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2013-02-06 07:00:03 CET 2013-02-06 07:00:19 CET REGULATED INFORMATION Nokian Renkaat - Financial Statement ReleaseNokian Tyres plc Financial Statement Bulletin 2012: Strong results and cash flow – a challenging market ahead in early 2013Nokia, Finland, 2013-02-06 07:00 CET (GLOBE NEWSWIRE) -- Nokian Tyres plc Financial Statement Bulletin 2012 6 February 2013, 8 a.m. Nokian Tyres plc Financial Statement Bulletin 2012: Strong results and cash flow - a challenging market ahead in early 2013 Nokian Tyres group's net sales increased by 10.7% to EUR 1,612.4 million (EUR 1,456.8 million in 2011). Operating profit grew to EUR 415.0 million (EUR 380.1 million). Profit for the period amounted to EUR 330.9 million (308.9). Earnings per share increased to EUR 2.52 (EUR 2.39). Cash flow from operations was EUR 262.3 million (EUR 114.1 million). The Board of Directors proposes a dividend of EUR 1.45 (EUR 1.20) per share. Outlook: The demand for replacement car tyres in 2013 is expected to grow 1-2% in Europe, 2% in Nordic countries and 2-5% in Russia. The pricing environment for 2013 is challenging for all tyre categories. Margins, however, will be supported by easing of raw material costs (€/kg) by 10% in Q1 year-over-year and 4% full year 2013. Nokian Tyres sales are expected to show growth during 2013 however with a slow start in Q1. Sales in core markets Russia and Nordic countries are expected to grow whereas sales in Central Europe are expected to be flat. Financial guidance: In 2013, the company is positioned to show some growth in Net sales and Operating profit. The first quarter Operating profit, however, is expected to be clearly weaker than in 2012. Key figures, EUR million 10-12/12 10-12/11 Change% 2012 2011 Change% Net sales 446.4 482.5 -7.5 1,612.4 1,456.8 10.7 Operating profit 111.8 119.1 -6.1 415.0 380.1 9.2 Profit before tax 104.2 114.8 -9.2 387.7 359.2 8.0 Profit for the period 88.3 94.2 -6.3 330.9 308.9 7.1 Earnings per share, EUR 0.67 0.73 -8.0 2.52 2.39 5.4 Equity ratio, % 71.2 63.2 Cash flow from 552.0 367.3 50.3 262.3 114.1 129.8 operations RONA,% (roll. 12 months) 23.0 27.0 Gearing, % -4.5 -0.3 Kim Gran, President and CEO: “In 2012 Nokian Tyres performed well in a challenging environment and recorded all time high sales and profits combined with excellent cash flow. Our market position improved in core areas, the company is debt free and we are able to develop our business further from a healthy position. We got a flying start to the year 2012 sales and were running full utilization of our capacities in H1. The weak economic situation in Central Europe combined with high carry-over inventories in distribution resulted however in a dramatic drop in demand in CE. Also our sales were hit and growth in CE stalled during Q3 and Q4. Due to decisive and rapid changes in production, allocating a higher share of production and sales to Russia and support from reduced costs we managed to end the year with reasonably good results. The Russian tyre market continued to grow double digits and also the Nordic countries were relatively healthy. Despite the challenges in CE we managed to increase full year car tyre sales volumes, improve sales mix, overall ASP and to improve our market position. Our car tyre sales in Russia grew at a triple rate compared to the overall market, further strengthening our market leader position. In the Nordic countries sales came in as planned, we gained winter tyre market share and continue to be a clear market leader. A continued expansion of our distribution network spearheaded by Vianor, combined with test winning products are cornerstones to our growth. It is again encouraging that we managed to open 127 new Vianor stores, now totalling 1,037 stores and add three new countries France, Serbia and Bosnia to our network now operating in 26 countries. Our new factory in Russia, wall to wall with the previous one, was commissioned and represents the absolute top in automation, productivity and quality. In 2012 we scored some 6% labour productivity and 11% output improvement in production despite a harsh market environment. With the new factory up and running we have presently an inbuilt capability to increase output rapidly without capex to meet market growth and further to increase output by 50% by adding lines in Russia. We are looking into 2013 with confidence. After a slow start for the year in Q1 we expect the market to present us with some growth opportunities. With overwhelming test wins in 2012, the newly launched next generation of Hakkapeliitta winter tyres and test winner summer tyres, our product offering will be by far the best we have ever had. Vianor is to be expanded again by more than 100 shops and our market geography in Russia and Northern Europe is looking comparatively healthy offering us a good base for profitable business.” Market situation The global economy was characterized by uncertainty and slowing growth in 2012. Big question marks relating to US fiscal cliff, slower growth in China and continued problems in Europe reduced confidence and economic activity. The global GDP grew at approximately 3% in 2012 with the developed economies growing only moderately and emerging market growth slowing down to less than 6%. The Euro area has been in a recession since spring 2012 and the GDP for the full year 2012 is estimated to have declined by 0.4% with a start of a potential recovery postponed to the latter part of 2013. The weak economy had a clear negative effect on consumer confidence and spending. Sales of new cars dropped by 8% and the replacement car tyre sales by 13%, winter tyres sell-in from manufacturers to distribution tumbling down by 18% in Europe. The problems in the economic environment are hardly solved but some positive and encouraging signs are starting to emerge. The fiscal cliff has turned into a fiscal drag and the housing sector is improving giving hope for a 2% GDP growth in US. Estimates for growth in China are improving with GDP expectations of 8 % and Europe seems to be stabilizing although at zero growth in 2013. Consensus expectation is that global economy will turn for the better late 2013 with further improvement in 2014-2015. Economies in Nokian Tyres' core markets continue to show comparatively stable development. Annual GDP growth in 2012 averaged 3.6% in Russia and 1% in the Nordic countries. In 2013 the GDP growth is estimated to be at approximately same level in these markets. The new car sales in 2012 in Russia were 2.9 million, up by 11% year-over-year, with western brands growing 18%. In Russia the new car sales in 2013 are estimated to reach approximately 3.1 million, up 2-5% versus 2012. Sales of car tyres increased by approximately 15% in 2012 and growth in 2013 is expected to continue at a lower rate of 2-5% with winter tyre volumes growing and summer tyres declining. In the Nordic countries the new car sales decreased in 2012 by approximately 7% year-over-year. The sales volume of car tyres showed a decrease of 5% with winter tyre volumes down 9%. In 2013 car sales are expected to recover slightly and tyre sales to show some volume growth due to lower inventory in distribution and pent up demand. In the autumn 2012 car tyre distributors were left with some summer tyre carry-over stocks in Central Europe and Russia, which may have a negative effect on summer tyre sales in H1/2013. There is pricing pressure both in premium and economy summer tyres in all markets due to the challenging market situation. The demand for heavy tyres remains comparatively weak. The demand for forestry tyres had a downturn in 2012 and is expected to remain soft in 2013. Demand for mining and earthmoving tyres continue to be reasonably healthy and some growth for special container handling is expected for 2013. The demand for premium truck and retreaded tyres in Europe decreased in 2012 by approximately 19%. The drop in Nordic countries and Russia was clearly more modest and turned to growth late 2012. At the beginning of 2013 there are signs of recovery in truck tyre demand. The new truck winter tyre legislation in Sweden came into effect in the beginning of 2013, which increased the public awareness throughout Europe on tyres and winter safety. Tyre industry raw material prices in 2012 decreased during the year from a historically high level in Q1 to a low in Q4. Tyre industry raw material cost development was flat in 2012 compared to 2011 but enjoyed a tailwind in Q4 which is expected to continue in 2013. The raw material cost is expected to go down in H1/2013 versus H1/2012. For the full year 2013 the material cost for the tyre industry is estimated to decrease by 4% compared to 2012. October-December 2012 In the fourth quarter Nokian Tyres Group recorded Net sales of EUR 446.4 million (482.5), showing an decrease of 7.5% compared with Q4/2011. In the Nordic countries sales were down by 1.6%. Sales in Russia increased by 33.7%. Russia and CIS consolidated sales grew by 37.9%. In Other Europe sales were down by 47.0% year-over-year. In North America sales increased by 13.8%. Raw material cost (EUR/kg) in manufacturing decreased in the fourth quarter by 12.2% year-over-year and decreased by 4.1% versus the third quarter of 2012. Fixed costs amounted to EUR 112.5 million (101.1), accounting for 25.2% (21.0%) of net sales. Nokian Tyres Group's Operating profit amounted to EUR 111.8 million (119.1). The Operating profit was negatively affected by expensed credit losses and provisions of EUR 0.4 million (4.5) and a bonus of EUR 2.3 million (5.0) for personnel and management. Net financial expenses were EUR 7.6 million (4.3). Net interest expenses were EUR 4.2 million (4.0) including EUR 2.3 million (2.2) in non-cash expenses related to convertible bonds. Net Financial expenses include EUR 3.3 million (0.2) of exchange differences of which EUR 2.1 million came from interest expenses related to RUB currency forwards. Profit before tax was EUR 104.2 million (114.8). Profit for the period amounted to EUR 88.3 million (94.2), and EPS were EUR 0.67 (EUR 0.73). Income financing after the change in working capital, investments and the disposal of fixed assets (Cash flow from operations) was EUR 552.0 million (367.3). January-December 2012 Nokian Tyres Group recorded Net sales of EUR 1,612.4 million (1,456.8), showing an increase of 10.7% compared with 2011. In the Nordic countries sales increased by 1.7% representing 34.4% (37.9%) of the group's total sales. Sales in Russia increased by 49.8%. Russia and CIS consolidated sales grew by 46.2% and formed 35.1% (26.9%) of the group's total sales. In Other Europe sales were down by 8.3% year-over-year representing 22.8% (27.8%) of the group's total sales. In North America sales increased by 10.7% and were 6.9% (6.9%) of the group's total sales. Sales of passenger car tyres were up by 13.9% representing 72.1% (69.5%) of the group's total sales. Heavy tyres' sales decreased by 7.4% and were 6.2% (7.3%) of the group's total sales. Vianor's sales increased by 5.7% forming 18.6% (19.4%) of the group's total sales. The sales of Other operations were down by 10.9% representing 3.1% (3.8%) of the group's total sales. Raw material cost (EUR/kg) in manufacturing increased by 0.4% year-over-year. Fixed costs amounted to EUR 389.2 million (345.8), accounting for 24.1% (23.7%) of net sales. Total salaries and wages were EUR 197.1 million (182.4). Nokian Tyres Group's Operating profit amounted to EUR 415.0 million (380.1). The Operating profit was negatively affected by the IFRS 2 -compliant option scheme write-off of EUR 11.8 million (8.1) and expensed credit losses and provisions of EUR 5.3 million (7.5). Net financial expenses were EUR 27.3 million (20.9). Net interest expenses were EUR 15.5 million (14.4) including EUR 9.0 million (8.5) in non-cash expenses related to convertible bonds. Net Financial expenses include EUR 11.8 million (6.5) of exchange differences of which EUR 7.2 million came from interest expenses related to RUB currency forwards. Profit before tax was EUR 387.7 million (359.2). Profit for the period amounted to EUR 330.9 million (308.9), and EPS were EUR 2.52 (EUR 2.39). Return on net assets (RONA, rolling 12 months) was 23.0% (27.0%). Income financing after the change in working capital, investments and the disposal of fixed assets (Cash flow from operations) was EUR 262.3 million (114.1). The Group employed an average of 4,083 (3,866) people, and 4,039 (3,981) at the end of the period. The equity-owned Vianor tyre chain employed 1,362 (1,370) people and Russian operations 1,252 (1,062) people at the end of the period. Financial position on 31 December 2012 Gearing ratio was -4.5% (-0.3%). Interest-bearing net debt amounted to EUR -65.2 million (-3.6). Equity ratio was 71.2% (63.2%). Nokian Tyres plc issued a EUR 150 million five-year Eurobond under EUR 500 million Euro Domestic Note Issuance Program on 12th June 2012. The Bond carries an annual coupon of 3.25%. The Bond will be used for general corporate and refinancing purposes. The Group's Interest-bearing liabilities totalled EUR 365.1 million (461.0) of which Current interest-bearing liabilities amounted to EUR 42.0 million (253.4). The Average interest rate of interest-bearing liabilities was 4.5% (5.6%). The Average interest rate of interest-bearing liabilities was 2.3% (1.8%) with calculatory non-cash expenses related to the convertible bond eliminated. Cash and cash equivalents amounted to EUR 430.3 million (464.5). At the end of the review period the company had unused credit limits amounting to EUR 656.8 million (360.8) of which EUR 306.0 million (305.9) 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 In 2012 the Group's Tax rate was 14.7% (14.0%). The Tax rate is affected 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 until approximately 2020. The estimated Tax rate for the following 5 years is 17%. The authorities' final approvals of the new factory building in Russia took place at the end of 2012 and the new agreed tax benefits and incentives came into force in the beginning of January 2013. PASSENGER CAR TYRES 10-12/12 10-12/11 Change% 2012 2011 Change% Net sales, m€ 304.2 338.4 -10.1 1,220.1 1,071.1 13.9 Operating profit, m€ 94.1 103.1 -8.7 410.8 365.1 12.5 Operating profit, % 30.9 30.5 33.7 34.1 RONA,% (roll.12 m.) 32.5 38.3 Net sales of Nokian Passenger Car Tyres totalled EUR 1,220.1 million (1,071.1), up 13.9% from previous year. Operating profit increased to EUR 410.8 million (365.1). Operating profit percentage was 33.7% (34.1). Operating Cash flow increased to EUR 258.4 million (151.9). Nokian car tyres' sales had a flying start for 2012 supported by strong sales in Russia and carry-over orders from 2011 in CE. Sales in H2, however, decreased despite good sales in core markets as the demand in CE turned exceptionally weak due to carry over inventories in distribution combined with low consumer sales in CE. The majority of growth in 2012 came from Russia where sales increased by 49.8%. Sales in other geographies combined were approximately on par with the previous year with North America up 16%, CIS excluding Russia up 11%, Nordic countries down 2% and CE down 2%. Nokian market share improved clearly in premium and mid tyre segments in Russia as a result of an expanding distribution and high brand awareness. The market share in winter tyres improved also in the Nordic countries. In Central Europe the market share improved in north and remained on previous year's level as a whole. Winter tyres represented 74% (77%) of Nokian car tyres' sales volume in 2012. A good sales mix together with successful price increases resulted in an ASP improvement of 5%. Raw material costs were flat year-over-year which combined with an ASP improvement supported margins. The new summer tyre range with the spearhead products Nokian Hakka Blue and Nokian Z G2 won several car magazines' tests in the core markets and in Central Europe. In October Nokian tyres dominated the winter tyre tests with several victories in Nordic and Russian car magazines. Also the Central European winter test results have been a success for Nokian Tyres with test wins in key markets. A major overhaul of key winter product offering, altogether five new product ranges, is done in January 2013. The biggest launch ever include the new generation of studded Hakkapeliitta 8, non-studded Hakkapeliitta R2 and Hakkapeliitta R2 SUV targeting further growth in core markets. In addition to the Nordic product range, Nokian Tyres is also introducing two new winter tyres for the Central European and North American markets: Nokian WR G3 and Nokian WR SUV 3. Fixed costs increased in line with sales growth, due to increased marketing in core markets, especially Russia. The commissioning of the new factory in Russia and high investments increased depreciation. Production output (pcs) grew by 11% compared to the previous year, boosted by the increasing capacity in Russia. Productivity improved along with the capacity increases, although the production utilization rate was reduced towards year-end. The shift pattern of the car tyre production in Nokia, Finland was cut from 7 days/week to a 5 days/week production by the end of Q2, and further temporary production cuts were made in Q4/2012 and Q1/2013. Simultaneously the production in Russia has been increased, but the manning of production line 12 was postponed. The combined output of the Nokia and Vsevolozhsk plants in 2012 was 15.7 million tyres and the annualized capacity at year end 18 million pcs with present shift patterns. The construction and commissioning of the new plant and warehouse next to the current ones in Russia proceeded as planned on schedule. The first line in the new plant commenced production in June, and the second line (line 12) will become on stream in 2013. Capacity in the Russian plant will increase further with the installation of line 13 during 2013. In 2013 the focus is to increase sales in core markets with the newly launched products, to expand distribution further and to improve productivity and utilization of capacities. HEAVY TYRES 10-12/12 10-12/11 Change% 2012 2011 Change% Net sales, m€ 25.9 29.5 -12.3 104.4 112.8 -7.4 Operating profit, m€ 1.4 3.0 -53.0 11.3 17.2 -34.3 Operating profit, % 5.5 10.3 10.8 15.3 RONA,% (roll.12 m.) 12.5 20.5 The Net sales of Nokian Heavy Tyres totalled EUR 104.4 million (112.8), down by 7.4% year-over-year. Operating profit was EUR 11.3 million (17.2), and the Operating profit percentage 10.8% (15.3%). Nokian Heavy Tyres' sales decreased due to a weaker forestry tyre demand and a slowing down of machine building in Europe compared to 2011. Sales of mining and radial tyres showed growth both in OEM and replacement markets, especially in North America and Russia, but did not fully compensate for the decline in the forestry sector. ASP improved by 6% due to an improved sales mix combined with price increases and a higher share of sales to the replacement market. The production volume (tons) decreased by 13% year-over-year. During 2012 the production was optimized to match a lower demand from OE customers and to reduce the inventory level. The results were penalized by the lower utilization rate and structural changes relating to renewing product specifications throughout the year. The structural changes are targeted to improve product quality, flexibility and productivity for 2013. Investments are in progress to modernize the factory, to open bottlenecks in production and to increase radial tyre output. The upgrade of the factory will be completed in 2013. The outlook going into 2013 remains challenging with demand at a comparatively low level. The focus for 2013 is to increase sales, continue to launch new BAS products and to optimize production output. VIANOR Equity-owned operations 10-12/12 10-12/11 Change% 2012 2011 Change% Net sales, m€ 121.3 117.3 3.4 315.3 298.4 5.7 Operating profit, m€ 11.8 13.0 -9.5 0.0 2.3 -98.2 Operating profit, % 9.7 11.1 0.0 0.8 RONA, % (roll.12 m.) 0.0 1.4 At the end of 2012 Vianor had 182 (179) equity-owned stores in Finland, Sweden, Norway, USA, Switzerland and Russia. Vianor's Net sales amounted to EUR 315.3 million (298.4), up by 5.7% compared with 2011. Operating profit was EUR 0.0 million (2.3) and the Operating profit percentage was 0.0% (0.8%). Vianor succeeded in its strategic task of expanding distribution and setting market prices for Nokian products and was able to win market shares in a challenging market situation. The Operating profit was down despite an improvement in sales due to a decreased share of winter tyres sales and a one off inventory value correction. Full year sales in tyre retail, truck tyres and car services showed growth whereas tyre wholesale decreased in line with the market. Consumer surveys indicate that Vianor increased further its brand awareness in the Nordic countries. The gradual change of operating model from tyre sales to full car service in the stores continues with investments and local acquisitions of car service shops. In 2012 a total of 25 car service operations were acquired and integrated to existing Vianor stores which caused some consolidation costs. In 2013 there are on-going special projects in expanding the network, developing consumer tyre sales and the car services business, improving the customer experience further, updating all the processes (Vianor Way) and renewing the ERP-system. Franchising and partner operations Vianor expanded the shop network on Nokian Tyres' key markets by 127 stores during 2012. At the end of the year the Vianor network comprised of totally 1,037 stores of which 855 were partners. Vianor operates in 26 countries; most extensively in the Nordic countries, Russia and Ukraine. During the year France, Serbia and Bosnia-Herzegovina joined as new countries in the network. Nokian Tyres' market shares improved as a result of the expansion in each respective country. Expanding the partner franchise network will continue according to plans; the target is to have more than 1,150 stores by the end of 2013. OTHER OPERATIONS Truck Tyres In 2012 Net sales for Nokian Truck Tyres and retreading materials were down by 10.9% year-over-year, amounting to EUR 52.9 million (59.3). Operating profit and cash flow were on a healthy level. The Truck tyre market was challenging in 2012 in Europe with overall tyre industry sales down by 19%. In Nordic countries the demand dropped 3%, and in Russia demand was down by 5%. During Q4 the demand however turned positive due to increased winter tyre demand and Nokian Truck Tyres booked improved Operating profit versus the same period in 2011. In the core markets, Nordic countries and Russia, Nokian Tyres' market share increased due to an improved product range in both premium and standard tyres. Premium winter Hakkapeliitta Truck tyres' share of the total Nokian truck tyre sales increased improving mix and ASP. At the end of 2012 Nokian Truck Tyres' product inventories were down compared to a year earlier. The dealers' inventories of truck tyres decreased in the Nordic countries, which is expected to support sales in 2013. The new truck winter tyre legislation in Sweden came into effect in the beginning of 2013, which has throughout Northern Europe increased the public interest about winter safety of transportation vehicles. In 2013 the focus will be on increasing sales and improving market shares in the core markets. Expansion to Russia and CIS utilizing the “Vianor Truck” service concept will continue. RUSSIA AND THE CIS COUNTRIES Nokian Tyres' sales in Russia increased by 33.7% in Q4 and in the full year by 49.8% to EUR 563.0 million (375.8). Sales in CIS countries (excluding Russia) were EUR 43.7 million (39.3). Consolidated sales in Russia and CIS increased by 46.2% to EUR 606.7 million (415.1). Sales in Russia grew significantly prompted by a good economic situation and continued growth in new car sales along with improved production and supply capacity of Nokian Tyres. Winter tyre sales increased significantly, both in premium and mid-price segments. Nokian Tyres managed to grow at a triple rate compared to the overall market, which lead to further improved market shares and a stronger market leader position in Russia. Payments of customers' trade receivables and governmental tax incentives came in as planned. The distribution network was extended by signing additional distribution agreements and expanding the Vianor network. There were a total of 533 Vianor stores in 319 cities in Russia and CIS countries at the end of the year. Nokian Tyres' e-commerce development proceeded according to plans. The company commissioned a new plant next to the current one in Russia, which will increase the annual car tyre capacity further by 5-6 million tyres. The first line in the new plant has commenced production in June, and the second line (line 12) will become on stream in H1/2013. At the end of 2012 the annual maximum capacity in the Russian factory was approximately 14 million tyres. Capacity will increase further as machinery for line 13 will be installed during 2013. The utilization rate in 2013 will depend on tyre demand. The Russian economy grew at an estimated real GDP growth of 3.6% in 2012 versus 2011. Consumer confidence was strong and purchasing power improved. Russia is expected to show a GDP growth of 3-4% in 2013. New car sales, the main driver for premium tyres, increased by 11% with western brands growing by 18% compared to 2011. The new car sales were supported by the moderate credit rates offered by banks (including loans subsidized by car manufacturers). The sales of used cars were also strong with demand exceeding supply. The growth rate of new car sales in Russia has been slowing down in recent months and the sales in 2013 are estimated to be up 2-5% compared to 2012. Tyre industry deliveries to distributors in Russia increased in 2012 by approximately 15% year-over-year with western brand sales growing 19%. In 2013 the market potential with good consumer demand for tyres is still there, although a more moderate sales growth is expected in 2013. However, western cars that were acquired in large volumes before 2010 are now in need of both summer and winter replacement tyres. The Nokian Tyres plant located in Russia inside the customs borders (duty 20% for imported tyres) combined with strong brands and an expanding Vianor chain provides a significant competitive edge on the market. By Russia joining WTO, the tyre duties will go down gradually; duty of car and van tyres will decrease from 20% to 18% in 2013 and gradually to 10% in 5 years. INVESTMENTS Investments in 2012 amounted to EUR 209.2 million (161.7). This comprises of production investments in the Russian and Finnish factories, moulds for new products and the Vianor expansion projects. Investments in Russia were EUR 152 million. OTHER MATTERS 1. Stock options on the NASDAQ OMX Helsinki Stock Exchange The total number of stock options 2010A is 1,320,000. Each stock option 2010A entitles its holder to subscribe for one Nokian Tyres plc share. The shares can be subscribed with the stock options 2010A during 1 May 2012 - 31 May 2014. In the aggregate, the stock options 2010A entitle their holders to subscribe for 1,320,000 shares. The present share subscription price with stock options 2010A is EUR 16.29/share. The dividends payable annually shall be deducted from the share subscription price. 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 6.39/share. The dividends payable annually shall be deducted from the share subscription price. 2. Shares subscribed with option rights After 14 December 2011 registered new shares a total of 761,322 Nokian Tyres plc's shares have been subscribed with the 2007B option rights and 125,233 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 21 February 2012. After the subscription the number of Nokian Tyres plc shares increased to 130,496,395 shares. After 21 February 2012 registered new shares a total of 1,041,159 Nokian Tyres plc's shares have been subscribed with the 2007B option rights and 325,172 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 22 May 2012. As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to 131,862,726 shares. After 22 May 2012 registered new shares a total of 1,000 Nokian Tyres plc's shares have been subscribed with the 2007B option rights, 62,636 with the 2007C option rights and 150 with the 2010A option rights. These option rights are attached to the Nokian Tyres plc's Option Programs of 2007 and 2010. New shares have been registered into the Trade Register on 21 August 2012. As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to 131,926,512 shares. After 21 August 2012 registered new shares a total of 30,165 Nokian Tyres plc's shares have been subscribed with the 2007C option rights and 100 with the 2010A option rights. These option rights are attached to the Nokian Tyres plc's Option Programs of 2007 and 2010. New shares have been registered into the Trade Register on 12 November 2012. As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to 131,956,777 shares. After 12 November 2012 registered new shares a total of 350 Nokian Tyres plc's shares have been subscribed with the 2007C option rights. These option rights are attached to the Nokian Tyres plc's Option Program of 2007. New shares have been registered into the Trade Register on 17 December 2012. As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to 131,957,127 shares. 3. Share price development The Nokian Tyres' share price was EUR 30.10 (EUR 24.88) at the end of the review period. The volume weighted average share price during the period was EUR 31.92 (EUR 27.38), the highest EUR 38.20 (EUR 37.45) and the lowest EUR 24.84 (EUR 19.23). A total of 186,898,418 shares were traded during the period (209,897,339), representing 142% (162%) of the company's overall share capital. The company's market value at the end of the period amounted EUR 3.972 billion (EUR 3.225 billion).The company's percentage of Finnish shareholders was 38.9% (39.8%) and 61.1% (60.2%) were foreign shareholders registered in the nominee register. This figure includes Bridgestone's ownership of 15.2%. 4. Decisions made at the Annual General Meeting On 12 April 2012, Nokian Tyres Annual General Meeting accepted the financial statements for 2011 and discharged the Board of Directors and the President and CEO from liability. The meeting decided that a dividend of EUR 1.20 per share shall be paid for the period ending on 31 December, 2011. The dividend was decided to be paid to shareholders included in the shareholder list maintained by Euroclear Finland Ltd on the record date of 17 April 2012. The proposed dividend payment date was decided to be 3 May 2012. 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, Benoît Raulin, Aleksey Vlasov and Petteri Walldén will continue in the Nokian Tyres' Board of Directors. Risto Murto was elected as a new member 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 80,000 per year, while that paid to Board members is set at EUR 40,000 per year. With the exception of the President and CEO, members of the Board and the Nomination and Remuneration Committee are also granted an attendance fee of EUR 600 per meeting. In addition, 50% of the annual fee be paid in cash and 50% in company shares, such that in the period from 12 April to 30 April 2012, EUR 40,000 worth of Nokian Tyres plc shares will be purchased at the stock exchange on behalf of the Chairman of the Board and EUR 20,000 worth of shares on behalf of each Board member. This means that the final remuneration paid to Board members is tied to the company's share performance. No separate compensation will be paid to the President and CEO for Board work. 4.3. Authorization for a share issue The Annual General Meeting authorized the Board of Directors to make a decision to offer no more than 25,000,000 shares through a share issue, or by granting special rights under chapter 10 section 1 of the Finnish Companies Act that entitle to shares (including convertible bonds) on one or more occasions. The Board may decide to issue new shares or shares held by the company. The maximum number of shares included in the authorization accounts for approximately 19% of the company's entire share capital. The authorization includes the right to issue shares or special rights through private offering, in other words to deviate from the shareholders' pre-emptive right subject to provisions of the law. Under the authorization, the Board of Directors will be entitled to decide on the terms and conditions of a share issue, or the granting of special rights under chapter 10, section 1 of the Finnish Companies Act, including the recipients of shares or special rights entitling to shares, and the compensation to be paid. This authorization was given to be exercised for purposes determined by the Board of Directors. The subscription price of new shares shall be recognized under unrestricted equity reserve. The consideration payable for Company's own shares shall be recognized under unrestricted equity reserve. The authorization will be effective for five years from the decision made at the Annual General Meeting. This authorization invalidates all other Board authorizations regarding share issues and convertible bonds. 5. Changes in ownership Nokian Tyres received a notification from JPMorgan Chase & Co on 12 April 2012, according to which the total ownership of J.P. Morgan Securities Ltd, JPMorgan Asset Management (UK) Limited, JPMorgan Asset Management (Taiwan) Limited, JP Morgan Chase Bank National Association and J.P. Morgan Investment Management Inc. rose to 5.26% of the share capital in Nokian Tyres plc as a result of a share transaction concluded on 11 April 2012. Nokian Tyres received a notification from JPMorgan Chase & Co on 18 April 2012, according to which the total holding of J.P. Morgan Securities Ltd, JPMorgan Asset Management (UK) Limited, JPMorgan Asset Management (Taiwan) Limited, JP Morgan Chase Bank National Association and J.P. Morgan Investment Management Inc. in Nokian Tyres plc fell below 5% as a result of a share transaction concluded on 17 April 2012. Nokian Tyres received a notification from Capital Research and Management Company (CRMC) on 12 July 2012, according to which the total holding of CRMC in Nokian Tyres plc exceeded 5% as a result of a share transaction concluded on 11 July 2012. Nokian Tyres received a notification from The Capital Group Companies, Inc. on 5 September 2012, according to which as a result of the corporate re-organization effective 1 September 2012, the disaggregation exemption granted by the Finnish Financial Supervisory Authority no longer applies, so Capital Research and Management Company and Capital Group International Inc. will no longer report relevant holdings separately. The holdings under management will be reported in aggregate by the group's parent company, The Capital Group Companies Inc. The total holding of The Capital Group Companies Inc. in Nokian Tyres plc was 6.00% after the change in holdings reporting on 3 September 2012. 6. Adjustment measures in the Finnish factory The statutory negotiations at Nokian Tyres plc Finnish factory ended on 17 December 2012. Improving productivity and adjusting production will be executed mainly with temporary lay-offs; in addition 28 production workers and officials were laid off permanently. The car tyre production will be cut through lay-offs by not more than 42 production days in 2013. Heavy tyre production will be adjusted accordingly by decreasing production volumes and cutting production days. 7. Corporate social responsibility Nokian Tyres plc qualified to the OMX GES Sustainability Finland index in December 2012. The index is designed to provide investors with a liquid, objective and reliable benchmark for responsible investment. The benchmark index comprises of the 40 leading NASDAQ OMX Helsinki listed companies in terms of sustainability. The index criteria are based upon international guidelines for environmental, social and governance (ESG) issues. The index is calculated by NASDAQ OMX in cooperation with GES Investment Services. 8. Events after the review period On 14 January 2013 Nokian Tyres announced that it will renew its winter tyre range for northern conditions by introducing three new products into the unique Hakkapeliitta winter tyre family: studded winter tyre Nokian Hakkapeliitta 8 and non-studded winter tyres Nokian Hakkapeliitta R2 and Nokian Hakkapeliitta R2 SUV. In addition to the Nordic product range, Nokian Tyres is also introducing two new winter tyres for the Central European and North American markets: Nokian WR G3 and Nokian WR SUV 3. Nokian Tyres is introducing the new Hakkapeliitta products to its most important partners at its own testing centre in Ivalo, Finland in Jan-Feb. In addition to the launch in Ivalo, the Nordic countries and Russia will have their own promotional tours. All of the Hakkapeliitta products are aimed at the company's core markets in the Nordic countries and Russia. Deliveries of the new products to distribution will start in early 2013. RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE Based on economic data the Euro area has practically been in a recession since spring 2012 and the growth for full year 2012 was negative. The development is however very uneven across the region. European and U.S. debt problems remain unresolved and the emerging economies' growth is slowing down. These uncertainties may weaken future demand for tyres. However, Nokian Tyres' core markets, the Nordic countries and Russia, have relatively healthy economies. The company's receivables have increased in 2012 in line with the increased sales and business model. Tyre inventories are on a planned level. The company follows the development of NWC very closely. At the end of 2012 Russian trade receivables accounted for 27% of the Groups total trade receivables. Around 32% of the Group's Net sales in 2013 are estimated to be generated from Euro-denominated sales. The most important sales currencies in addition to the Euro are the Russian Rouble, the Swedish and Norwegian Krona, the US Dollar and the Ukrainian Hryvnia. The widening interest rate difference between the Rouble and the Euro increased the hedging costs of the Rouble exposure in 2012. Nokian Tyres' other risks and uncertainty factors relate to the challenging pricing environment of tyres. The maintaining of profitability in case of rising raw material prices depends on the company's ability to raise tyre prices in line with the increasing raw material cost. An efficient ramp-up of new production lines in Russia will depend on the success of recruiting and retaining work force in a tightening labour market. Nokian Tyres Group has no pending disputes or litigations expected to have material effect on the performance or future outlook of the group. OUTLOOK FOR 2013 Consensus expectation is that the global economy will turn for the better late 2013 with further improvement in 2014-2015. Economies in Nokian Tyres' core markets continue to show comparatively stable development. Annual GDP growth in 2013 is estimated at 3-4% in Russia and 1% in the Nordic countries. The demand for replacement car tyres in 2013 is expected to grow 1-2% in Europe, 2% in Nordic countries and 2-5% in Russia. The pricing environment for 2013 is challenging for all tyre categories. Margins, however, will be supported by easing of raw material costs (€/kg) by 10% in Q1 yoy and 4% full year 2013. Nokian Tyres sales are expected to show growth during 2013 however with a slow start in Q1. Sales in core markets Russia and Nordic countries are expected to grow whereas sales in Central Europe are expected to be flat. Nokian Tyres' growing car tyre production capacity in Russia offers growth potential, productivity gains, and a moderate growth of fixed costs supports profitability. Production output in Nokia, Finland has been cut to support growth of production in Russia.The combined output of the Nokia and Vsevolozhsk plants in 2012 was 15.7 million tyres and the annualized capacity at year-end 18 million pcs with present shift patterns. Capacity will increase further as line 13 will be installed in Russia in 2013. The production utilization rate in 2013 will depend on tyre demand. The demand for heavy tyres remains relatively good for agriculture, mining and radial tyres but is still soft for forestry tyres. The outlook for Nokian Heavy Tyres going into 2013 remains challenging with demand at a comparatively low level. The focus for 2013 is to increase sales, continue to launch new BAS products and to optimize production output. Vianor is expected to add more than 100 stores to the retail network and to reach 1,150 stores, increase sales, develop service business further and to show a positive operating result in 2013. A strong position in the core markets, an expanding distribution channel, an improved cost structure with majority of production inside duty borders of Russia and CIS combined with new test winner Hakkapeliitta products give Nokian Tyres a good chance to strengthen its market leadership in the core markets and to show growth also in the more challenging market environment. Financial guidance: In 2013, the company is positioned to show some growth in Net sales and Operating profit. The first quarter Operating profit, however, is expected to be clearly weaker than in 2012. INVESTMENTS IN 2013 Nokian Tyres' budget for total investments in 2013 is EUR 144 million (209.2). EUR 83 million will be invested in Russia. The balance comprises of investments in Nokia plant (automation, moulds, ICT, R&D) EUR 44 million, Heavy tyres EUR 6 million and sales companies including Vianor chain with its acquisitions EUR 11 million. Nokia, 6 February 2013 Nokian Tyres plc, Board of Directors *** The above-said information contains forward-looking statements relating to future events or future financial performance of the company. In some cases, such forward-looking statements can be identified by terminology such as ”may”, ”will”, ”could”, ”expect”, ”anticipate”, ”believe” ”estimate”, ”predict”, or other comparable terminology. Such statements are based on the current expectations, known factors, decisions and plans of the management of Nokian Tyres. Forward-looking statements involve always risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. Future results may thus vary even significantly from the results expressed in, or implied by, the forward-looking statements. Nokian Tyres plc Antti-Jussi Tähtinen, Vice President, Marketing and Communications Further information: Mr. Kim Gran, President and CEO, tel: +358 10 401 7336 Distribution: NASDAQ OMX, media, www.nokiantyres.com ***** Nokian Tyres financial statement bulletin 2012 was published on Wednesday 6 February, 2013 at 8.00 a.m. Finnish time. The result presentation to analysts and media will be held in Hotel Kämp in Helsinki at 10.00 a.m. Finnish time. The presentation can be listened through audiocast via internet at http://www.nokiantyres.com/resultinfo2012 To be able to ask questions during the event you can participate in the conference call. Please dial in 5-10 minutes before the beginning of the event: +44 (0)20 7162 0077 (UK). Password: 927420. Stock exchange release and presentation material will be available before the event from http://www.nokiantyres.com/ir-calendar After the event the audio recording can be downloaded from the same page. Nokian Tyres interim report January-March 2013 will be published on Tuesday 30 April, 2013. Releases and company information can be found from http://www.nokiantyres.com The whole release can be load from the enclosure or from http://www.nokiantyres.com |
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