Fri October 25 12:00 am 2002 in category Stock exchange releases
Nokian Tyres plc Stock exchange release 25.10.02 at 8 a.m. 1 (8)


Nokian Tyres' consolidated net sales were up 12% and totalled EUR 311.2 million (2001:EUR 277.7 million). Operating profit totalled EUR 23.9 million (EUR 25.3 million). Comparable operating profit improved by EUR 3.1 million from the previous year, as the 2001 figure includes profits from the sales of fixed assets EUR 4.5 million. Earnings per share were EUR 0.93 (EUR 0.86). The objective is to achieve sales growth and better EBITA than in 2001.


The European tyre market improved somewhat from the previous year due to an increased demand for winter tyres. The most powerful demand growth was seen in the Nordic countries, Eastern Europe and Russia. In Finland the sales of new cars boosted tyre sales. Demand for heavy tyres began gradually to recover at the beginning of the year. The positive trend continued throughout the third quarter, although global economic uncertainty continued to reflect on the business.

Nokian Tyres' and Vianor's sales increased in company's key markets and market shares improved. Vianor continued rationalisation measures, resulting in a marked increase in Vianor's profitability in Finland from the previous year. In Norway and, particularly, in Sweden cost adjustments and rationalisation measures are yet to be completed.

July to September 2002

Nokian Tyres' consolidated net sales were up by 11.1% to EUR 117.9 million (EUR 106.1 million in the corresponding period in 2001). Net sales from manufacturing increased by 10.3 % and Vianor's net sales by 15.5%.

Fixed costs increased by 10.2% to EUR 38.5 million (EUR 34.9 million).

The Group's operating profit was EUR 15.2 million (EUR 18.6 million). The comparable operating profit was on previous year's level, as the year 2001 figure includes profits from the sales of fixed assets EUR 3.4 million. Operating profit from the manufacturing totalled EUR 19.9 million (EUR 22.2 million). Vianor's operating profit increased to EUR -1.2 million (EUR -1.7 million). Comparable figure from manufacturing business includes EUR 3.3 million profits from the sales of fixed assets and accordingly from Vianor EUR 0.1 million.

The Group's profit before taxes was EUR 12.4 million (EUR 14.8 million) and the net profit for the period EUR 8.8 million (EUR 9.8 million).

January to September 2002

Net sales were EUR 311.2 million (EUR 277.7 million), showing an increase of 12.0% on the corresponding period a year earlier. Net sales from manufacturing grew by 11.5 % and Vianor's net sales by 14.4 % from the previous year.

The improvement in sales profits could largely be attributed to an improved product mix featuring new products, implemented price

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increases and decreased material costs in the manufacturing business. Productivity (kg/mh) showed marked improvement from the previous year. The net sales prices per tyre for passenger car tyres rose by 4.2%. Raw material prices in the manufacturing business decreased by 2% from the average prices in the corresponding period a year earlier.
The Group's fixed costs increased by EUR 14.7 million, or 13.7%, on the previous year and totalled EUR 121.9 million (EUR 107.2 million). Fixed costs represented 39% (39%) of net sales.

The Group's operating profit was EUR 23.9 million (EUR 25.3 million). The comparable figure 2001 includes profits from sales of fixed assets EUR 4.5 million. Operating profit from the manufacturing business totalled EUR 36.0 million (EUR 33.6 million) and Vianor's operation profit was EUR -7.7 million (EUR -6.4 million). Net financial expenses were EUR 9.2 million (EUR 10.1 million).

The Group's profit before taxes totalled EUR 14.8 million (EUR 15.2 million). Net profit during the period was EUR 9.8 million (EUR 9.1 million). Eearnings per share were EUR 0.93 (EUR 0.86).

The return on net assets (RONA, rolling 12 months) was 12.3% (13.5%). Income financing after the change in working capital and investments (cash flow II) was EUR -23.7 million (EUR -20,9 million).

The Group employed an average of 2,612 (2,656) people, and 2,621
(2 618) at the end of the period. Vianor employed 1,190 (1,111) people at the end of the period.


Passenger car tyres

Net sales generated from Nokian passenger car tyre business grew 14.2% from the corresponding period in the previous year and amounted to EUR 162.7 million (EUR 142.5 million). Operating profit totalled EUR 30.6 million (EUR 26.2 million).

Sales of Nokian passenger car tyres developed favourably throughout the period in the key markets in Europe, the USA and Russia, and market shares improved. Winter tyres and other special products with high profit margins accounted for a large portion of total sales. Winter tyres represented 51.9% (41.9%) of the sales during the period. The improvement in sales profits could be largely attributed to price increases, improved productivity of 6.4% from the same period in the previous year and decreased material costs. Production volumes increased by 6.3% from the previous year.

The advantages of the new logistics centre were effectively utilised, which resulted in the markedly improved delivery capacity during the peak season.

In the course of the period, two new high-performance summer tyres, Nokian NRVi and Nokian NRY, were introduced. The tyres have been designed for demanding use, especially in the Central European markets, and customer sales will begin in the spring of 2003. Deliveries of the new non-studded winter tyre family, Nokian WR, to Central Europe and North America were launched according to schedule.

Heavy tyres

Net sales of Nokian heavy tyres business totalled EUR 39.9 million (EUR 37.6 million), showing an increase of 6.2% from the previous year. Operating profit totalled EUR 3.0 million (EUR 1.1 million).

Demand for heavy tyres gradually began to improve in the second quarter and continued to perk up during the third quarter of the year. The most powerful growth was seen in the forestry tyre business, where demand was boosted by the increased production volumes of forestry machinery and equipment manufacturers.

Sales also developed favourably in the USA, where the market position of Nokian forestry tyres strengthened significantly. Sales of Nokian truck tyres also perked up from the beginning of the year.

Bicycle tyres

Net sales from Nokian bicycle tyres were up by 5.8% on the previous year to EUR 4.0 million (EUR 3.8 million).

Bicycle manufacturing volumes continued to decrease in Europe and demand for bicycle tyres was low. Despite this development, sales of Nokian bicycle tyres improved and profitability increased from the year before. This could largely be attributed to the well-received new products, which ranked number one in several tests, and positive sales development in the USA, Canada, Japan and the Philippines, as well as measures to boost production efficiency.

Retreading materials

Nokian Tyres' retreading materials business booked sales of EUR 7.6 million (EUR 8.1 million), down 6.2% on the previous year.

The demand for passenger car tyres retreading materials continued to be low. In addition the demand for truck tyre retreading materials decreased from the previous year in the Nordic countries and elsewhere in Europe. Demand for winter treads perked up markedly towards the end of the period. As usual, sales of retreading materials are expected to peak towards the year-end.


Vianor generated net sales of EUR 134.6 million (EUR 117.7 million), showing an increase of 14.4% on the corresponding period last year. Vianor's comparable operating profit was on previous year's level. Operating profit during the period totalled EUR -7.7 million (EUR -6.4 million). EUR 1.2 million profits from the sales of fixed assets are included in the year 2001 figure. Goodwill depreciation amounted to EUR 5.9 million (EUR 5.6 million). Cash flow II totalled EUR -16.2 million (EUR 2.2 million). Vianor's figures also include 13 new sales outlets acquired in Sweden at the end of last year. The majority of Vianor's operating profit will be generated in the final quarter of the year.

Vianor's sales increased and its market shares improved in Finland, Sweden and, particularly, in Norway, although consumer sales of winter tyres began after the period in review. The demand for new truck tyres was weak early in the year, but picked up notably in the third quarter. Sales of agricultural tyres were also strong. The consumer prices of tyres, as well as Vianor's service prices, were raised.

Cost adjustment measures at Vianor in Finland were successful and sales and profit developed in the desired direction. Measures were continued in Sweden and Norway and are yet to be completed.


Nokian Tyres spent a total of EUR 21.1 million on investments during the period (EUR 37,1 million). Investments included purchases of new moulds, as well as investments in production machinery and equipment. Nokian Tyres' total investments for the year 2002 are EUR 32.0 million.


Nokian Tyres and Amtel co-operation

In the summer, Amtel Holding Company (Russia) and Nokian Tyres plc (Finland) signed a letter of intent to form a 50/50 joint venture company for the purpose of manufacturing, marketing and selling premium branded tyres in Russia and the CIS countries. The letter of intent is the latest step in the co-operation between the two companies to form a strategic partnership.

Co-operation negotiations continue intensively. A final joint venture agreement is expected to be completed before the end of the year. The parties earlier agreed to launch the off-take manufacturing of Nordman branded tyres at Amtel factories in Russia in the autumn of 2002.

Amtel Holdings Company, a privately held company, is a leader in the tyre industry in the CIS countries with a total market share of approximately 30%. In the passenger car and light truck market segment, Amtel's share is even higher - over 36.5%. In the CIS market, Amtel is also the leading manufacturer of bicycle and motorcycle tyres, tyres for the aviation industry, and special tyres for heavy earthmovers and other heavy machinery. Amtel owns raw material plants that produce Nylon 6 and Nylon 6.6 cord fabrics, as well as polyamide fibres. Amtel manufactures more than 30% of all carbon black produced in Russia. In 2001, the Amtel group sold about 11 million tyres and employed approximately 30,000 people nationwide.

Authorisations granted to the Board of Directors

At the Annual General Meeting held in March, the Board of Directors of Nokian Tyres was authorised to make a decision within one year from the Annual General Meeting to increase the share capital with one or more rights issues. The Board of Directors also has the right to deviate from the shareholders pre-emptive right to subscribe for shares, provided there is a compelling financial reason referred to in chapter 4, section 2a of the Companies Act.

As a result of share issues arranged under the authorisation, the company's share capital may increase by a maximum of EUR 4 million. A maximum of 2,000,000 new shares may be issued, each with a nominal value of EUR 2.


The RoadSnoop pressure watch was demonstrated to wholesale and retail businesses and interest in the product is high. Market demand has exceeded expectations and the order book is large.

Product development work and production start-up have taken longer than expected.
The lifetime of the battery used as the power supply for RoadSnoop and ensuring receiver operation has proved more challenging than expected. Because of delayed production start-up, the sales target set for 2002 will not be reached.


Nokian Tyres'outlook for the rest of the year is positive and the company expects to reach its set goal of outperforming the results of 2001 in terms of sales growth and EBITA.

Both the manufacturing business and Vianor will focus on the winter tyre season, which is of key importance to the company's profit. The season had a promising start and is expected to be better than last year in both the Nordic countries and elsewhere in Europe. The sale of winter tyres is also expected to pick up from last year in Russia and the USA.

Demand for winter tyres has picked up and Nokian Tyres has strengthened its position as a winter tyre manufacturer in all key markets. Vianor has also improved its position in the Nordic countries.

Production volumes have increased, daily output volumes have broken previous records and productivity continues to improve.

Customer service will be enhanced during the peak season. Delivery capacity improved markedly from the previous year due to the new logistics centre and the enhanced IT system. Contract manufacturing provides additional capacity in Russia, where Nordman winter tyres manufactured by Amtel will enter the market during the year-end.

Nokian brand tyres also performed well in the tyre tests of various trade magazines. In the Central European market the product range features a new product, the non-studded winter tyre Nokian WR.

Demand for heavy tyres has picked up markedly from the previous year, although there is still uncertainty in the market. Demand for retreading materials will also increase during the winter season.

Cost adjustment measures and cuts will be continued in Vianor Sweden and Norway. Nokian Tyres will pay special attention to strengthening the balance sheet and cash flow.

Raw material prices are on the increase and, during the last quarter of the year, prices are expected to rise by approximately 2% from the corresponding period in 2001. Raw material prices for the whole year
2002 will remain approximately 3% lower than in the previous year.

Nokia, 25 October 2002

Million euros 7-9/02 7-9/01 1-9/02 1-9/01 Last 12 1-12/01

Net sales 117.9 106.1 311.2 277.7 456.9 423.4
Operating expenses 93.8 82.7 261.3 232.0 374.1 344.8
Depreciation according
to plan 6.8 6.2 20.0 19.3 25.1 24.4
Operating result before
non-recurring items and
goodwill amortisations 17.2 17.1 29.9 26.4 57.6 54.2
Non-recurring items 0.0 3.4 0.0 4.5 -0.6 3.9
Goodwill amortisations 2.0 1.9 5.9 5.6 7.9 7.5
Operating result 15.2 18.6 23.9 25.3 49.1 50.5
Financial income
and expenses -2.8 -3.8 -9.2 -10.1 -12.5 -13.5
Result before extra-
ordinary items and tax 12.4 14.8 14.8 15.2 36.6 37.0
Extraordinary items 0.0 0.0 0.0 0.0 0.0 0.0
Direct tax for the
period 1) 3.6 5.0 5.0 6.2 10.6 11.9
Profit applicable to
minority shareholders 0.0 0.0 0.0 0.0 0.0 0.0
Net result 8.8 9.8 9.8 9.1 25.9 25.2

CONSOLIDATED BALANCE SHEET 30.9.02 30.9.01 31.12.01

Intangible assets 12.9 14.9 14.0
Goodwill 42.3 45.6 47.8
Tangible assets 197.8 194.3 196.5
Investments 0.6 0.3 0.4
Inventories 98.1 97.0 87.0
Receivables 150.9 131.0 95.9
Cash in hand and at bank 5.3 5.6 18.2

Shareholders' equity 151.8 132.7 149.0
Capital loan 36.0 36.0 36.0
Minority shareholders' interest 0.0 0.0 0.0
Long-term liabilities
interest bearing 124.2 159.7 137.0
non interest bearing 19.6 17.1 19.1
Current liabilities
interest bearing 91.4 67.7 39.4
non interest bearing 84.9 75.6 79.2

Total assets 507.9 488.8 459.8

Interest bearing net debt 210.3 221.7 158.2
Capital expenditures 21.1 37.1 45.3
Personnel average 2,612 2,656 2,636

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KEY RATIOS 30.9.02 30.9.01 months 31.12.01

Earnings per share, euro 0.93 0.86 2.45 2.38
Equity ratio, % 2) 37.0 34.5 40.2
Equity ratio, % 29.9 27.2 32.4
Gearing, % 2) 112.0 131.4 85.5
Shareholders' equity
per share, euro 14.34 12.54 14.08

Number of shares
(1.000 units) 10,582 10,582 10,582

1) Direct tax in the consolidated profit and loss account is
based on the taxable profit for the period.
2) Capital loan is included in equity

SEGMENT INFORMATION 7-9/02 7-9/01 1-9/02 1-9/01 1-12/01

Net sales 117.9 106.1 311.2 277.7 423.4
Manufacturing 88.1 79.8 214.2 192.1 274.7
Vianor 47.0 40.7 134.6 117.7 193.5

Operating result 15.2 18.6 23.9 25.3 50.5
Manufacturing 19.9 22.2 36.0 33.6 50.3
Vianor -1.2 -1.7 -7.7 -6.4 -0.5

Cash Flow II -4.9 1.9 -23.7 -20.9 47.7
Manufacturing -1.9 -1.4 -8.3 -23.8 30.0
Vianor -3.0 -1.3 -16.2 2.2 18.4

CONTINGENT LIABILITIES 30.9.02 30.9.01 31.12.01
Million euros

Mortgages 0.7 0.7 0.7
Pledged assets 0.0 0.1 0.1
Guarantees 1.2 5.1 1.2

The amount of debts with security 0.0 2.6 0.0

Guarantees 0.1 0.0 0.0

Leasing and rent
commitments 37.2 28.6 27.6
Acquisition commitments 0.4 4.8 0.6

Interest rate swaps
Fair value -1.6 -0.4 -1.0
Underlying value 50.0 33.4 37.5

Forward contracts
Fair value -0.5 1.3 -0.4
Underlying value 68.4 66.1 50.9
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Options, purchased
Fair value 0.0 0.0 0.0
Underlying value 0.0 0.0 3.0
Options, written
Fair value 0.0 0.0 0.0
Underlying value 0.0 0.0 4.0

Currency derivatives are used to hedge the Group's net exposure.

Currency derivatives are included in the financial result at market
value except for those relating to order stock and budgeted net
currency positions. which are entered in the profit and loss
account as the cash flow is received.

(Unaudited figures)

Nokian Tyres Plc

Raila Hietala-Hellman
Vice President, Public Information

Further information: Mr. Kim Gran, President and CEO,
Tel +358 3 340 7336

Distribution: Hex and major media