October-December 2015
- Net sales increased 11.1% to EUR 422.3 million (380.0 in 10-12/2014). Currency rate changes cut net sales by EUR 21.0 million compared with the rates in 10-12/2014.
- Operating profit increased 22.4% to EUR 94.8 million (77.5). Operating profit percentage was 22.5% (20.4%).
- Profit for the period decreased 133.5% to EUR -16.8 million (50.1). This includes additional taxes and punitive interest of EUR 94.1 million.
- Earnings per share were down 134.4% to EUR -0.13 (0.37).
January-December 2015
- Net sales decreased 2.1% to EUR 1,360.1 million (1,389.1 in 2014). Currency rate changes cut net sales by EUR 69.3 million compared with the rates in 2014.
- Operating profit was down 4.1% to EUR 296.0 million (308.7). Operating profit percentage was 21.8% (22.2%).
- Profit for the period increased 15.5% to EUR 240.7 million (208.4). In Q1 the company returned to the financial result the 2007-2010 total additional taxes and punitive interest of EUR 100.3 million, based on the annulment decision made by the Board of Adjustment of the Finnish Tax Administration. In December 2015 and in January 2016 the company received renewed reassessment decisions of EUR 94.1 million related to the ongoing tax dispute of years 2007-2010. The company recorded the amount as expenses in full in the financial statement and result for 2015. The net effect of the above described tax decisions related to the tax dispute 2007-2010 was EUR 6.2 million positive for the financial year 2015.
- Earnings per share were up 15.1% to EUR 1.80 (1.56).
- Cash flow from operations was EUR 311.1 (458.3).
Dividend
The Board of Directors proposes a dividend of EUR 1.50 (1.45) per share.
Financial guidance
In 2016, with current exchange rates, net sales and operating profit are to remain at the same level compared to 2015.
Key figures, EUR million
| 10-12 /15 |
10-12 /14 |
Change % |
2015 | 2014 | Change % |
|
| Net sales | 422.3 | 380.0 | 11.1 | 1,360.1 | 1,389.1 | -2.1 |
| Operating profit | 94.8 | 77.5 | 22.4 | 296.0 | 308.7 | -4.1 |
| Operating profit % | 22.5 | 20.4 | 21.8 | 22.2 | ||
| Profit before tax | 72.9 | 65.0 | 12.1 | 274.2 | 261.2 | 5.0 |
| Profit for the period | -16.8 | 50.1 | -133.5 | 240.7 | 208.4 | 15.5 |
| Earnings per share, EUR |
-0.13 | 0.37 | -134.4 | 1.80 | 1.56 | 15.1 |
| Equity ratio, % | 70.8 | 67.5 | ||||
| Cash flow from operations |
417.0 | 579.1 | -28.0 | 311.1 | 458.3 | -32.1 |
| RONA, % (roll. 12 months) |
18.5 | 18.3 | ||||
| Gearing, % | -16.9 | -13.6 |
Ari Lehtoranta, President and CEO:
“Despite the delayed winter season and Russia’s further deteriorating economic challenges, we were able to deliver strong results. Like we reported earlier, winter season deliveries moved later; in Central Europe in great extent even to the fourth quarter. Our teams were able to achieve market share gains based on the world’s safest product portfolio. North American and Russian winter seasons were almost non-existing and this resulted in lower sales in 2015 and higher inventory levels going to 2016 in these market areas.
Raw material cost decline supported our profitability in 2015. Good product mix, sales growth in 2H and improved productivity contributed also in profitability increase. Productivity improvement in passenger car tyre manufacturing was 5% in 2015 despite clearly lower volumes.
Heavy Tyres improved profitability and increased its net sales. Vianor was hit by the lack of winter and ended up in negative profitability.
One of our key strengths, our distribution network, continued to grow as planned. In 2015, we added over 500 new Vianor, NAD and N-Tyre outlets to our branded distribution network, and the current number of Vianor stores is 1,475 and the NAD/N-Tyre network has already grown to over 1,300 stores.
Russia is still our biggest single country in terms of sales. Russia’s economic outlook for 2016 is negative. This together with the North American inventory situation will limit our capability to grow this year. However, we are aiming at improving our profitability in 2016.
Our personnel has been doing great job everywhere. During 2015 we went through a difficult capacity reduction program in Nokia. At the same time, however, we have increased our investments in R&D, marketing and sales much more than the savings achieved in that program. These investments together with a strong balance sheet, positive cash flow and the whole organization delivering excellent results give us confidence about the positive future.”
Market situation
The global economy is estimated to pick up in 2016. The key issues influencing the global outlook: the gradual slowdown and rebalancing of economic activity in China, lower prices for energy and other commodities and a gradual tightening in monetary policy in the USA. Despite the anticipated improvement, the pace of the recovery is forecast to remain below pre-crisis levels. The USA continues still to be the growth engine. Also Europe is recovering. The global GDP is estimated to grow by 3.5% in 2016. The GDP growth estimates for Nordic countries are +0.5% – 3.8% and for Europe (including Nordics) +1.7%. The GDP in USA is estimated to grow by 2.7%. In Russia the GDP is expected to further decline between 0.3% and 3% depending on the scenario.
In the Nordic countries new car sales increased in 2015 by 9% year-over-year. The market volume of car tyres showed an increase of 5% compared to 2014, but for full year 2016 the increase is expected to be lower.
In Europe sales of new cars increased in 2015 by 9% year-over-year. Car tyre sell-in to distributors was up 3% compared with 2014, with winter tyre demand decreasing by 2%. Overall tyre demand is estimated to grow slightly in Central Europe in 2016. Pricing pressure is, however, tight.
In the USA estimated new car sales were up 6% 2015 vs. 2014. The market volume of car tyres was flat compared with 2014, due to specific reasons related to the punitive import duties imposed on Chinese tyre suppliers. Car tyre demand in North America is expected to grow by 2% in 2016 year-over-year.
Russia’s economic situation has remained challenging: according to the preliminary estimates, GDP contracted by 3.7% in 2015 vs. 2014. Year-on-year decline slowed down in Q4 compared to Q3; quarterly GDP is estimated to have grown in Q4 vs. Q3. Inflation continued to be high: consumer price index is estimated to have increased by 12.9% by year-end and by over 15% on average during the year, resulting in the cut of real wages of about 10%. Russian consumers’ purchasing power clearly weakened and consumer confidence remained at a very low level; in Q4 it continued to decline and approached historical minimum. As a result, consumers are holding back their spending: retail turnover remains quite sluggish, with only minor improvement on the way.
Sales of new cars in Russia in 2015 reached 1.601 million units, down by 35.7% vs. 2014. The decline in December (-45.7%) was higher than in the previous months, as expected, due to the peak in sales in December 2014 driven by the sharp devaluation of the ruble and consumers’ flight from the ruble. Car manufacturers have muted expectations for 2016. Their joint forecast for the year is 1.53 million units, further 4.4% decline from 2015, although many experts expect a bigger slump in sales, up to -25%. Nokian Tyres estimates new car sales in Russia to decline approximately 10 – 25%. Tyre market (sell-in in A+B segments) is estimated to have declined by approximately 20%, with continued shift towards cheaper segments and decrease of imports by 32%.
The global demand for special heavy tyres varied still strongly between product and market areas. OE forestry tyre demand continued to be strong. The increased use of wood and good profitability of pulp manufacturers will also support forestry machine and tyre demand during the following quarters.
In 2015 in Europe the sell-in of premium truck tyres was up 4%, and in the Nordic countries demand was flat year-over-year. Demand in North America showed growth. In Russia, however, demand for premium truck tyres decreased by 11% compared to 2014. Truck tyre demand in 2016 is estimated to show some increase or to be at the same level as in the previous year in all Nokian Tyres’ western markets; in Russia demand is expected to remain weak.
Raw materials
The tailwind from tyre industry raw material prices continued through 2015. Raw material costs (€/kg) for Nokian Tyres were down 13.1% in 2015 year-over-year, savings of approximately EUR 40 million. Raw material costs are estimated to decrease around 5% in full year 2016, providing a tailwind of approximately EUR 15 million versus 2015.
OCTOBER-DECEMBER 2015
Nokian Tyres Group recorded net sales of EUR 422.3 million (380.0), an increase of 11.1% compared with Q4/2014. Currency rate changes cut net sales by EUR 21.0 million. In the Nordic countries sales increased 6.4% year-over-year. Sales in Russia decreased 8.4%. Russia and CIS consolidated sales dropped 13.8%. In Other Europe sales were up 38.3% and in North America sales increased 10.7%.
The raw material cost (EUR/kg) in manufacturing increased 2.9% year-over-year and increased 4.1% versus the third quarter of 2015. Fixed costs amounted to EUR 114.2 million (109.6), accounting for 27.0% (28.9%) of net sales.
Nokian Tyres Group’s operating profit amounted to EUR 94.8 million (77.5), an increase of 22.4% compared with Q4/2014. The operating profit was negatively affected by the recognition of credit losses and provisions of EUR 11.3 million (4.0).
Net financial expenses were EUR 21.9 million (12.5). Net interest expenses were EUR 21.0 million (4.6). Net interest expenses include EUR 19.2 million penalty interest related to the tax dispute of 2007-2010. Net financial expenses include EUR 0.9 million (7.9) of exchange rate differences.
Profit before tax was EUR 72.9 million (65.0). Profit for the period amounted to EUR -16.8 million (50.1), and EPS were EUR -0.13 (0.37), penalized by the additional taxes of EUR 94.1 million in Finland, including punitive tax increases and interests based on the renewed reassessment decisions from the Tax administration related to the tax dispute 2007-2010 received in December 2015 and January 2016.
Income financing after the change in working capital, investments and the disposal of fixed assets (cash flow from operations) was EUR 417.0 million (579.1).
JANUARY-DECEMBER 2015
Nokian Tyres Group recorded net sales of EUR 1,360.1 million (1,389.1), a decrease of 2.1% compared with 2014. Currency rate changes cut net sales by EUR 69.3 million.
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