Nokian Tyres plc Financial Statement Release 2016: Strong Performance in Challenging Market Environment

HELSINKI, Finland, Feb 02, 2017 /PRNewswire/ -- This release is a summary of Nokian Tyres' Financial Statement Release 2016. The complete report is attached to this release. It is also available on the company website at https://www.nokiantyres.com/company/investors/.

October–December 2016

• Net sales increased by 9.1% to EUR 460.7 million (422.3 in 10–12/2015). Currency exchange rate changes affected net sales positively by EUR 4.1 million compared with the rates in 10–12/2015.
  
• Operating profit increased by 14.4% to EUR 108.5 million (94.8). Operating profit percentage was 23.5% (22.5%).
  
• The profit for the period increased by 643% to EUR 91.2 million (-16.8, including additional taxes and punitive interest of EUR 94.1 million in 2015).
  
• Earnings per share were EUR 0.67 (-0.13).
  
• Cash flow from operating activities was EUR 456.9 million (398.9). 
  

January–December 2016

• Net sales increased by 2.3% to EUR 1,391.2 million (1,360.1 in 2015). Currency exchange rate changes affected net sales negatively by EUR 29.9 million compared with the rates in 2015.
  
• Operating profit increased by 4.9% to EUR 310.5 million (296.0). Operating profit percentage was 22.3% (21.8%).
  
• The profit for the period increased by 4.6% to EUR 251.8 million (240.7). The net effect of the Finnish Tax Authorities' tax decisions related to the 2007–2010 tax dispute was positive by EUR 4.9 million for the full financial year 2016. The tax dispute for 2007–2010 is thoroughly described in the section "Tax rate".  
  
• Earnings per share were EUR 1.87 (1.80).
  
• Cash flow from operating activities was EUR 364.4 million (283.4), which was affected by the payment of EUR 51.0 million in additional taxes with punitive tax increases and interest concerning the tax years 2007–2010. The company paid the amount in January 2016.

Dividend

The Board of Directors proposes a dividend of EUR 1.53 (1.50) per share.

Financial guidance

In 2017, with the current exchange rates, net sales and operating profit are expected to grow by at least 5% compared to 2016. 

Key figures, EUR million

Andrei Pantioukhov, Interim President and CEO:

"In 2016, Nokian Tyres demonstrated strong performance in all its main market areas despite quite challenging market environment. Our net sales and profitability improved, along with the market shares.

The fourth quarter exceeded our expectations. Sales in all our main markets increased compared to the same period in the previous year. Russia was the biggest contributor to the growth in sales in Q4 – for the first time in a few years. The first encouraging signals that we reported in connection with the Q3 results continued to come from Russia. Russia's economy and consumer markets continue to gradually stabilize, but we expect the growth in 2017 to be moderate.

The winter season started early and continued strongly, especially in CE, the Nordic countries and Russia. We have succeeded in improving our market share in our target areas despite all the challenges, especially in Russia and Central Europe. Our overall performance in the fourth quarter was excellent, and led to a strong full-year result.

Our production volumes were higher than last year, and productivity continued to develop positively. Raw material costs started to increase, as forecasted. We estimate that the raw material costs will increase by approximately 15–20% for the full year 2017 vs. 2016. This development will definitely lead to price increases in the whole industry. We have already started to implement the necessary price increases in order to maintain our profitability.

The cash flow from operating activities was EUR 81 million better than last year. Investments in 2016 amounted to EUR 105.6 million. Profitability was weakened by bad debt provisions of EUR 18.6 million, most of which related to customer bankruptcies originated in year 2015 in Russia (EUR 16.9 million). However, the collection rate of 2016 current receivables in Russia was 100%.

The fourth quarter net sales in Passenger car tyres went up from last year, and so did the operating profit. ASP decreased only slightly this quarter, mainly due to currency effects. In Heavy Tyres, we continued making the necessary investments for the future. Net sales and operating profit were practically flat year-over-year.

Vianor's net sales increased slightly, but profitability was below the targeted level driven by operational challenges and non-recurrent items (ICT development project write-offs). In order for Vianor to achieve a positive result, a comprehensive profit improvement program will be launched in 2017. The growth of our distribution network was positive, despite large-scale tyre shop closures in Russia caused by difficult economic situation in Russia. The number of Vianor, NAD, and N-Tyre outlets in our network grew by 286 in 2016. Currently, the network includes 3,102 stores in total.

We launched top quality products during 2016, and our products continued to perform very well in magazine tests. The new flagship products for our winter tyre range, the Nokian Hakkapeliitta 9 and  Nokian Hakkapeliitta 9 SUV, along with new value-for-money products Nokian Nordman 7 and Nokian Nordman 7 SUV, will make our product portfolio even stronger.

Nokian Tyres is in great shape, and I am proud to be the interim President & CEO to lead the company forward. High customer satisfaction, an engaged organization, and the upcoming flow of new world's safest tyres create an excellent ground for future growth. In 2017, we expect net sales and operating profit to grow by at least 5% compared to 2016."

BUSINESS UNIT REVIEWS

Passenger Car Tyres 

Heavy Tyres

Vianor

Equity-owned operations

 * Excluding non-recurring items: Operating profit EUR 10.4 million, operating profit percentage 8.3%.
** Excluding non-recurring items: Operating profit EUR -4.5 million, operating profit percentage -1.3%.

The proposal for the use of profits by the Board of Directors

The distributable funds in the Parent company total EUR 608.6 million.

The Board of Directors proposes to the Annual General Meeting that

the distributable funds be used as follows:

No material changes have taken place in the financial position of the company since the end of the financial year. The liquidity of the company is good, and the proposed distribution of profits does not compromise the financial standing of the company, as perceived by the Board of Directors.

Press and analyst meetings

The result presentation for analysts and media will be held on February 2, 2017 at 10.00 a.m. Finnish time at Hotel Kämp (address Pohjoisesplanadi 29, Helsinki). Interim President and CEO Andrei Pantioukhov will present the result for 2016 and answer questions from the audience.

The presentation can be listened through audiocast via internet at www.nokiantyres.com/resultinfo-Q4-2016 starting at 10 a.m. 

The event can also be attended via conference call. Please dial in 5-10 minutes before the beginning of the event: FI: +358 9 8171 0495, UK: +44 20 3194 0552, SE: +46 8-5664-2702, US: +1 855-7161-597.

An audio file of the event will be available on the company's website later same day.

Reporting schedule

The 2016 Annual Report, Annual Financial Report, Corporate Governance Statement and Remuneration Statement for 2016 will be published on week 11 at the latest.

Interim Report January–March 2017 will be published on May 3, 2017. Releases and company information will be available at: https://www.nokiantyres.com/company/investors/. 

Further information:

Andrei Pantioukhov, Interim President and CEO, tel: +358-10-401-7733

Nokian Tyres plc

Antti-Jussi Tähtinen, Vice President, Marketing and Communications

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

Attachment: Nokian Tyres' Financial Statement Release 2016

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Related Links

https://www.nokiantyres.com/company/investors/