 273.2
Other operations 10.1 5.2 16.1 9.6 28.5
Eliminations -28.1 -22.9 -48.6 -42.0 -80.7
Total 260.4 191.1 444.2 346.7 798.5
Operating result
Passenger car tyres 51.5 18.7 86.9 34.8 106.2
Heavy tyres 3.9 -1.9 7.7 -4.0 0.0
Vianor 6.8 3.0 -5.1 -8.6 -3.0
Other operations 0.9 -1.2 -0.5 -3.9 -5.0
Eliminations -2.2 1.6 -7.0 -0.7 3.7
Total 60.9 20.3 82.0 17.5 102.0
Operating result,
% of net sales
Passenger car tyres 28.7 14.7 27.3 14.2 20.1
Heavy tyres 19.3 -18.4 20.8 -17.8 0.0
Vianor 8.6 4.2 -4.2 -7.7 -1.1
Total 23.4 10.6 18.5 5.1 12.8
Cash Flow II
Passenger car tyres -2.0 -5.7 -10.5 -81.7 109.9
Heavy tyres 2.0 5.4 -1.3 0.7 5.7
Vianor 0.0 6.5 -9.1 -7.9 7.6
Total -2.5 7.4 -27.3 -88.6 123.1
CONTINGENT LIABILITIES 30.6.10 30.6.09 31.12.09
Million euros
FOR OWN DEBT
Mortgages 0.9 0.9 0.9
Pledged assets 0.0 35.2 35.8
OTHER OWN COMMITMENTS
Guarantees 5.7 2.9 5.5
Leasing and rent commitments 98.7 111.8 101.1
Purchase commitments 3.4 0.8 3.4
DERIVATIVE FINANCIAL
INSTRUMENTS 30.6.10 30.6.09 31.12.09
Million euros
INTEREST RATE DERIVATIVES
Interest rate swaps
Notional amount 61.2 14.2 3.9
Fair value -1.6 -0.3 0.0
FOREIGN CURRENCY DERIVATIVES
Currency forwards
Notional amount 371.5 390.3 427.2
Fair value -8.1 1.3 -7.1
Currency options, purchased
Notional amount 31.6 46.7 3.9
Fair value 0.6 0.8 0.0
Currency options, written
Notional amount 71.9 91.0 3.9
Fair value -0.6 -0.7 -0.1
RELATED PARTY TRANSACTIONS
The Group has related party relationships with members of the Board
of Directors, the President, other key management personnel, and
close members of their families, and Bridgestone Group with significant
influence through share ownership.
Transactions and outstanding balances with parties having
significant influence
Shareholders
Bridgestone Group
1-6/10 1-6/09 1-12/09
Sales of goods 14.8 17.5 18.8
Purchases of goods 14.4 13.7 23.5
30.6.10 30.6.09 31.12.09
Trade and other receivables 2.9 6.6 0.0
Trade and other payables 3.9 5.8 6.1
Key management personnel 1-6/10 1-6/09 1-12/09
Total employee benefit expenses 2.6 4.0 7.8
Of which share-based payments 1.1 2.7 4.9
During 1 January and 30 June 2010 the President and other key
management personnel were granted a total of 452,050 share options
for the subscription of 452,050 shares (during 1 January and
30 June 2009 no share options were granted). The share option
plan terms for the key management personnel are equal to the share
options directed at other personnel. On 30 June 2010 the key
management personnel held 2,135,720 share options for the subscription of
2,135,720 shares (1,368,153 share options for the subscription of 1,568,340
shares on 30 June 2009). Of these share options 1,317,620 pcs were exercisable
for the subscription of 1,317,620 shares on 30 June 2010 (708,153 pcs
exercisable for the subscription of 908,340 shares on 30 June 2009).
No share options have been granted to the other members of the
Board of Directors.
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 CONSOLIDATED KEY FINANCIAL INDICATORS
Earnings per share, euro:
Result for the period attributable to the equity holders of the
parent / Average adjusted number of shares during the period
Earnings per share (diluted), euro:
Result 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
Operating margin:
Operating result, % of net sales
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.
Nokian Tyres plc
Anssi Mäki
Communications Manager
Further information: Mr. Kim Gran, President and CEO,
Tel: +358 10 401 7336
Distribution: NASDAQ OMX, media, www.nokiantyres.com
Nokian Tyres plc will publish interim report January-June, 2010 on Thursday 5
August, 2010 at 8.00 am Finnish time.
The result presentation to analysts and media will be held in Helsinki at 10.00
am Finnish time. The presentation can be listened through audiocast via
internet at http://www.nokiantyres.com/resultinfo2010q2
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: 871621, Nokian Tyres
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 Q3/2010 will be published on 3 November, 2010.
Releases and company information will be found from http://www.nokiantyres.com
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