Russia continues to depress Nokian sales

May 8, 2015

Nokian Tyres plc's net sales decreased in the first quarter of 2015 ended March 31, 2015, by 9.8% to 281.3 million euros, compared to 311.9 million euros in the same period of 2014. Currency rate changes cut net sales by 29.1 million euros compared with the rates in Q1/2014.

Operating profit was down 29.4% to 48.3 million euros (68.4 million euros in Q1/2014). Operating profit percentage was 17.2% (21.9% in Q1/2014).

Profit for the period increased by 249.3% amounting to 135.3 million euros (38.7 million euros in Q1/2014). The company returned the 2007-2010 total additional taxes and punitive interests of 100.3 million euros to the financial result based on the annulment decision made by the Board of Adjustment of Finnish Tax Administration.

Earnings per share were up by 249.5% to 1.02 euros (0.29 euro in Q1/2014).

Full year financial guidance reiterated

In 2015, with current exchange rates, net sales and operating profit are to decline slightly compared to 2014.

From Ari Lehtoranta, CEO and president:

“The end of the year 2014 was very volatile in Russia. Oil price, Ruble valuation and purchasing behavior changed on a daily basis following the slightest moves in geopolitical and economic environment. The situation has somewhat stabilized and our first quarter has gone according to our plans. Biggest negative impacts have come from currency valuations and delay in the start of the winter tire sales in Russia. While the whole market has gone down in Russia and CIS (the Commonwealth of Independent States, formerly the USSR), we have been able to improve market share, volumes and margins in all other markets. This is due to our competitive product portfolio, expanding distribution, improved productivity and excellent people.

"Currency rate changes cut our net sales by 29.1 million euros. Local price changes and increasing success in SUV tires compensated part of the drop. Together with the raw material cost gone down by 15%, these helped us to maintain a reasonable operating profit level of 17.2%. According to the tax decision by Board of Adjustments, we returned the 2007-2010 total additional taxes of 100.3 million euros to the financial result, which improved our net profit accordingly.

"Our distribution network keeps on growing; the current number of Vianor stores is 1,371, the NAD network has already grown to 930 stores and the new N-Tyre partner concept has 67 stores in operation. The competitiveness of our product portfolio continues to improve; we have launched new winter tires and all-weather tires for Central Europe and North America, and the magazine test success has remained on good level. Our heavy tires and Vianor business units increased their sales and heavy tires also its profitability. Vianor’s decline in profitability is explained by the seasonality.

"Even if the market development visibility in Russia and CIS is still poor at the moment, we remain confident about our future. We reiterate our guidance for the year and feel positive about the growth opportunities for the future.”