Thu April 27 12:00 am 2000 in category Stock exchange releases
Nokian Tyres plc Stock Exchange Bulletin 27 April 2000 8.00 am
Earnings per share for the first quarter of 2000 stood at -0.41 euros (0.10 euros during the corresponding period of 1999). Net sales increased by 18.4% and totalled 67 million euros (57 million euros). Profits nearly reached their planned targets, which take into account the adverse effects of the own tyre chain at the beginning of the year. The target for the year is a similar sales and profit increase as in previous years.
NET SALES AND PROFIT
Nokian Tyres' net sales in January-March 2000 amounted to 67 million euros (57 million euros), which is 18.4% higher than in the corresponding period of the previous year. Commensurate net sales excluding company acquisitions in 1999 was 60 million euros, which is 7% more than the previous year. The percentage of foreign invoicing was 70% (71%) of net sales. Sales in all key countries have increased since the previous year. Sales profitability remained at the same level as the previous year.
Fixed costs increased by 11 million euros, which is 48% higher than the previous year and amounted to 33 million euros (22 million euros). The increase was due to company acquisitions in 1999.
The operating profit of Nokian Tyres Group stood at -4.4 million euros (2.7 million euros). The operating profit in manufacturing amounted to 2.9 million euros (5.8 million euros) and the operating profit of the tyre chain was -6.0 million euros (-2.9 million euros).
Net financial expenses stood at 2.1 million euros (1.0 million euros).
Raw material prices increased by 4%, but the increase is yet to affect the profits of this financial period.
Profit before tax amounted to -6.6 million euros (1.7 million euros). The profit for this financial period was -4.3 million euros (1.1 million euros). Commensurate profit for the financial period, that is, profit excluding Nokian Tyres' company acquisitions in 1999 was -1.8 million euros.
As Nokian Tyres' own tyre chain has increased, the emphasis of Nokian Tyres' profits will again be increasingly on the second half of the year.
The average number of employees in the group during the period was 2.258 (1.793) and, at the end of the review period, the company had 2.257 (1.813) employees. At the end of the review period, the tyre chain employed 798 (412) people.
PASSENGER CAR TYRES
Demand for passenger car tyres was particularly affected by price pressures on summer tyres, which resulted in less advance sales to tyre retailers, who timed their purchases to be closer to the actual consumer sales season. The long winter in the Nordic countries pushed forward sales of summer tyres.
Particularly in Sweden, sales of summer tyres were quiet, because drivers were using new winter tyres, as winter tyres only became compulsory this winter, and the need to buy new summer tyres moved forward.
Sales of Nokian passenger car tyres amounted to 34.0 million euros (32.8 million euros), which is 4% more than the previous year. Sales were particularly good in Sweden and in Germany.
The Nokian NRH2 summer tyre launched this spring and the V rated Nokian NRV summer tyre were well accepted on the market. The Nokian NRV received the joint best results in the German ADAC's tyre test, which is the most prestigious tyre test in Europe. The test was published in the Auto, Motor und Sport magazine, among others.
In January, Nokian Tyres introduced a new winter tyre family comprising four new winter tyres: the Nokian Hakkapeliitta 2 studded winter tyre and three new van winter tyres tailored for different market areas. These new products will strengthen Nokian Tyres' market position both in the Nordic countries and in Europe. New tyres will start to be sold to the public this autumn.
Demand for heavy tyres remained high in almost all strategic market areas. The storms that raged in Europe at the end of the year increased the need for tree harvesting, which in turn increased demand for forestry machinery and forestry tyres.
Sales of Nokian heavy tyres stood at 13.2 million euros (12.9 million euros), that is 3% higher than during the corresponding period in the previous year. Sales of forestry tyres and special radial tyres were particularly good.
Sales of truck tyres were brisker than the previous year, but due to tough price competition, volumes were lower than planned. The new Nokian NTR 831 truck tyre, which was introduced last autumn, received favourable feedback from customers.
Ending the off-take manufacturing agreement last December decreased sales of agricultural and industrial tyres. During the review period, a new manufacturing partner could not be found for those products.
The new radial heavy tyres were well received on the market. This year, a lot of new products will be included in heavy tyre product range.
Sales of Nokian bicycle tyres stood at 1.6 million euros (1.8 million euros), which is 12% lower than the previous year. Sales on the domestic replacement market were livelier than last year, but original equipment sales did not reach their targets. The main reason for this was a decline in bicycle production.
In Europe, demand for bicycle tyres was clearly lower than in the previous year, which affected exports of Nokian bicycle tyres.
The outlook for the rest of the year is good, thanks to new product families, increased off-take manufacturing and a renewed retail network. Speciality tyre sales will be expanded to completely new market areas.
Demand for bus and truck tyre retreading materials in all main market areas was higher than the previous year, but passenger car tyre retreading volumes have declined since the previous year.
Nokian Tyres' retreading material sales stood at 2.1 million euros (1.7 million euros), which is 19% more than the previous year.
New products and increased marketing efforts strengthened the market position of Nokian brand retreading materials in Finland and in all important export countries.
In the Nordic tyre market, sales were particularly low at the beginning of the year because of the long winter season.
Nokian Tyres' tyre chain sales stood at 22.4 million euros (9.4 million euros), which is 139% higher than the corresponding period last year. Commensurate net sales excluding company acquisitions stood at 11 million euros. The operating profit of tyre chain was -6.0 million euros (-2.9 million euros), that is, relative profitability remained the same as in 1999.
Acquisition of Rengasmestarit-Kumi-Helenius Group
In March, Nokian Tyres announced that it was to strengthen its tyre chain, which was already the largest in the Nordic countries, by purchasing Rengasmestarit-Kumi-Helenius Group that has 31 outlets in Finland. As a result of the acquisition, Nokian Tyres' tyre chain covers the whole of Finland. The purchase price was 8.3 million euros and the company was sold by Mr. Matti Kupiainen and his children.
The purchase price was paid in cash in instalments during March. The profit of Rengasmestarit-Kumi-Helenius Group will be consolidated during the last quarter of the year at the latest.
As a result of the acquisition, Nokian Tyres now has a total of 153 outlets in Finland, Sweden, Norway, Estonia and Latvia. In 1999, net sales from tyre chain stood at 100 million euros. The target for net sales from tyre chain in 2000 is 200 million euros.
Unification and development of the own tyre chain are Nokian Tyres' short-term targets. The target is to develop both traditional outlets as well as outlets with city centre locations focusing on quick service for passenger car drivers. The roles of retreading, spare parts and real estate also need to be clarified. There are plans to expand the own tyre chain in Sweden in particular.
Nokian Tyres' brand policy is that 50% of products on sale will be Nokian brand and 50% other manufacturers' brands. Two thirds of the company's net sales will continue to come from outside the company's own tyre chain.
As a result of the increased share of the tyre chain operations, the year's profit and net sales development will be increasingly dependent on the final quarters of the year. The tyre chain has the same growth and profitability targets as Nokian Tyres' other operations.
During the first quarter, the investment programme proceeded as planned. In 2000, the company aims to invest a total of approximately 60 million euros. The most significant investment this year will be the expansion of the mixing department.
During the review period, investments were 14.4 million euros (8.6 million euros). Machinery installation at the new 11,000 m2 heavy tyre building hall continued on schedule and will be completed during the summer. Passenger car tyre production will start to use the production space that heavy tyres will vacate and will thus be able to increase its production capacity.
DECISIONS AT THE ANNUAL GENERAL MEETING
The Annual General Meeting of Nokian Tyres plc, held on 29 March 2000, adopted the company's financial statements of 1999 and the members of the Board of Directors and the President were discharged from liability. The meeting agreed that a dividend be distributed for 0.85 euros (FIM 5.05) per share. The matching date was 3 April 2000 and the payment date was 10 April 2000.
The Board of Directors will have five members. The following members were re-elected: Olli-Pekka Kallasvuo, member of Nokia Corporation's Board of Directors; Lasse Kurkilahti, President and CEO of Nokian Tyres plc; Matti Oksanen, Senior Vice President, Fortum Oil and Gas Oy; Hannu Penttilä, Deputy Managing Director of Stockmann plc and Antti Saarialho, Professor.
Authorised public accountants KPMG Wideri Oy are to continue as auditors.
Nokian Tyres' Annual General Meeting authorised Nokian Tyres' Board of Directors to decide upon increasing the share capital with one or more rights issues within a year of the registration of the authorisation. The Board of Directors also has the right to deviate from the shareholders' pre-emptive right to subscribe stock, provided that there is a compelling corporate reason. The share capital of the company may increase by a maximum of FIM 20 million (3.4 million euros) as a result of the shares issues included in the authorisation. A maximum of 2,000,000 new shares can be issued, each bearing a nominal value of FIM 10 (1.68 euros).
Results of the public purchase offer on Isko Oyj
Nokian Tyres' purchase offer on all Isko Oyj's shares that was started on 28 December 1999 ended on 28 January 2000. On the ending date of the public purchase offer, Nokian Tyres owned or had received approval for all 900,000 K and 890,076 A shares in Isko, which corresponds to approximately 99.4% of Isko shares and approximately 99.9% of the votes of all shares.
Nokian Tyres has started redemption of the rest of the shares according to the regulations of the Companies' Act.
Nokian Tyres' subordinated loan 1/2000
Nokian Tyres financed the acquisition of Isko Oyj with equity securities. The amount of the subordinated loan is 36 million euros and the coupon interest rate is 7.25%. The subscription date of the loan was 16 March 2000 by 1 p.m.. The issue price of the loan is 101,018. There were a total of 17 approved subscriptions and the subscriptions amounted to a total of 70.2 million euros. The loan was oversubscribed by approximately 1.9 times.
The subscriptions of the investors were approved by 51.28%. In the allocation, subscriptions of 5 million euros have been rounded down to the nearest 100,000 euros and other subscriptions have been rounded up to the nearest 100,000 euros.
The payment date of the subscriptions was 27 March 2000. The shares have been applied to be quoted on Helsinki Exchanges' main list so that trading started on 28 March 2000. The loan was arranged by Leonia Corporate Bank Oyj.
The Board of Directors decided in a meeting held on 14 February 2000 that Nokian Tyres would apply Helsinki Exchanges' Regulations on Insider Trading valid as of 1 March 2000.
MATTERS SUBSEQUENT TO THE FINANCIAL PERIOD
Subscription of bonds with warrants
37,500 Nokian Tyres shares had been subscribed with warrants pertaining to the 1996 bonds by 3 April 2000. An increase in share capital will be registered on the trade register in May 2000. The total subscription price is 285,709 euros. 5,000 shares from the 1996 bonds remain unsubscribed.
The number of Nokian Tyres' shares is 10,582,286 shares. The company's share capital amounts to 17,798,127 euros.
Approval by competition authorities
Competition authorities approved the purchase of Rengasmestarit-Kumi-Helenius Group in April.
OUTLOOK FOR THE END OF THE YEAR
Competition will continue to be tough particularly on the passenger car tyre market and price pressures will increase especially for tyres with lower speed ratings. Demand for both studded and studless winter tyres as well as summer tyres with high speed ratings is expected to continue to grow. The sales prospects of heavy tyres also look promising.
Raw material prices are expected to increase by 8% from the previous year.
Nokian Tyres focuses on premium quality speciality products and will launch a record-breaking number of new products in all product areas and increase its production capacity. Changes to the production structure will continue to be strong.
Additionally, the company has an expanded tyre chain and benefits from synergy in purchasing, marketing and administration.
Nokian Tyres continues to invest in increasing awareness of the Nokian brand. According to an independent research institute, the Nokian brand has developed extremely well and awareness and willingness to buy the Nokian brand have clearly increased in the Nordic countries. Actions to strengthen the brand in Germany are also well underway. So far, the brand-building efforts have mainly concentrated on Nokian brand passenger car tyres, but the Nokian Heavy Tyres product area has now also started to invest in actions to strengthen the Nokian brand.
During the first quarter, Nokian Tyres has negotiated intensively with several tyre manufacturers. The negotiations have dealt with co-operation in off-take manufacturing, product development and tyre chain. Targets for the co-operation include speeding up growth and improving profitability. Negotiations are expected to be completed by midsummer.
Nokian Tyres' target for the year 2000 is to improve its sales and profits according to previous years.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Thousand euros 1-3/00 1-3/99 Change % 1-12/99
Net sales 67,147 56,719 18.4 322,623
Operating expenses 65,227 49,519 31.7 260,748
to plan 6,364 4,527 40.6 19,754
Operating profit -4,444 2,674 -266.2 42,122
and expenses -2,149 -1,018 111.1 -6,194
Profit before extra-
ordinary items and tax -6,593 1,656 -498.2 35,928
Extraordinary items 0 0 -447
Direct tax for the year -2,288 600 -481.6 9,797
Profit applicable to
minority shareholders 0 0 -3
Net profit -4,305 1,056 -507.6 25,682
CONSOLIDATED BALANCE SHEET 31.3.00 31.3.99 31.12.99
Goodwill 50,636 13,785 50,716
Fixed assets 172,145 131,248 163,625
Inventories 79,457 60,618 68,368
Receivables 99,535 74,578 94,876
Cash in hand and at bank 7,350 7,211 14,263
Shareholders' equity 108,063 94,924 121,000
Capital loan 36,000 0 0
Minority shareholders' Interest 149 0 148
interest bearing 137,475 82,203 127,472
non interest bearing 17,466 13,195 16,607
interest bearing 37,663 39,368 57,174
non interest bearing 72,306 57,751 69,447
Total assets 409,123 287,440 391,849
Interest bearing net debt 167,789 114,359 170,384
Capital expenditures 14,378 8,623 85,681
Personnel 2,258 1,793 2,023
KEY RATIOS 31.3.00 31.3.99 Change % 31.12.99
Earnings per share, euro -0.41 0.10 -501.0 2.51
Equity ratio, % *) 35.2 33.0 30.9
Equity ratio, % 26.4 33.0 30.9
Gearing, % 155.1 120.5 140.6
per share, euro 10.25 9.12 12.3 11.47
Number of shares
(1,000 units) 10,545 10,406 10,545
*) Capital loan is included
FOR OWN DEBT
Mortgages 5,787 460 7,375
Mortgage on company assets 8,662 0 11,353
Pledged assets 67 0 67
Guarantees 1,177 1,177 1,177
ON BEHALF OF OTHER COMPANIES
Guarantees 6 9 9
OTHER OWN COMMITMENTS
Leasing and rent
commitments 15,911 4,094 2,988
Acquisition commitments 5,106 0 5,109
Not entered interest on
capital loan 29
INTEREST RATE DERIVATIVES
Interest rate swaps
Fair value 223 504 283
Underlying value 8,409 8,409 8,409
Fair value 41 0 41
Underlying value 5,046 0 5,046
Fair value -1,729 -514 -1,266
Underlying value 57,123 32,359 58,375
Fair value 76 0 148
Underlying value 6,000 10,240 7,000
Fair value -659 -169 -240
Underlying value 18,500 8,000 11,000
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.
Nokian Tyres plc
Vice President, Public Information
Further information: Mr. Lasse Kurkilahti, President and CEO,
tel. +358 3 3407 336
Distribution: HEX and Major Media