Tue February 18 12:00 am 2003 in category Stock exchange releases
Nokian Tyres plc Stock Exchange Bulletin 18.02.2003 at 8 a.m.
NOKIAN TYRES IN 2002
Group's net sales and operating profit improved markedly. All product areas, including Vianor, improved operating profits. Profit before taxes was up 29.5% to EUR 48.0 million (2001:EUR 37.0 million). EPS were EUR 3.17 (EUR 2.38). Net sales was up 13.2% to EUR 479.2 million (EUR 423.4 million). The Board of Directors proposes that a dividend 35% of the net profit, i.e. EUR 1.11 (0.83) per share, be distributed.
NET SALES AND PROFIT
The situation in Nokian Tyres' main markets and key products was more favourable than a year ago, although the uncertainty in the global economy continued to impact on the tyres business. The demand for passenger car winter tyres and high performance summer tyres, forestry tyres and special heavy tyres increased in the key markets. In Finland and Sweden the sales of new cars increased. The strongest growth areas for Nokian Tyres included the Nordic countries, Sweden in particular, as well as East Europe, Russia and the USA. Raw material prices were lower than the previous year throughout the year, but the last quarter saw an upturn in the prices.
Nokian Tyres Group performed well in 2002. Net sales were up and the operating profit improved both in manufacturing and in Vianor. Market shares in the main market areas increased remarkably. Co-operation between manufacturing and Vianor produced synergy benefits and the share of Nokian branded tyres increased in Vianor's sales. Production volumes increased and profitability improved, particularly in the passenger car tyre production.
October-December 2002
Nokian Tyres Group booked net sales of EUR 168.0 million (2001: EUR 145.7 million). Net sales from manufacturing grew by 21.4% and Vianor's net sales by 7.6% from the previous year.
The raw material costs of the manufacturing business remained at the previous year's level.
Fixed costs increased by 11.1% to EUR 48.8 million (EUR 43.9 million).
The Group's operating profit improved, totalling EUR 36.1 million (EUR 25.2 million). Operating profit from the manufacturing business amounted to EUR 23.5 million (EUR 16.3 million) while Vianor's operating profit before goodwill depreciation was EUR 10.6 million (EUR 7.9 million). Goodwill depreciation amounted to EUR 2.0 million (EUR 1.9 million) and concerned Vianor.
The Group's profit before taxes was up to EUR 33.2 million (EUR 21.8 million). Operating profit for the period rose to EUR 23.7 million
(EUR 16.1 million).
January-December 2002
In 2002 Nokian Tyres booked net sales of EUR 479.2 million (EUR 423.4 million), which is 13.2% more than in the previous year. Net sales from manufacturing grew by 14.5% and Vianor's net sales by 11.8% from the previous year. Invoicing from outside Finland accounted for 70% (68%) of the net sales. Sales in the Nordic countries increased by 10.8%, in Russia and other CIS countries by 25.0%, in Eastern Europe by 18.0% and in North America by 27.2% from the previous year.
Good sales mix, implemented price increases and improved productivity boosted the company's profitability. Raw material costs in manufacturing were 3% lower than the average prices in 2001.
The Group's fixed costs increased by EUR 19.6 million, or 13.0%, and totalled EUR 170.8 million (EUR 151.2 million). Fixed costs represented 35.6% (35.7%) of net sales. The tyre chain accounted for EUR 8.7 million of the fixed cost growth.
The Group's operating profit improved, totalling EUR 60.1 million (EUR 50.5 million). The comparable figure for 2001 includes EUR 3.9 million profits from the sales of fixed assets. Operating profit from the manufacturing business amounted to EUR 59.5 million (EUR 50.3 million) while Vianor's operating profit before goodwill depreciation was EUR 8.9 million (EUR 7.1 million). Goodwill depreciation amounted to EUR 7.9 million (EUR 7.5 million) and concerned Vianor. Net financial expenses were EUR 12.1 million (EUR 13.5 million) and represented 2.5% (3.2%) of net sales.
Profit before taxes was up to EUR 48.0 million (EUR 37.0 million). Net profit for the period improved, totalling EUR 33.6 million (EUR 25.2 million). Earnings per share were EUR 3.17 (EUR 2.38) i.e. 33.2% better than the previous year.
Return on net assets (RONA) was 15.0% (12.8%). Income financing after the change in working capital, investments and the sales of fixed assets (Cash Flow II) was EUR 70.1 million (EUR 22.5 million), showing an improvement of EUR 22.5 million from the previous year. Equity ratio rose from 40.2% to 46.9% and included the capital loan.
Product development costs totalled EUR 8.5 million (EUR 8.3 million), representing 2.7% of the net sales from manufacturing.
Over the year the Group employed some 2,663 people on average (2,636). Meanwhile, the parent company employed 1,334 (1,383) people.
At the end of the financial year the Group employed 2,585 (2,664) people and the parent company 1,340 (1,361). At the year-end Vianor employed 1,150 (1,213) people.
MANUFACTURING
Passenger car tyres
Net sales generated from the Nokian passenger car tyre business grew 17.5% from the previous year and amounted to EUR 242.8 million (EUR 206.6 million). The operating profit improved, totalling EUR 51.4 million (EUR 41.5 million).
Sales of Nokian passenger car tyres developed favourably in the key markets in Europe, Russia and the USA, and market shares improved. The development was particularly positive in Sweden, a significant target for the company because of the change in the competitive scene. Market shares also improved in Norway.
The demand for Nokian WR, the new winter tyre designed for Central European markets, was boosted by the top ratings in winter tyre tests of German magazines.
Approximately 100,000 Nordman branded winter tyres were manufactured at Amtel factories in Russia, which sold very well. Other contract manufacturing proceeded as planned.
Winter tyres and other products with high profit margins accounted for a large portion of total sales. Winter tyres represented 73% and new products 44% of the product area net sales.
The advantages of the own tyre chain and its special expertise were effectively utilised and special emphasis was given to customer service during the peak seasons. Thanks to intensified logistics solutions, seasonal delivery capacity improved considerably from the previous year.
In the course of the period the company introduced two new ultra high performance summer tyres for high-performance cars, Nokian NRVi and Nokian NRY. The markets in this product segment are expanding strongly in Central Europe. The tyres will be available for consumers in the spring of 2003.
Production volumes increased from 4.8 million to 5.1 million tyres. Sales volume of the product area was 5,3 million tyres. Productivity (kg/man hour) improved by 5.6% from the previous year.
Heavy tyres
Net sales of Nokian heavy tyres business totalled EUR 55.0 million (EUR 51.3 million), showing an increase of 7.0% from the previous year. The operating profit improved, totalling EUR 4.7 million (EUR 1.7 million). The increased capacity usage in the production of core products and a better sales mix had a positive impact on the result.
The early months of the year saw an upturn in the demand for special heavy tyres, which increased towards the end of the year. The increase was strongest in the demand for forestry tyres and the special radial agricultural tyres. Tyres sold particularly well in the Nordic countries. Original equipment installation represented 40.7% of the net sales.
The annual output of the heavy tyres unit was 8,670 tons (8,782 tons in 2001). New products accounted for 10.3% of the product area's net sales. Contract manufacturing proceeded as planned.
Bicycle tyres
Net sales from Nokian bicycle tyres totalled EUR 5.5 million (EUR 5.3 million), showing an increase of 4.8% from the previous year, while the overall market for bicycle tyres shrank by roughly 10 %. The operating profit and the cash flow were positive and clearly better than a year ago. The positive result was due to active product development and the development of the distribution chain, as well as production efficiency boosting.
Sales focused on volume tyres sold both in the original equipment and replacement markets. Nokian Tyres consolidated its market position also in all-terrain bicycle tyres and other special tyres. The demand for studded bicycle winter tyres increased in the Nordic countries. Sales developed favourably in Sweden, Norway and Northern America, in particular.
New products accounted for 16% of the product area net sales. Manufacturing volumes at the Lieksa factory totalled 830,000 (815,000) bicycle tyres.
Retreading materials
Net sales from the Nokian retreading materials business was
EUR 11.2 million (EUR 11.4 million), i.e. 2.2% less than a year ago, but the profitability in the product area improved from the previous year.
Demand for retreading materials was clearly slower than the previous year; in particular, the demand for car tyre retreading materials was weak. The sales of high margin winter treads developed more favourably.
New products accounted for 7.8% of the product area's net sales. Production volumes decreased from 4,727 tons to 4,326 tons.
VIANOR
Vianor's net sales grew by 11.8% on the previous year to EUR 216.2 million (EUR 193.4 million). Operating profit before goodwill depreciation improved, totalling EUR 8.9 million (EUR 7.1 million). Goodwill depreciation amounted to EUR 7.9 million (EUR 7.5 million). Cash flow II totalled EUR 10.3 million (EUR 18.4 million).
Both the winter and summer seasons were successful for Vianor and the chain increased its market share in all Nordic countries. The strongest increase was seen in the sales to car dealers and wholesalers. The demand for truck tyres picked up markedly towards the end of the year. Sales of agricultural tyres were also strong. The consumer prices, as well as Vianor's service prices, were raised.
During the year Vianor implemented significant streamlining measures, which were particularly successful at Vianor in Finland. The result of Vianor Finland was all-time high. In Sweden and Norway the streamlining measures are yet to be completed.
ROADSNOOP
The development and production start-up of the RoadSnoop pressure watch, demonstrated early in the year, has taken longer than expected. Interest in the product continues to be high and the advance order book is strong. Because of delayed production start-up, the sales target set for 2002 was not reached. The product is expected to enter the market during the first half of 2003.
INVESTMENTS
Nokian Tyres spent a total of EUR 26.0 million on investments in 2002 (EUR 45.3 million). Investments in production and operations accounted for some EUR 25.2 million. Vianor's investments amounted to EUR 3.0 million (EUR 11.1 million). In 2002 the majority of investments were moulds for new products, as well as machinery and equipment purchases to remove production bottlenecks.
OTHER MATTERS IN 2002
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.
Nokian Tyres' co-operation with Amtel
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 parties had earlier agreed to launch the contract manufacturing of Nordman branded tyres at Amtel factories in Russia in the autumn of 2002.
In December Nokian Tyres plc and the Russian company Amtel Holdings B.V. signed a joint venture agreement. The joint venture will organise and manage the development, production and sales of Nordman and Amtel branded passenger car tyres and light truck tyres in the CIS countries. The contractual arrangement is to be closed within 180 days of the signing of the contract.
The agreement means that the parties will form a joint sales company and Nokian Tyres and Amtel will both have a 50% holding of the shares. The company will be called OOO Amtel-Nokian Tyres and it will be registered in Russia. The products sold by the sales company will be manufactured at the Amtel factories in Kirov and Voronezh in Russia and the Rosava plant in Belaya Tserkov in the Ukraine. The objective is to manufacture 900,000 tyres in 2003 and 3.6 million tyres in 2004. Amtel will have the main responsibility for manufacturing Nordman and Amtel branded tyres.
To improve the quality and capacity of the Amtel plants, investments of roughly EUR 25 million are needed at the Voronezh and Kirov plants in 2003 and 2004. The parties will arrange the financing together. The share of Nokian Tyres will amount to roughly USD 10 million.
Nokian Tyres and Amtel will further develop their partnership by establishing a new tyre factory in Russia. The objective is to increase production capacity and volumes for their joint sales company. The new production facilities will be used for manufacturing Nokian branded high-quality tyres. Nokian Tyres will have the majority and main responsibility for the new plant. The objective for the first phase is to achieve an annual production volume of 1.2 million tyres within two years of the final approval of the project agreement on the new plant.
MATTERS AFTER THE PERIOD UNDER REVIEW
Nokian Tyres and Matador to start contract manufacturing
In January Nokian Tyres Plc and Matador AS signed a contract manufacturing agreement. According to the agreement, Matador will begin manufacturing Nokian branded passenger car summer tyres in the S, T and H speed categories at its plant in Slovakia. Nokian Tyres will sell the products in the Eastern European countries and the tyres will form part of the Nokian Tyres product range.
With co-operation in contract manufacturing, Nokian Tyres is ensuring opportunities for growth in Eastern Europe, a strongly expanding market. At the same time, production capacity at the Nokia plant in Finland will become available for the manufacture of ultra high performance tyres.
The first tyres will enter the markets in the first quarter in 2003. The objective is for Matador to manufacture 100,000 tyres for Nokian Tyres in 2003 and to increase its production volume to 300,000 tyres in 2004-2005.
The agreement will be valid until the end of 2005 and to be renewed after that for one year at a time.
A new studded winter tyre for the Nordic and Russian markets
Nokian Tyres announced that it will introduce a new studded passenger car winter tyre, Nokian Hakkapeliitta 4. Targeted at the Nordic and Russian markets, the tyre will be available to customers in the autumn of 2003. When the tyre was designed, special emphasis was placed on the tyre grip and environmental issues.
The grip of Nokian Hakkapeliitta 4 is based on a number of creative solutions, such as new stud technology and structural solutions that improve driving stability. The new stud technology is called Nokian Eco Stud System 4 and there is a patent pending.
The grip properties are improved by the special rape-seed oil used in the tread mixture. In addition to the rape-seed oil, only low aromatic oils are used in the tread mixture.
OUTLOOK FOR 2003
Uncertain trends in the global economy and the pressure to increase raw material prices continue to reflect on the tyre industry. Raw materials prices are expected to go up by approximately 5% during the first quarter of the year from the corresponding period last year.
According to its strategy, Nokian Tyres will focus on expanding and profitable winter and forestry tyre markets and product areas. There are several opportunities for growth in the core areas and the company also holds an increasingly strong position in these areas. The demand for passenger car winter tyres, high-performance summer tyres and special heavy tyres is expected to further increase in Europe and Russia.
The company continues its operations in a profitable growth curve, aiming at outperforming the results of 2002 in terms of net sales and profit in 2003.
As in previous years, the first quarter will be weak. The demand for tyres in the domestic market is normally slow early in the year, while fixed costs that are not linked to sales will tax the profitability. The profits will be made during the second half, and particularly in the final quarter because of the winter season.
Nokian Tyres is well positioned to meet the growing demand in its core areas. Production capacity at the Nokia plant is increasing and productivity is improving. As contract manufacturing increases, more of the Nokia plant's capacity will be available for the manufacture of special products with high profit margins. Co-operation with Amtel will cement the market position in Russia, and the contract manufacturing of Nordman branded tyres will expand the sales in the strongly growing Russian market. Contract manufacturing in Eastern Europe provides the company with good opportunities for meeting the growing markets.
The product mix will further improve as it has been expanded with several new products in the top segments. The car summer and winter tyre novelties as well as the new heavy tyres will be available in the course of the year.
Vianor continues efficiency boosting measures. The share of own products will be increased and cost adjustment measures will be carried out, particularly in Sweden and Norway.
The aim is to improve return on capital and to limit the growth of fixed costs. Investments will be focused on removing production bottlenecks. Budgeted investments for 2003 total EUR 52.0 million. Investments will be production investments and moulds for new products. The figure also includes investments related to the joint venture established with Amtel in Russia.
Nokia, 18 February 2003
Board of Directors
NOKIAN TYRES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
NOKIAN TYRES IN 2002
Group's net sales and operating profit improved markedly. All product areas, including Vianor, improved operating profits. Profit before taxes was up 29.5% to EUR 48.0 million (2001:EUR 37.0 million). EPS were EUR 3.17 (EUR 2.38). Net sales was up 13.2% to EUR 479.2 million (EUR 423.4 million). The Board of Directors proposes that a dividend 35% of the net profit, i.e. EUR 1.11 (0.83) per share, be distributed.NET SALES AND PROFIT
The situation in Nokian Tyres' main markets and key products was more favourable than a year ago, although the uncertainty in the global economy continued to impact on the tyres business. The demand for passenger car winter tyres and high performance summer tyres, forestry tyres and special heavy tyres increased in the key markets. In Finland and Sweden the sales of new cars increased. The strongest growth areas for Nokian Tyres included the Nordic countries, Sweden in particular, as well as East Europe, Russia and the USA. Raw material prices were lower than the previous year throughout the year, but the last quarter saw an upturn in the prices.
Nokian Tyres Group performed well in 2002. Net sales were up and the operating profit improved both in manufacturing and in Vianor. Market shares in the main market areas increased remarkably. Co-operation between manufacturing and Vianor produced synergy benefits and the share of Nokian branded tyres increased in Vianor's sales. Production volumes increased and profitability improved, particularly in the passenger car tyre production.
October-December 2002
Nokian Tyres Group booked net sales of EUR 168.0 million (2001: EUR 145.7 million). Net sales from manufacturing grew by 21.4% and Vianor's net sales by 7.6% from the previous year.
The raw material costs of the manufacturing business remained at the previous year's level.
Fixed costs increased by 11.1% to EUR 48.8 million (EUR 43.9 million).
The Group's operating profit improved, totalling EUR 36.1 million (EUR 25.2 million). Operating profit from the manufacturing business amounted to EUR 23.5 million (EUR 16.3 million) while Vianor's operating profit before goodwill depreciation was EUR 10.6 million (EUR 7.9 million). Goodwill depreciation amounted to EUR 2.0 million (EUR 1.9 million) and concerned Vianor.
The Group's profit before taxes was up to EUR 33.2 million (EUR 21.8 million). Operating profit for the period rose to EUR 23.7 million
(EUR 16.1 million).
January-December 2002
In 2002 Nokian Tyres booked net sales of EUR 479.2 million (EUR 423.4 million), which is 13.2% more than in the previous year. Net sales from manufacturing grew by 14.5% and Vianor's net sales by 11.8% from the previous year. Invoicing from outside Finland accounted for 70% (68%) of the net sales. Sales in the Nordic countries increased by 10.8%, in Russia and other CIS countries by 25.0%, in Eastern Europe by 18.0% and in North America by 27.2% from the previous year.
Good sales mix, implemented price increases and improved productivity boosted the company's profitability. Raw material costs in manufacturing were 3% lower than the average prices in 2001.
The Group's fixed costs increased by EUR 19.6 million, or 13.0%, and totalled EUR 170.8 million (EUR 151.2 million). Fixed costs represented 35.6% (35.7%) of net sales. The tyre chain accounted for EUR 8.7 million of the fixed cost growth.
The Group's operating profit improved, totalling EUR 60.1 million (EUR 50.5 million). The comparable figure for 2001 includes EUR 3.9 million profits from the sales of fixed assets. Operating profit from the manufacturing business amounted to EUR 59.5 million (EUR 50.3 million) while Vianor's operating profit before goodwill depreciation was EUR 8.9 million (EUR 7.1 million). Goodwill depreciation amounted to EUR 7.9 million (EUR 7.5 million) and concerned Vianor. Net financial expenses were EUR 12.1 million (EUR 13.5 million) and represented 2.5% (3.2%) of net sales.
Profit before taxes was up to EUR 48.0 million (EUR 37.0 million). Net profit for the period improved, totalling EUR 33.6 million (EUR 25.2 million). Earnings per share were EUR 3.17 (EUR 2.38) i.e. 33.2% better than the previous year.
Return on net assets (RONA) was 15.0% (12.8%). Income financing after the change in working capital, investments and the sales of fixed assets (Cash Flow II) was EUR 70.1 million (EUR 22.5 million), showing an improvement of EUR 22.5 million from the previous year. Equity ratio rose from 40.2% to 46.9% and included the capital loan.
Product development costs totalled EUR 8.5 million (EUR 8.3 million), representing 2.7% of the net sales from manufacturing.
Over the year the Group employed some 2,663 people on average (2,636). Meanwhile, the parent company employed 1,334 (1,383) people.
At the end of the financial year the Group employed 2,585 (2,664) people and the parent company 1,340 (1,361). At the year-end Vianor employed 1,150 (1,213) people.
MANUFACTURING
Passenger car tyres
Net sales generated from the Nokian passenger car tyre business grew 17.5% from the previous year and amounted to EUR 242.8 million (EUR 206.6 million). The operating profit improved, totalling EUR 51.4 million (EUR 41.5 million).
Sales of Nokian passenger car tyres developed favourably in the key markets in Europe, Russia and the USA, and market shares improved. The development was particularly positive in Sweden, a significant target for the company because of the change in the competitive scene. Market shares also improved in Norway.
The demand for Nokian WR, the new winter tyre designed for Central European markets, was boosted by the top ratings in winter tyre tests of German magazines.
Approximately 100,000 Nordman branded winter tyres were manufactured at Amtel factories in Russia, which sold very well. Other contract manufacturing proceeded as planned.
Winter tyres and other products with high profit margins accounted for a large portion of total sales. Winter tyres represented 73% and new products 44% of the product area net sales.
The advantages of the own tyre chain and its special expertise were effectively utilised and special emphasis was given to customer service during the peak seasons. Thanks to intensified logistics solutions, seasonal delivery capacity improved considerably from the previous year.
In the course of the period the company introduced two new ultra high performance summer tyres for high-performance cars, Nokian NRVi and Nokian NRY. The markets in this product segment are expanding strongly in Central Europe. The tyres will be available for consumers in the spring of 2003.
Production volumes increased from 4.8 million to 5.1 million tyres. Sales volume of the product area was 5,3 million tyres. Productivity (kg/man hour) improved by 5.6% from the previous year.
Heavy tyres
Net sales of Nokian heavy tyres business totalled EUR 55.0 million (EUR 51.3 million), showing an increase of 7.0% from the previous year. The operating profit improved, totalling EUR 4.7 million (EUR 1.7 million). The increased capacity usage in the production of core products and a better sales mix had a positive impact on the result.
The early months of the year saw an upturn in the demand for special heavy tyres, which increased towards the end of the year. The increase was strongest in the demand for forestry tyres and the special radial agricultural tyres. Tyres sold particularly well in the Nordic countries. Original equipment installation represented 40.7% of the net sales.
The annual output of the heavy tyres unit was 8,670 tons (8,782 tons in 2001). New products accounted for 10.3% of the product area's net sales. Contract manufacturing proceeded as planned.
Bicycle tyres
Net sales from Nokian bicycle tyres totalled EUR 5.5 million (EUR 5.3 million), showing an increase of 4.8% from the previous year, while the overall market for bicycle tyres shrank by roughly 10 %. The operating profit and the cash flow were positive and clearly better than a year ago. The positive result was due to active product development and the development of the distribution chain, as well as production efficiency boosting.
Sales focused on volume tyres sold both in the original equipment and replacement markets. Nokian Tyres consolidated its market position also in all-terrain bicycle tyres and other special tyres. The demand for studded bicycle winter tyres increased in the Nordic countries. Sales developed favourably in Sweden, Norway and Northern America, in particular.
New products accounted for 16% of the product area net sales. Manufacturing volumes at the Lieksa factory totalled 830,000 (815,000) bicycle tyres.
Retreading materials
Net sales from the Nokian retreading materials business was
EUR 11.2 million (EUR 11.4 million), i.e. 2.2% less than a year ago, but the profitability in the product area improved from the previous year.
Demand for retreading materials was clearly slower than the previous year; in particular, the demand for car tyre retreading materials was weak. The sales of high margin winter treads developed more favourably.
New products accounted for 7.8% of the product area's net sales. Production volumes decreased from 4,727 tons to 4,326 tons.
VIANOR
Vianor's net sales grew by 11.8% on the previous year to EUR 216.2 million (EUR 193.4 million). Operating profit before goodwill depreciation improved, totalling EUR 8.9 million (EUR 7.1 million). Goodwill depreciation amounted to EUR 7.9 million (EUR 7.5 million). Cash flow II totalled EUR 10.3 million (EUR 18.4 million).
Both the winter and summer seasons were successful for Vianor and the chain increased its market share in all Nordic countries. The strongest increase was seen in the sales to car dealers and wholesalers. The demand for truck tyres picked up markedly towards the end of the year. Sales of agricultural tyres were also strong. The consumer prices, as well as Vianor's service prices, were raised.
During the year Vianor implemented significant streamlining measures, which were particularly successful at Vianor in Finland. The result of Vianor Finland was all-time high. In Sweden and Norway the streamlining measures are yet to be completed.
ROADSNOOP
The development and production start-up of the RoadSnoop pressure watch, demonstrated early in the year, has taken longer than expected. Interest in the product continues to be high and the advance order book is strong. Because of delayed production start-up, the sales target set for 2002 was not reached. The product is expected to enter the market during the first half of 2003.
INVESTMENTS
Nokian Tyres spent a total of EUR 26.0 million on investments in 2002 (EUR 45.3 million). Investments in production and operations accounted for some EUR 25.2 million. Vianor's investments amounted to EUR 3.0 million (EUR 11.1 million). In 2002 the majority of investments were moulds for new products, as well as machinery and equipment purchases to remove production bottlenecks.
OTHER MATTERS IN 2002
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.
Nokian Tyres' co-operation with Amtel
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 parties had earlier agreed to launch the contract manufacturing of Nordman branded tyres at Amtel factories in Russia in the autumn of 2002.
In December Nokian Tyres plc and the Russian company Amtel Holdings B.V. signed a joint venture agreement. The joint venture will organise and manage the development, production and sales of Nordman and Amtel branded passenger car tyres and light truck tyres in the CIS countries. The contractual arrangement is to be closed within 180 days of the signing of the contract.
The agreement means that the parties will form a joint sales company and Nokian Tyres and Amtel will both have a 50% holding of the shares. The company will be called OOO Amtel-Nokian Tyres and it will be registered in Russia. The products sold by the sales company will be manufactured at the Amtel factories in Kirov and Voronezh in Russia and the Rosava plant in Belaya Tserkov in the Ukraine. The objective is to manufacture 900,000 tyres in 2003 and 3.6 million tyres in 2004. Amtel will have the main responsibility for manufacturing Nordman and Amtel branded tyres.
To improve the quality and capacity of the Amtel plants, investments of roughly EUR 25 million are needed at the Voronezh and Kirov plants in 2003 and 2004. The parties will arrange the financing together. The share of Nokian Tyres will amount to roughly USD 10 million.
Nokian Tyres and Amtel will further develop their partnership by establishing a new tyre factory in Russia. The objective is to increase production capacity and volumes for their joint sales company. The new production facilities will be used for manufacturing Nokian branded high-quality tyres. Nokian Tyres will have the majority and main responsibility for the new plant. The objective for the first phase is to achieve an annual production volume of 1.2 million tyres within two years of the final approval of the project agreement on the new plant.
MATTERS AFTER THE PERIOD UNDER REVIEW
Nokian Tyres and Matador to start contract manufacturing
In January Nokian Tyres Plc and Matador AS signed a contract manufacturing agreement. According to the agreement, Matador will begin manufacturing Nokian branded passenger car summer tyres in the S, T and H speed categories at its plant in Slovakia. Nokian Tyres will sell the products in the Eastern European countries and the tyres will form part of the Nokian Tyres product range.
With co-operation in contract manufacturing, Nokian Tyres is ensuring opportunities for growth in Eastern Europe, a strongly expanding market. At the same time, production capacity at the Nokia plant in Finland will become available for the manufacture of ultra high performance tyres.
The first tyres will enter the markets in the first quarter in 2003. The objective is for Matador to manufacture 100,000 tyres for Nokian Tyres in 2003 and to increase its production volume to 300,000 tyres in 2004-2005.
The agreement will be valid until the end of 2005 and to be renewed after that for one year at a time.
A new studded winter tyre for the Nordic and Russian markets
Nokian Tyres announced that it will introduce a new studded passenger car winter tyre, Nokian Hakkapeliitta 4. Targeted at the Nordic and Russian markets, the tyre will be available to customers in the autumn of 2003. When the tyre was designed, special emphasis was placed on the tyre grip and environmental issues.
The grip of Nokian Hakkapeliitta 4 is based on a number of creative solutions, such as new stud technology and structural solutions that improve driving stability. The new stud technology is called Nokian Eco Stud System 4 and there is a patent pending.
The grip properties are improved by the special rape-seed oil used in the tread mixture. In addition to the rape-seed oil, only low aromatic oils are used in the tread mixture.
OUTLOOK FOR 2003
Uncertain trends in the global economy and the pressure to increase raw material prices continue to reflect on the tyre industry. Raw materials prices are expected to go up by approximately 5% during the first quarter of the year from the corresponding period last year.
According to its strategy, Nokian Tyres will focus on expanding and profitable winter and forestry tyre markets and product areas. There are several opportunities for growth in the core areas and the company also holds an increasingly strong position in these areas. The demand for passenger car winter tyres, high-performance summer tyres and special heavy tyres is expected to further increase in Europe and Russia.
The company continues its operations in a profitable growth curve, aiming at outperforming the results of 2002 in terms of net sales and profit in 2003.
As in previous years, the first quarter will be weak. The demand for tyres in the domestic market is normally slow early in the year, while fixed costs that are not linked to sales will tax the profitability. The profits will be made during the second half, and particularly in the final quarter because of the winter season.
Nokian Tyres is well positioned to meet the growing demand in its core areas. Production capacity at the Nokia plant is increasing and productivity is improving. As contract manufacturing increases, more of the Nokia plant's capacity will be available for the manufacture of special products with high profit margins. Co-operation with Amtel will cement the market position in Russia, and the contract manufacturing of Nordman branded tyres will expand the sales in the strongly growing Russian market. Contract manufacturing in Eastern Europe provides the company with good opportunities for meeting the growing markets.
The product mix will further improve as it has been expanded with several new products in the top segments. The car summer and winter tyre novelties as well as the new heavy tyres will be available in the course of the year.
Vianor continues efficiency boosting measures. The share of own products will be increased and cost adjustment measures will be carried out, particularly in Sweden and Norway.
The aim is to improve return on capital and to limit the growth of fixed costs. Investments will be focused on removing production bottlenecks. Budgeted investments for 2003 total EUR 52.0 million. Investments will be production investments and moulds for new products. The figure also includes investments related to the joint venture established with Amtel in Russia.
Nokia, 18 February 2003
Board of Directors
NOKIAN TYRES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Million euros 10-12/02 10-12/01 1-12/02 1-12/01 Change-%
Net sales 168.0 145.7 479.2 423.4 13.2
Operating expenses 122.9 111.3 384.2 345.5 11.2
Depreciation according
to plan 7.0 6.7 27.0 23.8 13.3
Operating result before
non-recurring items and
goodwill amortisations 38.1 27.7 68.0 54.2 25.5
Non-recurring items 0.0 -0.6 0.0 3.9 -100.0
Goodwill amortisations 2.0 1.9 7.9 7.5 5.4
Operating result 36.1 25.2 60.1 50.5 18.9
Financial income
and expenses -2.9 -3.4 -12.1 -13.5 -10.2
Result before extra-
ordinary items and tax 33.2 21.8 48.0 37.0 29.5
Extraordinary items 0.0 0.0 0.0 0.0
Direct tax for the
period 1) 9.5 5.7 14.4 11.9 21.5
Profit applicable to
minority shareholders 0.0 0.0 0.0 0.0
Net result 23.7 16.1 33.6 25.2 33.2
CONSOLIDATED BALANCE SHEET 31.12.02 31.12.01
Intangible assets 12.5 14.0
Goodwill 40.8 47.8
Tangible assets 195.4 196.5
Investments 0.6 0.4
Inventories 78.8 87.0
Receivables 102.2 95.9
Cash in hand and at bank 20.5 18.2
Shareholders' equity 175.4 149.0
Capital loan 36.0 36.0
Minority shareholders' interest 0.0 0.0
Long-term liabilities
interest bearing 98.0 137.0
non interest bearing 20.5 19.1
Current liabilities
interest bearing 44.9 39.4
non interest bearing 76.1 79.2
Total assets 450.9 459.8
Interest bearing net debt 122.5 158.2
Capital expenditures 26.0 45.3
Personnel average 2,663 2,636
KEY RATIOS 31.12.02 31.12.01 Change-%
Earnings per share, euro 3.17 2.38 33.2
Earnings per share, diluted, euro 3.13 2.37 32.1
Equity ratio, % 2) 46.9 40.2
Equity ratio, % 38.9 32.4
Gearing, % 2) 57.9 85.5
Shareholders' equity
per share, euro 16.57 14.08 17.7
Number of shares
(1,000 units) 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 10-12/02 10-12/01 1-12/02 1-12/01 Change-%
Net sales 168.0 145.7 479.2 423.4 13.2
Manufacturing 100.2 82.6 314.5 274.7 14.5
Vianor 81.6 75.8 216.2 193.5 11.8
Operating result 36.1 25.2 60.1 50.5 18.9
Manufacturing 23.5 16.3 59.5 50.3 18.3
Vianor 8.6 6.0 0.9 -0.5 301.3
Operating result before
goodwill amortisations
Vianor 10.6 7.9 8.9 7.1 25.7
Cash Flow II 93.8 68.6 70.1 47.7 47.1
Manufacturing 67.5 53.7 59.3 30.0 97.8
Vianor 26.5 16.2 10.3 18.4 44.0
CONTINGENT LIABILITIES 31.12.02 31.12.01
Million euros
FOR OWN DEBT
Mortgages 1.0 0.7
Pledged assets 0.0 0.1
ON BEHALF OF OTHER COMPANIES
Guarantees 0.0 0.0
OTHER OWN COMMITMENTS
Guarantees 1.0 1.2
Leasing and rent
commitments 38.7 27.6
Acquisition commitments 1.2 0.6
INTEREST RATE DERIVATIVES
Interest rate swaps
Fair value