2011-05-06 07:00:00 CEST
2011-05-06 07:00:38 CEST
REGULATED INFORMATION
Nokian Renkaat - Interim report (Q1 and Q3)
NOKIAN TYRES PLC INTERIM REPORT JANUARY-MARCH 2011
Nokia, Finland, 2011-05-06 07:00 CEST (GLOBE NEWSWIRE) -- Nokian Tyres plc
Interim Report 6 May 2011, 8 a.m.
NOKIAN TYRES PLC INTERIM REPORT JANUARY-MARCH 2011:
Strong first quarter results and record-high order book
Nokian Tyres group's net sales increased by 57.3% to EUR 289.2 million (EUR
183.8 million in Q1/2010). Operating profit grew to EUR 72.3 million (EUR 21.1
million) and Earnings per share increased to EUR 0.49 (EUR 0.16).
Outlook:
Car tyre demand and deliveries have increased clearly driven by a recovery of
consumer confidence, growth of GDP on Nokian Tyres' core markets, growth in car
sales and improved financing to distributors. Higher industrial activity in
machine building and transportation supports growth of heavy tyre and truck
tyre sales. Inventories are low in the whole tyre industry and distribution
channels. Nokian Tyres' order book is on an all-time high level in all
manufacturing units and demand may exceed supply capacity at times in 2011.
Financial quidance:
In 2011, the company is positioned to provide strong sales growth and to
improve operating profit clearly compared to 2010.
Key figures, EUR million:
Q1/11 Q1/10 Change% Q2/10 Q3/10 Q4/10 2010
Net sales 289.2 183.8 57.3 260.4 245.2 368.7 1,058.1
Operating profit 72.3 21.1 241.8 60.9 48.3 91.8 222.2
Profit before tax 69.9 22.2 214.5 60.6 39.6 86.4 208.8
Profit for the period 62.4 20.1 211.1 52.6 34.5 62.6 169.7
Earnings per share, EUR 0.49 0.16 198.3 0.42 0.27 0.49 1.34
Equity ratio, % 71.0 62.5 68.4
Cash flow from operations -52.3 -24.8 -110.8 -2.5 -12.0 358.1 318.8
RONA,% (rolling 12 months) 21.6 10.3 17.8
Gearing, % 5.5 30.4 0.1
Kim Gran, President and CEO:
“Continued clear improvement of demand in core business gave Nokian Tyres a
flying start for 2011. The first quarter was a success for us, as we beat all
former Q1 results.
Sales grew significantly in our core markets, Northern Europe and Russia,
trailing the economic growth, booming new car sales and improved consumer
confidence. We continue to win market share with new test winning products and
the expansion of distribution network spearheaded by Vianor. A larger share of
Russian sales, with sales mix weighting more clearly on premium tyres combined
with price increases were sufficient to compensate for the significantly
increasing raw material cost.
We managed to increase production output in Q1 by 61% YOY, which however is not
enough to satisfy the growth in sales. Two additional production lines for
Russia (numbers 9 and 10) are being installed with start-up during summer,
which will further improve output and productivity. The new plant to be built
in Russia next to the current one will increase our annual car tyre capacity
further by 5-6 million tyres in 2012-2014. The investment and incentive
agreement is being finalized with local authorities and the new plant will
commence production during H2/2012.
The visibility to this year's sales is quite good. Inventories of all our core
products remain low in Nokian Tyres as well as in the distribution. Our order
book is record-high with sales growth correlating closely with increases in
production output.
Our sails bulge with tailwind, however it is not plain sailing; we still face
serious challenges with further significant raw material cost increases,
availability issues and general uncertainties of the global economy. We trust
to be able to tackle these challenges as in times of short supply we will make
choices which will enhance productivity and profitability.”
Market situation
The global economy continued to improve in the first quarter of 2011. Easy
monetary policies and low interest rates have improved global macro indicators
on a broad basis. The earthquake with the resulting tsunami and extensive
damage in Japan as well as the upheavals in Northern Africa and Middle East
have added to economic uncertainty. However, implications to Northern European
economies and Russia and consequently to Nokian Tyres are so far assessed to be
insignificant. In Europe there has been uncertainty related to the governmental
borrowing and its effects to financial markets but it has had minor input on
the private sector's optimism.
Drivers for growth in Nokian Tyres' core markets improved. Annual GDP growth
averaged 3.5% in the Nordic countries and 4.5% in Russia at the end of Q1. The
new car sales increased in the Nordic countries by 17% year-over-year. In
Russia the new car sales were up by 77% in January-March compared to the
corresponding period in 2010. New car sales in Russia is expected to continue
to grow by approximately 30% in 2011.
The aftermarket sales volume for car tyres in the review period increased in
the Nordic countries by an estimated 7% and in Europe also by 7%
year-over-year. Tyre industry deliveries to distributors increased by over 40%
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 stocks are down due to the previous
year's rapid recovery of demand continuing in Q1/2011. In the tyre industrystrong demand and improved sales for 2011 are expected.
The demand for special heavy tyres has continued to improve supported by a
significant increase in forest and mining machine manufacture. In the
aftermarket demand has also increased for other special use tyres, i.e.
container handling and agricultural tyres. The increase derives from improved
demand and prices of pulp, sawmill products, metals and food raw materials.
A recovery of the transport sector has improved demand for truck tyres and
created some short supply in the aftermarket.
Overall, the market environment has improved clearly and demand exceeds supply
in many product groups.
Tyre raw material prices have been increasing significantly since early 2009.
The price for natural rubber has increased by approximately 60% in the end of
Q1/2011 versus Q1/2010. Oil-based materials have also risen significantly and
some materials are in short supply. In early 2011 the raw material prices have
continued to go up triggering additional price increases from the tyre
industry.
January-March 2011
Nokian Tyres Group recorded net sales of EUR 289.2 million (183.8), showing an
increase of 57.3% on the corresponding period a year earlier. In the Nordic
countries sales increased by 33.6% representing 33.2% (39.0%) of the group's
total sales. Sales in Russia increased by 119.8%. Russia and CIS consolidated
sales grew by 115.9% and formed 35.7% (25.9%) of the group's total sales. In
Central and Eastern Europe sales were up by 58.0% year-over-year representing
24.7% (24.5%) of the group's total sales. In North America sales decreased by
9.8% and were 5.8% (10.1%) of the group's total sales.
Sales of passenger car tyres were up by 65.0% representing 74.0% (68.1%) of the
group's total sales. Heavy tyres' sales increased by 68.7% and were 9.1% (8.2%)
of the group's total sales. Vianor's sales decreased by 0.6% forming 13.5%
(20.7%) of the group's total sales. The sales of Other operations were up by
73.9% representing 3.4% (3.0%) of the group's total sales.
Raw material cost (EUR/kg) in manufacturing increased in the review period by
41,3% year-over-year. Fixed costs amounted to EUR 81.3 million (73.1),
accounting for 28.1% (39.7%) of net sales. Total salaries and wages were EUR
40.7 million (33.3).
Nokian Tyres Group's operating profit amounted to EUR 72.3 million (21.1). The
operating profit was negatively affected by the IFRS 2 -compliant option scheme
write-off of EUR 1.9 million (1.7) and expensed credit losses and provisions of
EUR 0.5 million (0.1).
Net financial expenses were EUR 2.4 million (-1.1). Net interest expenses were
EUR 2.4 million (4.8) including EUR 2.0 million (1.9) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 0.1 million
(5.9) of exchange rate differences.
Profit before tax was EUR 69.9 million (22.2). Profit for the period amounted
to EUR 62.4 million (20.1), and EPS were EUR 0.49 (EUR 0.16).
Return on net assets (RONA, rolling 12 months) was 21.6% (10.3%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR -52.3 million (-24.8).
The Group employed an average of 3,587 (3,184) people, and 3,653 (3,189) at the
end of the period. The equity-owned Vianor tyre chain employed 1,276 (1,300)
people and Russian operations 911 (648) people at the end of the period.
Financial position by 31 March 2011
Gearing ratio was 5.5% (30.4%). Interest-bearing net debt amounted to EUR 57.0
million (253.7). Equity ratio was 71.0% (62.5%).
The Group's interest-bearing liabilities totalled EUR 218.7 million (334.4) of
which current interest-bearing liabilities amounted to EUR 13.0 million (72.4).
The average interest rate of interest-bearing liabilities was 5.3% (4.5%). The
average interest rate of interest-bearing liabilities was 1.5% (2.2%) 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 536.6 million (451.1) of which EUR 235.9 million (180.4) 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 tax rate is effected by tax relieves in Russia based on present investments
and further investment-related incentive agreements. The Group's tax rate in
2010 was 18.7% and it is estimated to remain at the same level during 2011.
PASSENGER CAR TYRES
Q1/11 Q1/10 Change% Q2/10 Q3/10 Q4/10 2010
Net sales, m€ 229.7 139.2 65.0 179.5 174.7 221.4 714.7
Operating profit, m€ 84.1 35.4 137.4 51.5 48.7 69.9 205.5
Operating profit, % 36.6 25.4 28.7 27.9 31.6 28.8
RONA,% (roll.12 m.) 29.3 13.9 23.3
The net sales of Nokian Passenger Car Tyres in January-March totalled
all-time-high for Q1, EUR 229.7 million (139.2), up by 65.0% from previous
year. Operating profit increased to EUR 84.1 million (35.4). Operating profit
percentage improved to 36.6% (25.4%).
The demand for car tyres continued to increase. Nokian Tyres' sales were strong
in all core markets. Winter tyre sales represented 49% of total sales, which is
roughly the same as in the corresponding period a year earlier. Majority of the
sales growth came from Russia where the winter tyre sales improved clearly and
the summer tyre sales doubled year-over-year. Among product groups the SUV
tyres showed the strongest sales 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 second quarter.
The new summer tyre models with the spearhead product Nokian Hakka Green, a
tyre giving clear savings in fuel-consumption, won car magazines' tyre tests in
the core markets and in Europe.
Improved sales mix, successful price increases and favourable currency exchange
rate development raised the Average Selling Price significantly compared to
Q1/2010, thus compensating for the raw material cost increase of 41%
year-over-year.
Production output grew by 63% 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 capacity
will increase as the lines 9 and 10 in Russia come on stream in the second and
third quarter of the year, and as the company increases off-take contract
manufacturing.
Fixed costs increased moderately compared to the sales growth which helped to
improve margins.
The order book for 2011 is all-time high and the inventories are low.
Increasing raw material cost will result in further tyre price increases of
4-7% during Q2-Q3/2011. The most important challenges in 2011 will be securing
the tyre supply capacity and the availability of raw materials.
HEAVY TYRES
Q1/11 Q1/10 Change% Q2/10 Q3/10 Q4/10 2010
Net sales, m€ 28.4 16.8 68.7 20.3 18.3 25.7 81.0
Operating profit, m€ 5.4 3.8 42.4 3.9 1.7 4.2 13.7
Operating profit, % 19.1 22.7 19.3 9.5 16.5 16.9
RONA,% (roll.12 m.) 22.5 10.0 21.0
The net sales of Nokian Heavy Tyres totalled EUR 28.4 million (16.8) in the
review period, up by 68.7% year-over-year. Operating profit was EUR 5.4 million
(3.8), and the Operating profit percentage 19.1% (22.7%).
Demand for heavy tyres continued to grow at a healthy pace trailing increasing
activity in machine building and a stronger replacement market. Sales of Nokian
Heavy Tyres improved clearly in all product groups. Forestry tyres, mining and
radial tyres showed strongest growth.
Price increases were implemented to offset higher raw material costs and
margins improved compared to the end of 2010.
The production volume (tons) increased by 50% year-over-year and was at full
utilization with a clear improvement in productivity. Further investment to
open bottlenecks in production and to increase output in 2012-2013 by
approximately 25% from present level have been taken. Installation of first
machinery will start during H2/2011.
A new product category, Beyond All-Steel Radial (BAS) developed by Nokian Tyres
was launched targeting harbour and mining end use applications. Sales have
started in late 2010 challenging traditional all-steel tyres.
VIANOR
Equity-owned operations
Q1/11 Q1/10 Change% Q2/10 Q3/10 Q4/10 2010
Net sales, m€ 41.9 42.2 -0.6 78.7 64.5 122.6 307.9
Operating result, m€ -13.1 -11.8 -10.9 6.8 -2.8 11.8 4.0
Operating result, % -31.3 -28.0 8.6 -4.4 9.7 1.3
RONA,% (roll.12 m.) -2.1 -3.4 2.6
At the end of the review period Vianor had 172 equity-owned stores in Finland,
Sweden, Norway, USA, Switzerland and Russia. Vianor's net sales in
January-March amounted to EUR 41.9 million (42.2), down by 0.6% compared with
the corresponding period a year earlier. Operating result was EUR -13.1 million
(-11.8) and the Operating result percentage was -31.3% (-28.0%). The Operating
result was negative due to seasonality. Summer tyre consumer sales and the
related service sales in the Nordic countries were delayed to the second
quarter of the year due to a prolonged winter and a late timing of Easter.
Weeks around Easter are the main consumer season for changing from winter to
summer tyres.
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
In the review period Vianor expanded the network on Nokian Tyres' core markets
by 21 stores. At the end of March 2011, the global Vianor network comprised of
792 stores of which 620 were partners. Vianor operated in 20 countries; most
extensively in the Nordic countries, in Russia and in Ukraine. Nokian Tyres'
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 900 stores by the end of 2011.
OTHER OPERATIONS
Truck Tyres
The net sales of Nokian Truck Tyres were EUR 10.6 million (6.1), up by 73.9%
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.
The profitability of Nokian Truck Tyres improved significantly year-over-year
backed by increased sales volumes and tyre price increases.
Due to the market upturn there is 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, expanding the product
range and increasing prices further to offset the effects of the higher raw
material cost. 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 119.8% to EUR 102.8
million (46.8). Sales in CIS countries (excluding Russia) were EUR 5.8 million
(3.5). Consolidated sales in Russia and CIS increased by 115.9% to EUR 108.6
million (50.3).
Sales in Russia grew significantly due to recovering consumer demand,
distributors' low inventory levels and improving credit capability. Summer tyre
sales increased substantially, both in premium and standard tyres. Nokian Tyres
improved its market shares in Russia.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. The Vianor tyre chain was expanded
and there were a total of 438 Vianor stores in over 260 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 will increase the annual capacity to
approximately 11 million tyres. The company is also preparing a new plant next
to the current one, which will increase the annual car tyre capacity further by
5-6 million tyres. Negotiations about tax relieves and infrastructure
investments are in their final stage. The new plant is estimated to commence
production during 2012 and the capacity increase during 2012-2014.
Backed by the oil price the Russian Rouble has gradually strengthened against
the Euro. Russian economy recovered at an estimated real GDP growth of 4.5% in
Q1/2011 versus Q1/2010. Consumer confidence was strong and purchasing power
improved. Russia is expected to show a healthy GDP growth of 4-6% in 2011.
New car sales, the main driver for premium tyres, increased by 77% in Q1/2011
compared to Q1/2010. The new car sales is supported by the scrappage incentive
program, which has been extended into 2011, and the credit rates offered by
banks (including loans subsidized by car manufacturers) returning to pre-crisis
values. 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 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 evident with strong growth in car and tyre sales. Tyre industry
deliveries to distributors increased by over 40% in Q1/2011.
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 the first quarter amounted to EUR 15.0 million (14.4). 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 increase, the number of Nokian Tyres
shares is 128,849,012 and the share capital remained EUR 25,437,906.00.
3. Share price development
The Nokian Tyres' share price was EUR 30.03 (EUR 19.23) at the end of the
review period. The volume weighted average share price during the period was
EUR 28.65 (EUR 18.16), the highest EUR 31.13 (EUR 20.15) and the lowest EUR
26.07 (EUR 15.89). A total of 43,927,658 shares were traded during the period
(49,747,979), representing 34% (39%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 3.869 billion
(EUR 2.436 billion).The company's percentage of Finnish shareholders was 37.8%
(37.6) and 62.2% (62.4) 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. Matters after the review period
In April 4 2011 Nokian Tyres announced that the company's sales and operating
profit increased clearly in the first quarter. January-March 2011 Net sales was
on that date estimated to be approximately EUR 278 million (Q1/2010: EUR 183.8
million) and Operating profit EUR 65-70 million (Q1/2010: EUR 21.1 million).
The market outlook in Nokian Tyres' core markets was stated to have
strengthened further. The guidance was updated: “In 2011, the company is
positioned to provide strong sales growth and to improve operating profit
clearly compared to 2010.”
In the Annual General Meeting of Nokian Tyres plc on 7 April 2011, President
and CEO Kim Gran stated in his review: “Market outlook has strengthened clearly
and we need more production capacity. We, together with the local authorities,
are preparing a new plant next to the current one, which will increase our
annual car tyre capacity by 5-6 million tyres. Negotiations about tax relieves
and infrastructure investments are in their final stage. According to plans,
the new plant can be taken into use during 2012 and the capacity increase
during 2012-2014. We are also considering adding production capacity for heavy
tyres in order to serve the growing demand. We will make a decision on this
matter during this year”.
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 has 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.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
Ongoing uncertainty related to governmental borrowing in Europe may cause
disruption in the financial markets.
Nokian Tyres other risks and uncertainty factors relate to the prices and
availability 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 .
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.
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 40% 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 2011
Car tyre demand and deliveries have increased clearly driven by a recovery of
consumer confidence, growth of GDP on Nokian Tyres' core markets, growth in car
sales and improved financing to distributors. Higher industrial activity in
machine building and transportation supports growth of heavy tyre and truck
tyre sales. Inventories are low in the whole tyre industry and distribution
channels. Nokian Tyres' order book is on an all-time high level in all
manufacturing units and demand may exceed supply capacity at times in 2011.
Nokian Tyres will add to production capacity by more than 30% in 2011 versus
2010. Production will be increased mainly by investing in two new lines in the
Russian plant. The company is also preparing a new plant in Russia next to the
current one, which will increase the annual car tyre capacity by 5-6 million
tyres. Negotiations about tax relieves and infrastructure investments are in
their final stage. The new plant is estimated to commence production during
2012 and the capacity increase during 2012-2014.
Productivity is expected to improve due to the benefits of restructuring and
higher capacity utilization. The development of profits at Nokian Tyres is
estimated to be supported by higher sales volumes, price increases, improved
sales mix and an increasing share of Russian production.
Increasing raw material cost will result in further tyre price increases during
2011. Nokian Tyres' raw material cost for full year 2011 is estimated to
increase by approximately 30% 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 first quarter exceeded the target.
A strong demand, 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 in 2011.
Financial guidance:
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 has been increased by EUR 23
million and will be approximately EUR 140 million (50.5). Roughly EUR 75
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 25 million, moulds for new products EUR 26 million and Vianor
chain including acquisitions EUR 14 million.
Nokia, 6 May 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'.
The interim report figures are unaudited
NOKIAN TYRES
CONSOLIDATED INCOME STATEMENT 1-3/11 1-3/10 Last 12 1-12/10 Change
Million euros months %
Net sales 289.2 183.8 1,163.5 1,058.1 57.3
Cost of sales -155.6 -108.7 -651.0 -604.0 -43.2
Gross profit 133.5 75.2 512.5 454.1 77.7
Other operating income 0.7 0.9 4.1 4.3
Selling and marketing expenses -51.5 -44.6 -199.8 -192.9 -15.5
Administration expenses -6.2 -6.1 -27.8 -27.6 -2.8
Other operating expenses -4.2 -4.3 -15.7 -15.8 1.4
Operating profit 72.3 21.1 273.3 222.2 241.8
Financial income 34.6 29.3 101.6 96.3 17.9
Financial expenses -36.9 -28.3 -118.3 -109.7 -30.7
Profit before tax 69.9 22.2 256.5 208.8 214.5
Tax expense (1 -7.5 -2.2 -44.5 -39.1 -246.3
Profit for the period 62.4 20.1 212.1 169.7 211.1
Attributable to:
Equity holders of the parent 62.4 20.1 212.1 169.7
Non-controlling interest 0.0 0.0 0.0 0.0
Earnings per share from the profit
attributable to equity holders of the parent
basic, euros 0.49 0.16 1.34 198.3
diluted, euros 0.48 0.16 1.32 200.0
CONSOLIDATED OTHER COMPREHENSIVE
INCOME 1-3/11 1-3/10 1-12/10
Million euros
Profit for the period 62.4 20.1 169.7
Other comprehensive income,
net of tax:
Gains/Losses from hedge of net
investments in foreign operations 0.2 -16.0 -17.9
Cash flow hedges 1.6 -0.5 -0.6
Translation differences
on foreign operations 6.2 44.0 37.0
Total other comprehensive income
for the period, net of tax 8.0 27.5 18.5
Total comprehensive income
for the period 70.4 47.5 188.2
Total comprehensive income
attributable to:
Equity holders of the parent 70.4 47.5 188.2
Non-controlling interest 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 31.3.11 31.3.10 31.12.10 Change
%
Equity ratio, % 71.0 62.5 68.4
Gearing, % 5.5 30.4 0.1
Equity per share, euro 8.03 6.58 7.34 22.0
Interest-bearing net debt,
mill. euros 57.0 253.7 0.7
Capital expenditure,
mill. euros 15.0 14.4 50.5
Depreciation, mill. euros 17.6 17.0 69.4
Personnel, average 3,587 3,184 3,338
Number of shares (million units)
at the end of period 128.85 126.69 127.70
in average 128.16 125.57 126.75
in average, diluted 135.29 131.66 132.96
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION 31.3.11 31.3.10 31.12.10
Million euros
Non-current assets
Property, plant and equipment 485.7 522.0 483.6
Goodwill 60.4 56.3 58.8
Other intangible assets 18.9 19.0 19.7
Investments in associates 0.1 0.1 0.1
Available-for-sale financial assets 0.3 0.2 0.3
Other receivables 21.0 13.6 20.6
Deferred tax assets 27.5 37.9 22.3
Total non-current assets 613.8 649.1 605.2
Current assets
Inventories 263.2 213.1 210.6
Trade receivables 336.3 287.8 258.9
Other receivables 84.6 103.2 80.4
Cash and cash equivalents 161.8 80.7 216.6
Total current assets 845.9 684.8 766.3
Equity
Share capital 25.4 25.4 25.4
Share premium 181.4 181.3 181.4
Translation reserve -64.6 -62.2 -71.1
Fair value and hedging reserves 1.0 -0.5 -0.6
Paid-up unrestricted equity reserve 33.1 0.0 8.0
Retained earnings 858.3 689.4 793.9
Non-controlling interest 0.0 0.0 0.0
Total equity 1,034.5 833.4 937.2
Non-current liabilities
Deferred tax liabilities 31.2 32.3 39.3
Provisions 0.1 1.4 0.1
Interest bearing liabilities 205.8 260.2 204.2
Other liabilities 1.3 2.4 1.9
Total non-current liabilities 238.4 296.4 245.5
Current liabilities
Trade payables 91.6 43.1 81.0
Other current payables 80.1 85.9 92.7
Provisions 2.2 1.0 2.2
Interest-bearing liabilities 13.0 74.2 13.0
Total current liabilities 186.8 204.2 189.0
Total assets 1,459.7 1,333.9 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 1-3/11 1-3/10 1-12/10
Million euros
Cash flows from operating activities:
Cash generated from
operations -33.3 18.1 372.7
Financial items and taxes -31.1 -13.7 -45.4
Net cash from operating
activities -64.4 4.4 327.2
Cash flows from investing activities:
Net cash used in investing
activities -15.4 -12.5 -33.7
Cash flows from financing activities:
Proceeds from issue of share
capital 25.0 26.6 34.7
Change in current financial
receivables and debt 0.0 1.6 -29.8
Change in non-current financial
receivables and debt -0.4 -2.9 -95.2
Dividends paid 0.0 0.0 -50.7
Net cash from financing
activities 24.7 25.2 -141.0
Net change in cash and cash
equivalents -55.2 17.1 152.6
Cash and cash equivalents at
the beginning of the period 216.6 62.5 62.5
Effect of exchange rate changes 0.4 1.1 1.5
Cash and cash equivalents at
the end of the period 161.8 80.7 216.6
-55.2 17.1 152.6
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 20.1 20.1
Other comprehensive income,
net of tax
Cash flow hedges -0.5 -0.5
Net investment hedge -16.0 -16.0
Translation differences 43.9 43.9
Total comprehensive
income for the period 27.9 -0.5 20.1 47.5
Exercised warrants 0.5 26.1 26.6
Share-based payments 1.7 1.7
Total transactions with
owners for the period 0.5 26.1 1.7 28.3
Equity, Mar 31st 2010 25.4 181.3 -62.2 -0.5 0.0 689.4 0.0 833.4
Equity, Jan 1st 2011 25.4 181.4 -71.1 -0.6 8.0 793.9 0.0 937.2
Profit for the period 62.4 62.4
Other comprehensive income,
net of tax
Cash flow hedges 1.6 1.6
Net investment hedge 0.2 0.2
Translation differences 6.2 6.2
Total comprehensive
income for the period 6.4 1.6 62.4 70.4
Exercised warrants 25.0 25.0
Share-based payments 1.9 1.9
Total transactions with
owners for the period 25.0 1.9 26.9
Equity, Mar 31st 2011 25.4 181.4 -64.6 1.0 33.1 858.3 0.0 1,034.5
SEGMENT INFORMATION
Million euros 1-3/11 1-3/10 1-12/10 Change
%
Net sales
Passenger car tyres 229.7 139.2 714.7 65.0
Heavy tyres 28.4 16.8 81.0 68.7
Vianor 41.9 42.2 307.9 -0.6
Other operations 12.8 6.1 41.6 111.0
Eliminations -23.7 -20.5 -87.2 -15.9
Total 289.2 183.8 1,058.1 57.3
Operating result
Passenger car tyres 84.1 35.4 205.5 137.4
Heavy tyres 5.4 3.8 13.7 42.4
Vianor -13.1 -11.8 4.0 -10.9
Other operations 0.5 -1.4 -1.6 134.7
Eliminations -4.6 -4.9 0.6 6.2
Total 72.3 21.1 222.2 241.8
Operating result, % of net sales
Passenger car tyres 36.6 25.4 28.8
Heavy tyres 19.1 22.7 16.9
Vianor -31.3 -28.0 1.3
Total 25.0 11.5 21.0
Cash Flow II
Passenger car tyres -14.1 -8.5 291.2 -66.1
Heavy tyres -7.8 -3.3 8.5 -134.4
Vianor -12.2 -9.1 12.4 -33.9
Total -52.3 -24.8 318.8 -110.8
CONTINGENT LIABILITIES 31.3.11 31.3.10 31.12.10
Million euros
FOR OWN DEBT
Mortgages 1.0 0.9 1.1
Pledged assets 0.0 35.6 0.0
OTHER OWN COMMITMENTS
Guarantees 6.2 5.9 6.2
Leasing and rent commitments 97.8 97.9 102.1
Purchase commitments 1.8 3.4 2.2
DERIVATIVE FINANCIAL INSTRUMENTS 31.3.11 31.3.10 31.12.10
Million euros
INTEREST RATE DERIVATIVES
Interest rate swaps
Notional amount 30.3 31.6 30.7
Fair value -0.2 -1.0 -1.3
FOREIGN CURRENCY DERIVATIVES
Currency forwards
Notional amount 591.6 498.6 563.2
Fair value 3.0 -21.6 -3.3
Currency options, purchased
Notional amount 24.0 15.7 0.0
Fair value 0.2 0.1 0.0
Currency options, written
Notional amount 24.0 27.3 0.0
Fair value 0.0 -0.3 0.0
ELECTRICITY DERIVATIVES
Electricity forwards
Notional amount 13.5
Fair value 1.6
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- March 2011 was published on Friday 6
May, 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/resultinfoq12011
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: 893583
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-June 2011 will be published on 5 August,
2011. Releases and company information will be found from
http://www.nokiantyres.com
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