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Fri February 7 08:00 am 2014 in category Stock exchange releases
Nokian Tyres plc Financial Statement Bulletin 2013 7 February 2014, 8 a.m.

Nokian Tyres plc Financial Statement Bulletin 2013:


Improved market shares and solid margins in challenging conditions



10-12/2013



Nokian Tyres Group’s Net sales in the fourth quarter were EUR 411.8 million (EUR 446.4 million in 10-12/2012). Operating profit amounted to EUR 93.2 million (111.8), including expensed credit losses and provisions of EUR 8.4 million (0.4). Result for the period was EUR -36.4 million (88.3), due to the additional taxes of EUR 100.3 million in Finland from years 2007-2010. Earnings per share amounted to EUR -0.28 (EUR 0.67).

1-12/2013



Nokian Tyres Group’s Net sales decreased by 5.7% to EUR 1,521.0 million (EUR 1,612.4 million in 2012). Operating profit was down by 7.1% to EUR 385.5 million (415.0), including expensed credit losses and provisions of EUR 14.3 million (5.3). Profit for the period amounted to EUR 183.7 million (330.9), penalized by exceptional additional taxes of EUR 100.3 million in Finland from years 2007-2010. Earnings per share amounted to EUR 1.39 (EUR 2.52). Cash flow from operations was EUR 325.6 million (EUR 262.3 million). The Board of Directors proposes a dividend of EUR 1.45 (EUR 1.45) per share.

Outlook



The market demand for replacement car tyres is expected to show growth in the Nordic countries and in Central Europe in 2014. In Russia relatively low GDP growth and flat car sales still limit growth in tyre demand. Heavy industrial tyre demand in Nokian core products is expected to improve clearly. The pricing environment for 2014 remains tight for all tyre categories.

Nokian Tyres sales are expected to show growth in 2014, with a slow start in Q1. Sales in all target markets, Nordic countries, Central Europe, North America and Russia & CIS are expected to grow in 2014. Some growth is targeted in all core product groups. Margins will be supported by easing of raw material costs (€/kg) by 16% in Q1/2014 year-over-year and 5% in full year 2014, providing a tailwind of EUR 22 million versus 2013.

Financial guidance



In 2014, the company is positioned to show growth in Net sales and Operating profit.

Kim Gran, President and CEO:



“Nokian Tyres’ strong market leader position in Russia and Nordic countries improved further in 2013 and we managed again to increase both market share and our distribution footprint. The newly launched Nokian Hakkapeliitta 8 winter tyre set new standards for winter tyres and helped us to maintain price leadership, to improve sales mix and to book good growth in the premium segment. Despite the headwind from the markets in 2013 we maintained a reasonably good level of profitability and provided strong cash flow. The company is debt free with a strong balance sheet, which gives us a good platform to create further growth and improve owner value. In 2014 we see signs of recovery, especially in Central Europe, and we aim to grow our top line and to provide healthy margins on the back of our renewed successful product lines, expanding distribution, efficient industrial structure and decreasing raw material cost.

Nokian Tyres’ sales in the Nordic countries were again solid, and our already strong market position was further improved by clear growth especially in Sweden. Our market share improved to an all-time high 37% of winter tyres in the Nordic region. Our sales growth in Russia took a breath, even though we managed again to grow winter tyre sales clearly in a weaker market. One of our highlights was a clear improvement in our CE sales. The expansion of our distribution network in CE is starting to pay dividends with sales volumes increasing faster than the average market demand. We showed clear growth in Germany, Poland and France.

Our sales mix was strong securing an almost flat ASP (€/kg) of -1.1% in a challenging market. Our margins were good while the result was being pulled in two directions: a strong tailwind from material cost was challenged by the unfavourable exchange rate of the Russian Rouble and a tough pricing environment. A reasonable utilization rate and an increased share of Russian production compensated for the increased depreciation and marketing costs.

We continued to develop and improve productivity and our industrial structure. In Q1 we commissioned another line (line 12) in the Russian factory and followed up in Q2 with installation of line 13. This took the annualized capacity in Russia to more than 15 million tyres by end of 2013. We have an inbuilt capability to increase our output rapidly without capex to meet market growth.

Expanding our distribution network continued as we opened 169 new Vianor stores in 2013, now totalling 1,206 stores in 27 countries. In Russia Nokian dealership programs now include nearly 3,300 tyre stores and car dealers. A new softer partner franchise model Nokian Authorized Dealer (NAD) has also been rolled out with 432 shops contracted in Europe and China.

Our net profit was hit hard in Q4 by exchange rate changes and by additional taxes of EUR 100.3 million in Finland. We strongly disagree with the tax decision, which we consider to be in conflict with legislation and tax agreements. We will appeal against this decision in all instances necessary, and trust that the decision will be revised.

We are looking into the future with confidence. With the expanded product range combined with the overwhelming test victories in all core markets in 2013, our product offering is the best we have ever had. Our market geography is showing signs of improving demand and our tyre chains Vianor and NAD are to be expanded further, offering us a good base to increase sales in 2014. Lower material cost and a higher share of Russian production will support our profitability.”

Read the whole stock exchange release here.