Fri August 9 12:00 am 2002 in category Stock exchange releases
Stock exchange bulletin 9 August 2002 8 am.


Consolidated net sales and operating profit grew from the previous year in the second quarter and the entire period under review. Operating profit in January-June was EUR 8.7 million (EUR 6.7 million in January-June 2001). Earnings per share were EUR 0.10 (EUR -0.07). Net sales grew by 12.6% to EUR 193.3 million (EUR 171.6 million). The objective for 2002 is to outperform the results of 2001 in terms of growth and profit.


The situation in Nokian Tyres' main markets was more favourable than a year earlier. Demand for passenger car tyres picked up, particularly in Eastern Europe, the Nordic countries and Russia. Sales of new cars picked up in Finland but continued to decline in the other Nordic countries. Although global economic uncertainty continued to reflect on the heavy tyres business, demand for heavy special tyres began to gradually perk up.      

Nokian Tyres was able to boost its sales and market shares in its key markets: the Nordic countries, Russia, Europe and the USA. Sales focused on products with a high profit margin such as winter tyres; these accounted for 46% (40%) of the overall sales in the period. Vianor was also able to boost its market shares.

April to June 2002

Nokian Tyres' consolidated net sales were up by 14.5% to EUR 108.8 million (EUR 95.0 million in the corresponding period in 2001). Net sales from manufacturing grew by 13.1% and Vianor's by 16.2%. Vianor's figures included 13 new sales outlets acquired in Sweden in autumn 2001.

Fixed costs grew by 16.5% to EUR 42.0 million (EUR 36.1 million). Raw material costs in manufacturing decreased by 6% from the corresponding period a year earlier.

Consolidated operating profit of both the manufacturing business and the Vianor tyre chain increased from the corresponding period a year earlier. The Group's operating profit amounted to EUR 9.8 million (EUR 8.5 million) while the operating profit from the manufacturing business totalled EUR 7.8 million (EUR 6.6 million) and from the Vianor tyre chain EUR 2.1 million (EUR 1.9 million).  

Profit before taxes rose to EUR 6.4 million (EUR 5.4 million) and the net profit for the period to EUR 4.3 million (EUR 3.0 million).

January to June 2002

In the January to June period, the Nokian Tyres group booked net sales of EUR 193.3 million (EUR 171.6 million), showing an increase of 12.6% on the corresponding period a year earlier. Net sales from manufacturing grew by 12.8% and Vianor's by 13.8% on the previous year.

The improvement in sales profits could be largely attributed to price increases, an improved sales mix featuring new products, and decreased material costs in the manufacturing business. Moreover, productivity (kg/mh) showed marked improvement from the previous year.  

The synergy benefits generated in the tyre chain and manufacturing business were put to efficient use, which translated into sales and market share increases in the Nordic countries.  

Fixed costs increased by EUR 10.8 million, or 14.9%, on the previous year and totalled EUR 83.5 million (EUR 72.6 million). Fixed costs represented 43.2% (42.3%) of net sales. Prices of raw materials in the manufacturing business dropped by 6% from the average prices in the corresponding period a year earlier.

The operating profit of the Nokian Tyres Group picked up to EUR 8.7 million (EUR 6.7 million). Operating profit from the manufacturing business was EUR 16.1 million (EUR 11.4 million) while Vianor's operating loss before the depreciation of goodwill of EUR 4.0 million (EUR 3.7 million) was EUR -2.5 million (EUR -1.0 million).

Net financial expenses were EUR 6.3 million (EUR 6.3 million).

Profit before taxes rose to EUR 2.4 million (EUR 0.4 million). Net profit for the period increased and totalled EUR 1.0 million (EUR -0.8 million). Earnings per share were up to EUR 0.10 (EUR -0.07).

Return on net assets (RONA, rolling 12 months) was 13.2% (12.4%).

Income financing after the change in working capital, investments and the disposal of fixed assets (cash flow II) was EUR -18.8 million (EUR -22.8 million), showing an increase of EUR 4.0 million from the previous year. Equity ratio was 38.2% (33.9%) and included the capital loan in equity.  

The Group employed an average of 2,624 (2,572) people and 2,630 (2,572) at the end of the period. Meanwhile Vianor employed 1,197 (1,065) people at the end of the period.


Passenger car tyres

The net sales generated by the Nokian passenger car tyre business in the January to June period grew 18.3% from the previous year and amounted to EUR 94.4 million (EUR 79.8 million). Operating profit totalled EUR 14.0 million (EUR 9.2 million).

Sales of Nokian passenger car tyres developed favourably throughout the period in the key markets in Europe, the USA and Russia. In the Nordic countries, the opportunities provided by the company's own distribution chain as well as its special expertise were effectively utilised. Sales and market shares picked up especially well in Sweden, where the closing down of the Gislaved factory helped strengthen Nokian Tyres' position.

New products, a successful product mix, the implemented price increases, clearly improved productivity and smaller than anticipated material costs helped raise profitability.  

Due to investments in production and the productivity-boosting measures taken, production volumes increased by 8% and productivity (kg/mh) improved by 9% on the corresponding period in the previous year.

Focus on special products with high profit margins has raised the production value and reduced the relative proportion of production costs.  

Heavy tyres

The net sales of Nokian heavy tyres business totalled EUR 25.1 million (EUR 24.9 million); up by 0.7% on the previous year. Operating profit rose to EUR 1.3 million (EUR 0.6 million).

Although global economic uncertainty continued to impact the heavy tyres business, demand for special tyres started to gradually pick up. Demand also perked up considerably in the US forestry machinery tyre market. The demand for radial tyres remained brisk throughout the period.  

Despite the increasingly fierce price competition in the industry, Nokian Tyres increased its prices.  

Bicycle tyres

Nokian bicycle tyres generated net sales of EUR 2.8 million (EUR 2.8 million), which represents the previous year's level.

Demand for bicycle tyres revived to some extent with new, high profit margin products boosting sales profitability. Sales picked up particularly well in the USA, Canada, Japan and the Philippines. The production efficiency boosting and streamlining measures completed at the Lieksa plant clearly helped improve financial performance and raise productivity.    

Retreading materials

Net sales from the Nokian retreading materials business were down 7.6% on the previous year to EUR 4.3 million (EUR 4.6 million).

Demand for retreading materials for both truck tyres and passenger car tyres shrank from the previous year in the Nordic countries and elsewhere in Europe. Sales of Nokian Noktop truck tyre retreading materials grew from the previous year, and the scheduled price increases were carried out. As usual, sales of retreading materials are expected to peak towards the year-end.


In the January to June period, the Vianor tyre chain generated net sales of EUR 87.6 million (EUR 77.0 million), showing an increase of 13.8% on the corresponding period in 2001. Operating result before the depreciation of goodwill totalled EUR -2.5 million (EUR -1.0 million). Depreciation of goodwill amounted to EUR 4.0 million (EUR 3.7 million). Cash flow II was EUR -13.2 million (EUR 3.5 million). The comparative cash flow II figure for 2001 include profits from sales of fixed assets EUR 2.8 million. Q2 operating profit and cash flow improved compared to the previous year.

Vianor's figures include 13 new sales outlets acquired in Sweden at the end of last year. The lion share of sales is generated during the second half of the year, while structural costs depress results during the first half.

The majority of Vianor's operating profit and a strong cash flow are generated in the final quarter of the year.

The passenger car summer tyre season was good in all Nordic countries, and Vianor was able to raise its market shares. Sales of agricultural tyres also picked up. Meanwhile the demand for new and retreaded truck tyres was weak in all Nordic countries. The consumer prices of tyres were raised.  

Getting fixed costs under control was the key priority at Vianor. Overlapping activities were rationalised and low-profit sales outlets were closed down and sold in Finland. Cost adjustment measures will continue in Sweden and Norway in the second half of the year.  

At the end of the period, Vianor had 162 outlets and it employed 1,197 people (1,065).  


The RoadSnoop pressure watch was presented to tyre retail and wholesale early in the year, and the product attracted a great deal of attention. In fact, market demand exceeded expectations, and the order book is large.  

Getting the product for manufacture took longer than was anticipated, which is why the production launch was rescheduled for August. At the same time, a few minor changes were made to the pressure watch that will enhance the product's profitability and functionality, and make it easier to install. Nokian Tyres expects to sell the planned number of pressure watches during the course of 2002.  Research and development on new RoadSnoop products continues.    


Investments during the period under review totalled EUR 15.6 million (EUR 26.4 million). The most important investments included the acquisition of new moulds, as well as investments in machinery and equipment to eliminate production bottlenecks. Nokian Tyres has budgeted total investments of EUR 37.0 million for 2002.


Co-operation between Nokian Tyres and Amtel

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

Most likely to be called Amtel-Nokian Trading, the joint venture will produce tyres under Nokian and Nordman brands in Russia and the CIS countries. Annual production capacity is 3 million tyres. The first Nokian branded tyres are going to be produced in Russia, in 2004. The facilities are expected to operate to full capacity by 2007. Total investments in the new manufacturing facilities will reach USD 110 million with first year, i.e. year 2003, investment of 38 million, and with the equity ratio of 30-40%.    

Amtel Holding 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 - 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.


Even though uncertainty continues to overshadow the general global economy, the outlook for Nokian Tyres for the second half of the year is positive. The company is well positioned to outperform the results of 2001 in terms of growth and profit.

The result of Nokian Tyres is dominantly made during the second half of the year, particularly in the final quarter of the year. Consequently, the company will focus sharply on the upcoming winter tyre season for maximum performance both in manufacturing business and in Vianor tyre chain

The winter tyre season is expected to be better than the previous one in the Nordic countries and elsewhere in Europe. Heavy snowfalls last winter helped eliminate dealers' excess winter tyre stocks. In Sweden, the demand for winter tyres is expected to grow, since the current year will be a year for winter tyre replacement as winter tyres became compulsory three years ago.

Furthermore, the closing down of the Gislaved factory strengthened Nokian Tyres' position as a winter tyre manufacturer. Demand for winter tyres is also expected to pick up in Russia and the USA.  

As a result of completed investments and the efficiency-boosting measures, production volume will further grow and productivity will improve.   Off-take manufacturing in Poland, Indonesia and the USA will provide the company with additional capacity. More capacity is now available also in Russia, where Amtel will manufacture roughly 200,000 Nordman-brand tyres for the Russian market during the year-end.  

The product range includes a number of new products, and the Nokian brand awareness and its market share have improved in the key markets. In addition, Vianor has been able to improve its market shares, and close co-operation with the manufacturing business will generate more synergy benefits.

Special attention will be paid to customer service in both the manufacturing business and in Vianor during the peak season. The new logistics centre that was introduced this spring, is now working to full capacity, which will help secure a higher level of service in the winter tyre season.

Demand for heavy special tyres appears to be recovering slowly, and brisker demand for retreading materials is expected in the second half of the year.  

Raw material prices are expected to remain at the previous year's level, which means that raw material prices for the whole year are estimated to be approximately 3% lower than in the previous year.

Cost adjustment measures and structural rearrangements will be made particularly in Vianor in Sweden and Norway. Special attention will be paid to strengthening the balance sheet and cash flow.  


Million euros       4-6/02  4-6/01  1-6/02   1-6/01  Last 12  1-12/01
Net sales             108,8   95,0   193,3    171,6    445,1    423,4
Operating expenses     90,4   78,3   167,5    148,2    360,8    341,6
Depreciation according
to plan                 8,6    8,2    17,1     16,7     31,7     31,3
Operating result        9,8    8,5     8,7      6,7     52,6     50,5
Financial income
and expenses           -3,4   -3,1    -6,3     -6,3    -13,5    -13,5
Result before extra-
ordinary items and tax  6,4    5,4     2,4      0,4     39,1     37,0
Extraordinary items     0,0    0,0     0,0      0,0      0,0      0,0
Direct tax for the
period  1)              2,1    2,5     1,4      1,2     12,1     11,9
Profit applicable to
minority shareholders   0,0    0,0     0,0      0,0      0,0      0,0
Net result              4,3    3,0     1,0     -0,8     27,0     25,2

CONSOLIDATED BALANCE SHEET         30.6.02  30.6.01          31.12.01

Intangible assets                     13,4     14,6              14,0
Goodwill                              44,2     47,5              47,8
Tangible assets                      199,1    198,0             196,5
Investments                            0,6      0,3               0,4
Inventories                           99,6     98,7              87,0
Receivables                          103,4    101,4              95,9
Cash in hand and at bank               6,8      9,5              18,2

Shareholders' equity                 142,4    123,4             149,0
Capital loan                          36,0     36,0              36,0
Minority shareholders' interest        0,0      0,0               0,0
Long-term liabilities
interest bearing                     115,3    161,2             137,0
non interest bearing                  19,6     17,1              19,1
Current liabilities
interest bearing                      87,5     64,3              39,4
non interest bearing                  66,3     68,0              79,2

Total assets                         467,1    470,1             459,8

Interest bearing net debt            195,9    216,0             158,2
Capital expenditures                  15,6     26,4              45,3
Personnel average                    2 624    2 572             2 636

KEY RATIOS                         30.6.02  30.6.01  Last 12 31.12.01

Earnings per share, euro              0,10    -0,07    2,55      2,38
Equity ratio, % 2)                    38,2     33,9              40,2
Equity ratio, %                       30,5     26,2              32,4
Gearing, %      2)                   109,8    135,5              85,5
Shareholders' equity
per share, euro                      13,46    11,66             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 4-6/02  4-6/01  1-6/02   1-6/01           1-12/01

Net sales            108,8    95,0   193,3    171,6             423,4
Manufacturing         63,0    55,6   126,6    112,2             274,7
Vianor                55,3    47,6    87,6     77,0             193,5

Operating result       9,8     8,5     8,7      6,7              50,5
Manufacturing          7,8     6,6    16,1     11,4              50,3
Vianor                 2,1     1,9    -6,5     -4,7              -0,5

Cash Flow II           0,3   -24,4   -18,8    -22,8              47,7
Manufacturing          1,8   -16,4    -6,4    -22,3              30,0
Vianor                -1,8    -4,5   -13,2      3,5              18,4

Million euros

Mortgages                              0,7      0,7               0,7
Pledged assets                         0,0      0,1               0,1
Guarantees                             2,8      4,3               1,2

The amount of debts with security      0,0      2,9               0,0

Guarantees                             0,1      0,0               0,0

Leasing and rent
commitments                           38,5     30,2              27,6
Acquisition commitments                0,2      5,3               0,6

Interest rate swaps
Fair value                            -0,6      0,3              -1,0
Underlying value                      40,0     33,4              37,5

Forward contracts
Fair value                             0,6     -0,8              -0,4
Underlying value                      60,3     46,5              50,9

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