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Tue October 27 02:00 pm 2020 in category Stock exchange releases

Nokian Tyres plc Interim Report January–September 2020: Good performance in a volatile market environment

Nokian Tyres plc Interim Report January–September 2020, October 27, 2020 at 2:00 p.m.

This release is a summary of Nokian Tyres’ Interim Report January–September 2020. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.

July–September 2020

  • Net sales were EUR 349.9 million (354.5 in July−September 2019). With comparable currencies, net sales increased by 3.3%.
  • Segments operating profit was EUR 69.3 million (74.9), with negative currency impact. Operating profit was EUR 62.3 million (67.5).
  • Segments earnings per share were EUR 0.44 (0.43). Earnings per share were EUR 0.38 (0.37).
  • Cash flow from operating activities was EUR 7.1 million (-88.7).

January–September 2020                    

  • Net sales were EUR 900.4 million (1,110.6 in January−September 2019). With comparable currencies, net sales decreased by 15.9% especially due to COVID-19, measures taken to reduce high carry-over stocks in the Russian distribution channel, and mild winter in all main markets.
  • Segments operating profit was EUR 110.1 million (230.4), with negative currency impact. The decline was driven by lower volumes and underabsorption of factory costs. EUR -61.5 million of items were booked as non-IFRS exclusions. Operating profit was EUR 48.6 million (215.5).
  • Segments earnings per share were EUR 0.60 (2.43; positively impacted by EUR 1.08 related to the rulings on the tax disputes). Earnings per share were EUR 0.22 (2.31; positively impacted by EUR 1.08 related to the rulings on the tax disputes).
  • Cash flow from operating activities was EUR -6.6 million (-178.5).
  • Guidance was withdrawn in March 2020 due to increased uncertainty in the car and tire market. Given the continuous uncertainties, the company refrains from giving a guidance for 2020.
  • The Board has decided on the distribution of a second dividend instalment of EUR 0.35 per share.

Jukka Moisio, President and CEO:

“In July-September 2020, our sales with comparable currencies increased, driven by North America and Central Europe. Net sales of Passenger Car Tyres increased in all areas except Russia, where we have successfully continued the measures to reduce high carry-over stocks in the distribution channel. Heavy Tyres and Vianor maintained their previous year’s performance level, which is a good achievement in a volatile market environment. Segments operating profit declined slightly from the comparison period, mainly due to the lower passenger car tire sales in Russia.

Good development was partly driven by some sales shifting from the second quarter to the third quarter as result of improved customer confidence. We have responded to the changes in demand with fast measures. At the same time, we have continued to manage costs prudently while preserving cash and maintaining our strong balance sheet. In the third quarter, operating cash flow developed positively and was significantly higher than in the comparison period.

Nokian Tyres has made significant investments in recent years. The investment phase is starting to be behind us, which will further support our free cash flow generation. Now we need to make sure that we benefit from these investments in the best possible way. In the Nokia factory, we will continue to increase heavy tires production, while the passenger car tire manufacturing will focus on the production of high-quality premium car tires and prototyping.

The fourth quarter of the year is typically seasonally strong to us, however, the uncertainty in the market continues. We have proven the resilience of our business model and the ability of our team to adapt to the changing market conditions. Going forward, top-line growth continues to be our top priority. Expanding product portfolio will be a key driver for boosting sales.”

Key figures, EUR million

  7–9
/20
7–9
/19
Change
%
CC*
Change
%
1–9
/20
1–9
/19
Change
%
CC*
Change
%
2019
Net sales 349.9 354.5 -1.3% 3.3% 900.4 1,110.6 -18.9% -15.9% 1,585.4
Operating profit 62.3 67.5     48.6 215.5     316.5
Operating profit % 17.8% 18.9%     5.4% 19.2%     19.8%
Profit before tax 56.2 62.1     35.1 241.7     336.7
Profit for the period 52.5 51.1     30.1 318.8     399.9
EPS, EUR ** 0.38 0.37     0.22 2.31     2.89
Segments operating profit 69.3 74.9     110.1 230.4     337.2
Segments operating profit % 19.8% 21.1%     12.2% 20.7%     21.3%
Segments EPS, EUR** 0.44 0.43     0.60 2.43     3.06
Segments ROCE, %***         9.5% 22.1%     18.6%
Equity ratio, %         57.5% 66.3%     75.9%
Cash flow from operating activities 7.1 -88.7     -6.6 -178.5     219.8
Gearing, %         18.5% 25.0%     2.3%
Interest-bearing
net debt
        280.6 422.6     41.1
Capital expenditure 31.0 88.1     118.5 236.1     299.6

* Comparable currencies
** EPS 1-9/2019 excl. the impact of the rulings on the tax disputes of EUR 1.08 were EUR 1.23. Segments EPS 1-9/2019 excl. the impact were EUR 1.35.
*** Rolling 12 months

BUSINESS UNIT REVIEWS

Passenger Car Tyres

  7–9
/20
7–9
/19
Change
%
CC*
Change
%
1–9
/20
1–9
/19
Change
%
CC*
Change
%
2019
Net sales, M€ 254.9 256.7 -0.7% 4.8% 609.2 806.5 -24.5% -21.3% 1,123.8
Segment operating profit, M€ 71.8 75.6     111.3 226.3     308.5
Segment operating profit % 28.2% 29.5%     18.3% 28.1%     27.4%

* Comparable currencies

Heavy Tyres

  7–9
/20
7–9
/19
Change
%
CC*
Change
%
1–9
/20
1–9
/19
Change
%
CC*
Change
%
2019
Net sales, M€ 49.8 52.2 -4.5% -2.0% 141.4 148.2 -4.6% -2.8% 202.7
Segment operating profit, M€ 7.8 8.3     18.7 25.6     35.7
Segment operating profit % 15.8% 15.9%     13.2% 17.3%     17.6%

* Comparable currencies

Vianor, own operations

  7–9
/20
7–9
/19
Change
%
CC*
Change
%
1–9
/20
1–9
/19
Change
%
CC*
Change
%
2019
Net sales, M€ 67.4 69.7 -3.3% -1.2% 202.7 216.4 -6.4% -3.1% 336.5
Segment operating profit, M€ -3.2 -3.8     -6.0 -6.4     7.7**
Segment operating profit % -4.8% -5.5%     -3.0% -3.0%     2.3%
Number of own service centers at period end 175 189             189

* Comparable currencies
** Including EUR 2.0 million profit from sale of real estate

CONFERENCE CALL

A conference call for investors, analysts and media will be held on October 27, 2020 at 3:00 p.m. Finnish time. In the call, President and CEO Jukka Moisio and CFO Teemu Kangas-Kärki will present the financial results.

To participate, please dial in 5−10 minutes before the beginning of the event:

Finland: +358 981 710 310
Sweden: +46 856 642 651
UK: +44 333 300 08 04
US: +1 631 913 1422

PIN: 66819301#

The call can also be listened live via www.nokiantyres.com/resultinfo-Q3-2020.

A recording of the conference call and a transcript will be available on the company’s website later.

FINANCIAL REPORTING

Financial Statement Release 2020 will be published on February 9, 2021.

Releases and company information are available at www.nokiantyres.com/company/investors/.

Nokian Tyres plc

Päivi Antola
SVP, Corporate Communications and Investor Relations

Further information:
Jukka Moisio, President and CEO, tel: +358 10 401 7742
Teemu Kangas-Kärki, CFO, tel: +358 10 401 7750
Päivi Antola, SVP, Corporate Communications and Investor Relations, tel: +358 10 401 7327

Distribution: Nasdaq Helsinki, media, www.nokiantyres.com


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