2012-08-08 07:00:01 CEST
2012-08-08 07:00:11 CEST
REGULATED INFORMATION
Nokian Renkaat - Interim report (Q1 and Q3)
Nokian Tyres plc Interim Report January-June 2012: Strong results, improving market position
Nokia, Finland, 2012-08-08 07:00 CEST (GLOBE NEWSWIRE) -- Nokian Tyres plc
Interim Report 8 August 2012, 8 a.m.
Nokian Tyres plc Interim Report January-June 2012:
Strong results, improving market position
Nokian Tyres group's net sales increased by 27.1% to EUR 798.0 million (EUR
628.0 million in
1-6/2011). Operating profit grew to EUR 217.7 million (EUR 165.6 million).
Earnings per share increased to EUR 1.40 (EUR 1.06).
Outlook:
The order book for Nokian car tyres remains good despite a more challenging
market. The company has further improved its position by winning market shares
in all targeted markets in Russia and Northern Europe. The growing production
capacity offers further growth potential and productivity gains, and a
declining Fixed cost ratio supports profitability. Successful winter tyre
pre-deliveries in Russia in H1 and the uncertainty in Europe may shift sales
from Q3 to Q4, closer to the consumer winter tyre season. Nokian Heavy Tyres'
sales in 2012 are estimated to decrease compared to 2011 due to a softer
demand.
Financial guidance (unchanged):
In 2012, the company is positioned to improve Net sales and Operating profit
compared to 2011.
Key figures, EUR 4-6/12 4-6/11 Change% 1-6/12 1-6/11 Change% 2011
million:
Net sales 413.8 338.8 22.1 798.0 628.0 27.1 1,456.8
Operating profit 112.7 93.3 20.8 217.7 165.6 31.5 380.1
Profit before tax 108.0 85.4 26.5 210.3 155.3 35.4 359.2
Profit for the period 95.4 74.2 28.6 182.9 136.6 34.0 308.9
Earnings per share, 0.73 0.57 26.7 1.40 1.06 32.2 2.39
EUR
Equity ratio, % 62.8 70.2 63.2
Cash flow from -42.5 -49.9 14.8 -163.9 -102.3 -60.3 114.1
operations
RONA,% (roll. 12 26.4 24.1 27.0
months)
Gearing, % 25.9 20.0 -0.3
Kim Gran, President and CEO:
“We continued to show strong progress and good results in the first semester
of 2012. Our strategy of focusing on value added growth, replacement and
consumer business - primarily winter, SUV and premium summer tyres - high
productivity and a tight ship continues to pay off.
Car tyre sales improved in Q2 in the wake of our strong growth in Russia and
market share improvement in Northern Europe. Improved productivity, successful
cost control, as well as higher ASP, were the main factors for profit growth.
We managed to increase sales, improve market shares and expand distribution in
all of our targeted markets. Our sales mix improved and ASP was up with an
increasing share of Nordic winter tyres, SUV tyres and Russian sales. The
successful launch of new premium summer tyres combined with several test wins
supported our price increases and an improving price position in Central
Europe. Our growth in CE and especially Germany despite a challenging market
situation was encouraging.
One of the cornerstones for our growth is a continuous expansion of a committed
distribution with a strong consumer focus. During H1 our Vianor chain opened 51
new stores, now totalling 961 stores in 24 countries. Our target of exceeding
1,000 stores by the end of 2012 seems quite realistic.
Increasing production in our Russian factory improved productivity and boosted
production output (tons) by 27% versus H1/2011. The new plant, wall to wall
with the existing Russian factory, produced its first tyres in June. The
ramp-up of capacity in the new plant continues as the second line comes on
stream during end Q4/2012. Production in Nokia, Finland has been cut and moved
to Russia to further improve productivity in H2.
There have been dark clouds in the market horizon for some time as global
growth has been slowing down and distribution customers in all markets are
limiting risks by carrying low stock. Our market geography in Russia and
Northern Europe offer however good potential and is still comparatively
healthy.
We are positioned to improve operations in our core markets in 2012 and
confident that we are able to rapidly react to any changes. Our car tyre order
book is good and production grows according to plan. The successful H1
pre-deliveries in Russia and the tendency to delay deliveries due to carry-over
stocks in Central Europe may shift sales from Q3 to Q4, closer to the consumer
winter tyre season.”
Market situation
Financial market and sovereign stress in the Euro area periphery is casting a
shadow onto the global recovery, which was not strong to start with. European
and US debt problems remain unresolved and now the growth in the emerging
economies is slowing. Based on economic data the Euro area has practically been
in a recession since spring 2011 and the growth for full year 2012 is expected
to be negative. The development is however very uneven across the region. The
global GDP is projected to grow at 2.5% in 2012 with the developed economies
growing at only 1% and emerging market growth slowing down to less than 6%.
Growth in Nokian Tyres core markets, Nordic countries and Russia, continue to
show comparatively positive development. Annual GDP growth estimates in the
review period averaged 4% in Russia and 1% in the Nordic countries. The new car
sales in 1-6/2012 in Russia were up by 14% year-over-year, with western brands
growing 24%. In Russia the new car sales is estimated to grow by 10-15% in full
year 2012. In the Nordic countries the new car sales decreased by approximately
6% year-over-year.
The sell-in sales volume for replacement market car tyres in the Nordic
countries in 1-6/2012 shows a decrease of 1% year-over-year, whereas in Europe
the market declined by 13%. The full year estimated sell-out to consumers for
car tyres in Europe is estimated to be down approximately 5% versus previous
year. In Russia tyre industry deliveries to distributors increased by
approximately 20% trailing the improving economy and continued growth in new
car sales.
At the end of the review period by June 2012 the car tyre distributors
especially in Central Europe had some carry-over stocks of both winter and
summer tyres, which is expected to shift manufacturers' winter tyre sales
closer to the consumer season in Q4. Tyre supply and demand for passenger car
tyres seem to be balanced for premium tyres whereas there is an overcapacity
for economy tyres. The pricing discipline has continued to be good for premium
tyres in all regions. However, no significant price increases are expected by
industry due to challenging market situation and lower raw material costs.
The demand for agricultural tyres is below previous year but has improved
slightly trailing the positive turn in food raw material prices. Metal prices
stopped falling at the end of Q2, supporting demand for tyres in the mining
industry which is still good. The demand for forestry tyres has been weaker
than a year before, and the downturn in the price of pulp at the end of Q2 is a
negative signal for future months.
The demand for premium truck tyres and retreads has fallen by 30% in Europe.
The Nordic countries have suffered the least with 2% decrease in truck tyre
demand. In Russia the drop in demand for premium truck tyres has been
approximately 20% whereas demand for cheaper radial tyres is increasing.
Raw material prices dropped at the end of 2011 and availability came back to
normal. Prices and tyre industry raw material cost decreased in Q2/2012
compared to Q1/2012. In H1/2012 the cost was still higher than in H1/2011. The
raw material cost is expected to go down in H2/2012 versus H1/2012 and H2/2011.
For the full year 2012 the material cost for the tyre industry is estimated to
be flat compared to 2011.
April-June 2012
Nokian Tyres Group recorded Net sales of EUR 413.8 million (338.8), showing an
increase of 22.1% compared with Q2/2011. In the Nordic countries sales was at
the same level than in the corresponding period a year earlier. Sales in Russia
increased by 73.7%. Russia and CIS consolidated sales grew by 67.8%. In Central
and Eastern Europe sales were up by 12.7% year-over-year. In North America
sales increased by 17.9%.
Raw material cost (EUR/kg) in manufacturing increased in the second quarter by
2.9% year-over-year but decreased by 4.3% versus the first quarter of 2012.
Fixed costs amounted to EUR 94.3 million (84.6), accounting for 22.8% (25.0%)
of net sales.
Nokian Tyres Group's Operating profit amounted to EUR 112.7 million (93.3). The
Operating profit was negatively affected by expensed credit losses and
provisions of EUR 1.4 million (0.3).
Net financial expenses were EUR 4.7 million (7.9). Net interest expenses were
EUR 3.8 million (4.1) including EUR 2.2 million (2.1) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 0.9 million
(3.8) of exchange rate differences.
Profit before tax was EUR 108.0 million (85.4). Profit for the period amounted
to EUR 95.4 million (74.2), and EPS were EUR 0.73 (EUR 0.57).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR -42.5 million
(-49.9).
January-June 2012
Nokian Tyres Group recorded Net sales of EUR 798.0 million (628.0), showing an
increase of 27.1% compared with 1-6/2011. In the Nordic countries sales
increased by 4.6% representing 29.3% (36.0%) of the group's total sales. Sales
in Russia increased by 70.1%. Russia and CIS consolidated sales grew by 67.0%
and formed 40.1% (30.9%) of the group's total sales. In Central and Eastern
Europe sales were up by 15.4% year-over-year representing 22.8% (25.4%) of the
group's total sales. In North America sales increased by 27.8% and were 7.2%
(7.3%) of the group's total sales.
Sales of passenger car tyres were up by 35.1% representing 75.2% (69.8%) of the
group's total sales. Heavy tyres' sales decreased by 5.5% and were 6.4% (8.4%)
of the group's total sales. Vianor's sales increased by 7.3% forming 15.4%
(18.0%) of the group's total sales. The sales of Other operations were down by
2.0% representing 3.0% (3.8%) of the group's total sales.
Raw material cost (EUR/kg) in manufacturing increased by 9.1% year-over-year.
Fixed costs amounted to EUR 187.0 million (165.9), accounting for 23.4% (26.4%)
of net sales. Total salaries and wages were EUR 98.3 million (87.2).
Nokian Tyres Group's Operating profit amounted to EUR 217.7 million (165.6).
The Operating profit was negatively affected by the IFRS 2 -compliant option
scheme write-off of EUR 5.2 million (3.8) and expensed credit losses and
provisions of EUR 4.9 million (0.8).
Net financial expenses were EUR 7.4 million (10.3). Net interest expenses were
EUR 6.5 million (6.5) including EUR 4.4 million (4.1) in non-cash expenses
related to convertible bonds. Net financial expenses include EUR 1.0 million
(3.8) of exchange rate differences.
Profit before tax was EUR 210.3 million (155.3). Profit for the period amounted
to EUR 182.9 million (136.6), and EPS were EUR 1.40 (EUR 1.06).
Return on net assets (RONA, rolling 12 months) was 26.4% (24.1%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR -163.9 million (-102.3).
The Group employed an average of 4,078 (3,727) people, and 4,155 (3,786) at the
end of the period. The equity-owned Vianor tyre chain employed 1,413 (1,317)
people and Russian operations 1,187 (965) people at the end of the period.
Financial position on 30 June 2012
Gearing ratio was 25.9% (20.0%). Interest-bearing net debt amounted to EUR
329.3 million (205.0). Equity ratio was 62.8% (70.2%).
Nokian Tyres plc issued an 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 530.6 million (227.4) of
which Current interest-bearing liabilities amounted to EUR 194.6 million
(24.2). The Average interest rate of interest-bearing liabilities was 3.5%
(5.2%). The Average interest rate of interest-bearing liabilities was 1.0%
(1.5%) with calculatory non-cash expenses related to the convertible bond
eliminated. Cash and cash equivalents amounted to EUR 201.4 million (22.4).
At the end of the review period the company had unused credit limits amounting
to EUR 490.4 million (495.2) of which EUR 306.0 million (205.9) 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 the review period the Group's Tax rate was 13.0% (12.1%). In full year 2011
the Tax rate was 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 2012 is 15% and for the
following 5 years 17%.
PASSENGER CAR TYRES
4-6/12 4-6/11 Change% 1-6/12 1-6/11 Change% 2011
Net sales, m€ 317.1 238.8 32.8 633.0 468.5 35.1 1,071.1
Operating profit, m€ 110.0 83.9 31.1 228.7 168.0 36.2 365.1
Operating profit, % 34.7 35.2 36.1 35.9 34.1
RONA,% (roll.12 m.) 38.2 33.0 38.3
The Net sales of Nokian Passenger Car Tyres totalled EUR 633.0 million (468.5),
up by 35.1% from the corresponding period a year earlier. Operating profit
increased to EUR 228.7 million (168.0). Operating profit percentage improved to
36.1% (35.9%).
Nokian car tyres' sales showed growth in all market areas. The bulk of the
total sales growth came from Russia where especially winter tyre sales grew
significantly, but good progress was recorded also in Germany and Czech
Republic. Winter tyres represented 65% (62%) of the total sales volume. Sales
of both winter and summer SUV tyres continued to increase, which improved sales
mix.
Nokian car tyres' market share improved in Russia, Central Europe and in the
Nordic Countries as a result of an expanding distribution and the success of
newly launched products.
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.
A good sales mix combined with successful price increases during 2011 raised
the Average Selling Price year-over-year, thus compensating for the raw
material cost (€/kg) increase of 9% versus the first half of 2011.
Fixed costs increased moderately compared to sales growth, which helped to
improve profits. Inventories and receivables grew along with increased sales.
Production output (pcs) grew by 29% compared to the corresponding period in the
previous year, boosted by the increasing capacity in Russia. Productivity
improved along with high utilization and the capacity increases. The shift
pattern of the car tyre production in Nokia, Finland was cut from 7 days/week
to a 5 days/week production by end June. Simultaneously the production in
Russia has been increased. Construction of the new plant and warehouse next to
the current ones in Russia has proceeded on schedule. The first line in the new
plant has commenced production in June, and the second line is estimated to
become on stream in late 2012. Capacity will increase further with two more
lines being added during 2013-2014. The planned combined output of the Nokia
and Vsevolozhsk plants in 2012 is 16.5 million tyres.
At the end of the review period the order book for 2012 was good. The
successful H1 pre-deliveries in Russia and the uncertainty in Europe may shift
sales from Q3 to Q4, closer to the consumer winter tyre season. The focus for
the rest of this year will be on optimizing the tyre supply capacity and the
logistics for growing deliveries as well as on controlling the inventories and
trade receivables.
HEAVY TYRES
4-6/12 4-6/11 Change% 1-6/12 1-6/11 Change% 2011
Net sales, m€ 26.5 28.3 -6.1 53.6 56.7 -5.5 112.8
Operating profit, m€ 2.6 4.6 -44.3 6.3 10.0 -36.6 17.2
Operating profit, % 9.6 16.2 11.9 17.7 15.3
RONA,% (roll.12 m.) 15.2 22.2 20.5
The Net sales of Nokian Heavy Tyres totalled EUR 53.6 million (56.7), down by
5.5% year-over-year. Operating profit was EUR 6.3 million (10.0), and the
Operating profit percentage 11.9% (17.7%).
Nokian Heavy Tyres' sales decreased due to weaker forestry tyre demand and
sales compared to first half of 2011. Sales of mining and radial tyres showed
growth especially in North America and Russia but did not fully compensate for
the decline in the forestry sector. The order book going forward is stable and
on the same level as by end of Q1/2012.
ASP improved due to an improved sales mix with higher sales to the replacement
market and price increases which compensated the increased raw material costs.
The production volume (tons) decreased by 15% year-over-year. During the first
half of the year the production was optimized to match a lower demand from OE
customers and to reduce the inventory level. The utilization rate of the
capacity was not satisfactory and utilization rate going forward in 2012 is
targeted to improve from the first half of the year. Investments are being made
to modernize the factory, to open bottlenecks in production and to increase
radial capacity. The upgrade of the factory will be completed in 2013.
The focus for H2/2012 is to increase sales in the radial tyre segments and to
improve productivity. In 2012 Nokian Heavy Tyres' sales and Operating profit
are expected to be below previous year.
VIANOR
Equity-owned operations
4-6/12 4-6/11 Change% 1-6/12 1-6/11 Change% 2011
Net sales, m€ 79.4 78.7 0.9 129.4 120.6 7.3 298.4
Operating result, m€ 3.2 5.9 -45.3 -7.2 -7.2 1.0 2.3
Operating result, % 4.0 7.5 -5.5 -6.0 0.8
RONA,% (roll.12 m.) 1.4 -1.6 1.4
At the end of the review period Vianor had 180 (173) equity-owned stores in
Finland, Sweden, Norway, USA, Switzerland and Russia. Vianor's Net sales
amounted to EUR 129.4 million (120.6), up by 7.3% compared with 1-6/2011.
Operating result was EUR -7.2 million (-7.2) and the Operating result
percentage was -5.5% (-6.0%). Operating result was negative due to normal
seasonality and is expected to turn positive in H2 due to sales and profit
generation during the winter tyre season.
Sales in tyre retail and service showed growth whereas gross and fleet business
decreased in line with market. The gradual change of operating model from tyre
sales to full car service in the stores continues with investments and local
acquisition of car service shops. In the review period a total of 19 car
service operations were acquired and integrated to existing Vianor stores.
In 2012 the focus will be on improving sales and market shares further,
developing the car services business and improving cost efficiency.
Franchising and partner operations
Vianor expanded the network on Nokian Tyres' key markets by 51 stores during
H1/2012. At the end of the review period, the global Vianor network comprised
of 961 stores of which 781 were partners. Vianor operates in 24 countries; most
extensively in the Nordic countries, Russia and Ukraine. During the first half
of the year Serbia joined as a new country in the network. Nokian Tyres' market
shares improved as a result of the expansion.
Expanding the partner franchise network will continue according to plans; the
target is to have more than 1,000 stores by the end of 2012.
OTHER OPERATIONS
Truck Tyres
The Net sales of Nokian Truck Tyres were EUR 25.3 million (25.8), down by 2.0%
compared to
1-6/2011. The demand in Central Europe declined rapidly during the first
quarter, but started to recover slowly in the second quarter. Nokian truck
tyres' market share increased in the Nordic countries as well as in Central and
Eastern Europe due to an improved product range in both premium and standard
tyres. Sales and profitability were supported by an increasing share of
Hakkapeliitta truck tyre sales and improving market position of Noktop
retreading materials.
In 2012 the focus will be on increasing sales, improving market share as well
as on controlling the tyre inventory and trade receivables. 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 70.1% to EUR 327.9
million (192.8). Sales in CIS countries (excluding Russia) were EUR 14.1
million (12.0). Consolidated sales in Russia and CIS increased by 67.0% to EUR
342.0 million (204.8).
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 improved further its market shares
and the market leader position in Russia.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. There were a total of 505 Vianor
stores in 297 cities in Russia and CIS countries at the end of the review
period. Nokian Tyres' e-commerce development proceeded according to plans.
In the beginning of 2012 the annual capacity in the Russian factory was
approximately 11 million tyres. The company has commissioned a new plant next
to the current one, 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 is estimated to become on stream in late 2012.
Capacity will increase further with two more lines being added during
2013-2014.
The Russian economy grew at an estimated real GDP growth of over 4% in H1/2012
versus H1/2011. Consumer confidence was strong and purchasing power improved.
Russia is expected to show a healthy GDP growth of approximately 4% in 2012.
New car sales, the main driver for premium tyres, increased by 14% with western
brands growing by 24% in the first half-year compared to H1/2011. The new car
sales were supported by the moderate credit rates offered by banks (including
loans subsidized by car manufacturers). The car sales annual growth in 2012 is
forecasted to be in the range of 10-15% with a return to 2008 volume. The sales
of used cars are also strong with demand exceeding supply. Western cars that
were acquired in large volumes before 2010 are now in need of both summer and
winter replacement tyres.
The market potential with strong underlying consumer demand in Russia is
evident with strong growth in car and tyre sales. Tyre industry deliveries to
distributors increased by 20% in H1/2012 year-over-year. The market is expected
to show healthy growth throughout 2012, although the successful H1
pre-deliveries in Russia may shift sales from Q3 to Q4, closer to the consumer
winter tyre season.
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. By Russia joining WTO, the tyre
duties will go down gradually; duty of car and van tyres will decrease from 20%
to 10% in 5 years.
INVESTMENTS
Investments in January-June amounted to EUR 109.8 million (52.6). This
comprises of production investments in the Russian and Finnish factories,
moulds for new products and the Vianor expansion projects.
OTHER MATTERS
1. Stock options on the NASDAQ OMX Helsinki Stock Exchange
The total number of stock options 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 will increase to 131,862,726 shares.
3. Share price development
The Nokian Tyres' share price was EUR 29.86 (EUR 34.60) at the end of the
review period. The volume weighted average share price during the period was
EUR 32.19 (EUR 30.69), the highest EUR 38.20 (EUR 35.45) and the lowest EUR
24.84 (EUR 26.07). A total of 107,451,845 shares were traded during the period
(79,232,991), representing 81% (61%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 3.937 billion
(EUR 4.480 billion).The company's percentage of Finnish shareholders was 36.4%
(37.2) and 63.6 % (62.8) were foreign shareholders registered in the nominee
register. This figure includes Bridgestone's ownership of approximately 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.
6. Events after the reporting period
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.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
Based on economic data the Euro area has practically been in a recession since
spring 2011 and the growth for full year 2012 is expected to be 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 H1/2012 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 the review period
Russian trade receivables accounted for 44% of the Groups total trade
receivables.
Around 36% of the Group's Net sales in 2012 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.
Nokian Tyres' other risks and uncertainty factors relate to the prices of raw
materials. 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 2012
The order book for Nokian car tyres remains good despite a more challenging
market. The company has further improved its position by winning market shares
on all targeted markets in Russia and Northern Europe. Timing of sales in
Russia, distributors' carry-over stocks and the uncertainty in Europe may shift
sales from Q3 to Q4, closer to the consumer winter tyre season.
In 2012 the car tyre demand is expected to continue to grow globally at a rate
of 2-4% driven by growth in emerging markets. Europe is expected to show
negative growth with northern countries performing comparatively well. Demand
in Russia is forecasted to continue to show healthy growth on the back of
growth in GDP, car sales and an expanding replacement market.
The growing production capacity offers further growth potential and
productivity gains, and a declining fixed cost ratio supports profitability.
Capacity in Nokia, Finland has been cut for H2/2012 to support growth of
production in Russia. In the beginning of 2012 the annual capacity in the
Russian factory was approximately 11 million tyres. The company has
commissioned a new plant next to the current one, 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 is estimated to
become on stream in late 2012. Capacity will increase further with two more
lines being added during 2013-2014. The company and Russian authorities have
signed agreements which will prolong incentives and tax relieves until
approximately 2020.
Nokian Heavy Tyres' sales in 2012 are estimated to decrease compared to 2011
due to a softer demand.
Nokian Tyres' raw material cost (EUR/kg) has been levelling off and for full
year 2012 it is estimated to be the same as in 2011.
A healthy order book in the core markets, an 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 even in
the more challenging environment.
Financial guidance (unchanged):
In 2012, the company is positioned to improve Net sales and Operating profit
compared to 2011.
INVESTMENTS IN 2012
Nokian Tyres' budget for total investments in 2012 is EUR 210 million (161.7).
EUR 150 million will be invested in Russia, including the start of the new
production facilities. The balance comprises of investments in Nokia plant
(automation, moulds, ICT, R&D) EUR 32 million, Heavy tyres EUR 15 million and
sales companies including Vianor chain with its acquisitions EUR 13 million.
Nokia, 8 August 2012
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.
***
The whole report can be loaded from attached pdf.
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 Interim Report January-June was published on Wednesday 8 August,
2012 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/resultinfoq22012
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:
+358 (0)9 2313 9202 (Finland) or +44 (0)207 1620 177 (UK). Password: 920299.
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-September will be published on Tuesday 30
October, 2012. Releases and company information will be found from
http://www.nokiantyres.com
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