Nokian Tyres plc Stock Exchange Release 15 February 2007 9.00 a.m.
NOKIAN TYRES PLC FINANCIAL STATEMENTS BULLETIN 2006
In 2006 net sales of Nokian Tyres were up by 21.8% to EUR 835.9 million(2005: EUR
686.5 million). Operating profit was EUR 153.1 million (EUR 115.8 million). EPS
increased to EUR 0.88 (EUR 0.70). Profit for the period was EUR 107.3 million
(EUR 82.2 million). The Board proposes that a dividend of EUR 0.31 per share (EUR
0.23) be paid. The company is well positioned for strong sales growth and
improved profits in 2007 in line with the previous years.
Key figures, EUR million: 10-12 10-12 1-12 1-12
2006 2005 2006 2005
Net sales 302.0 241.0 835.9 686.5
Operating profit 67.5 50.7 153.1 115.8
Profit before tax 61.5 48.6 139.3 112.6
Profit for the period 48.0 35.5 107.3 82.2
Earnings per share, EUR 0.39 0.30 0.88 0.70
Equity ratio, % 63.0 59.1
Cash flow from operations,
(Cash Flow II) 242.8 157.7 77.7 -17.1
RONA, % (rolling 12 months) 19.4 18.1
Gearing, % 22.8 25.4
Kim Gran, President and CEO:
"Nokian Tyres enjoyed a successful year with strong growth in 2006. It was a year
when we began to reap the benefits of our growing manufacturing operations in
Russia as well as a year when our car tyre sales in Russia exceeded our sales in
the Nordic countries. The Group's sales were up, profits improved, and the market
shares of car summer and winter tyres picked up clearly in all key markets. 2006
was a record-breaking year for Heavy Tyres. New and retreaded truck tyres also
sold better than a year earlier. Vianor tyre chain expanded remarkably and its
operating profit was on the previous year's level. A good sales mix together with
the price increases of the newly launched products raised the average prices.
Inventories and receivables decreased by the end of the year as expected, and
cash flow improved significantly. Good sales in December generated new
receivables that are expected to start flowing in during the first quarter of the
year.
The year's challenges included higher raw material prices and tough competition.
The costs incurred from the expansion of Russian business and production, as well
as higher option scheme and financing costs taxed the profits as expected. No
exchange rate gains were recorded as in the previous year."
Market situation
Market growth was the strongest in Eastern Europe, Russia and the CIS countries
where the increased sales of new cars boosted demand. In Germany, the newly
enforced winter tyre regulations increased the demand for winter tyres. In the
Nordic countries, sales volumes of car summer and winter tyres were down from the
previous year. Elsewhere in Europe the sales of summer tyres declined from the
previous year, but the winter tyre markets saw substantial growth.
Although the growth rate in the manufacture of forestry machinery began to slow
down towards the year-end, the manufacture of other industrial machinery
continued to be brisk, resulting in a shortage of heavy special tyres. The demand
for new and retreaded truck tyres also picked up.
Raw material prices continued to rise in the final quarter compared with the
corresponding period a year earlier. Natural rubber prices took a downward trend
for the deliveries during the remaining year. While the prices of summer tyres
fell, several tyre manufacturers announced winter tyre price increases in the
latter part of the year.
Nokian Tyres October to December 2006
In the period October to December 2006, the Nokian Tyres Group recorded net sales
of EUR 302.0 (EUR 241.0), representing an increase of 25.3% on the corresponding
period a year earlier. Group's invoicing in the Nordic countries increased by
14.4%, in Russia and other CIS countries by 98.8%, in Eastern Europe by 34.5% and
in the USA by 6.0%.
Raw material prices (EUR/kg) in manufacturing increased by 16% in the last
quarter compared to the corresponding period a year earlier. Fixed costs amounted
to EUR 71.0 million (EUR 62.1 million). Fixed costs represented 23.5% (25.8%) of
the net sales. Fixed costs rose due to increased marketing in Russia and to the
investments related in the Russian factory.
The Group's operating profit rose to EUR 67.5 million (EUR 50.7 million). Net
financial expenses totalled EUR 6.0 million (EUR 2.1 million).
Profit before taxes was EUR 61.5 million (EUR 48.6 million). Profit for the
period amounted to EUR 48.0 million (EUR 35.5 million). Earnings per share
increased to EUR 0.39 (EUR 0.30).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow II) was EUR 242.8 million (EUR 157.7
million).
January to December 2006
In the period January to December 2006, the Nokian Tyres Group booked net sales
of EUR 835.9 million (EUR 686.5 million), representing an increase of 21.8% on
the corresponding year 2005. The Group's invoicing in the Nordic countries
increased by 7.1%, in Russia and other CIS countries by 78.6%, in Eastern Europe
by 31.3% and in the USA by 12.8% compared to the previous year.
Raw material prices (EUR/kg) in manufacturing increased by 13% compared to the
corresponding period a year earlier. Due to the price increases and the good
sales mix, the average prices in manufacturing rose by 4.4%. Fixed costs amounted
to EUR 236.7 million (EUR 209.1 million). Fixed costs represented 28.3% (30.5%)
of the net sales.
Nokian Tyres Group's operating profit rose to EUR 153.1 million (EUR 115.8
million). In compliance with IFRS, the operating profit for the review period was
burdened by an option scheme write-off of EUR 8.0 million (EUR 6.7 million). Net
financial expenses were EUR 13.8 million (EUR 3.2 million).
Profit before taxes improved and was EUR 139.3 million (EUR 112.6 million).
Profit for the period amounted to EUR 107.3 million (EUR 82.2 million). EPS were
up to EUR 0.88 (EUR 0.70).
Return on net assets (RONA, rolling 12 months) was 19.4% (18.1%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow II) improved and was EUR 77.7 million (EUR -17.1
million). Equity ratio was 63.0% (59.1%).
In terms of receivables and inventories, the situation improved as expected in
the final quarter. Working capital increased due to the higher inventory value
and to the receivables generated from the sales in December.
The Group employed an average of 3,234 (3,041) people, and 3,297 (3,201) at the
end of the period. The Vianor tyre chain had 1,279 (1,297) employees at the end
of the period. Russian operations employed 322 (220) people.
PASSENGER CAR TYRES
10-12 10-12 Change 1-12 1-12 Change 1-3 4-6
2006 2005 % 2006 2005 % 2006 2006
Net sales, MEUR 189.0 135.2 39.8 533.2 416.2 28.1 101.8 120.3
Operating profit,
MEUR 52.4 34.2 53.2 133.4 101.9 30.9 18.9 26.8
Operating profit, % 27.7 25.3 25.0 24.5 18.6 22.3
RONA, % 24.6 24.1
(rolling 12 months)
Nokian-branded passenger car tyres recorded net sales of EUR 533.2 million (EUR
416.2 million) between January and December, showing an increase of 28.1% on the
previous year. Operating profit amounted to EUR 133.4 million (EUR 101.9
million), and the operating profit percentage was 25.0% (24.5%).
Passenger car tyre sales showed a very strong growth throughout the year and
particularly in the final quarter. Sales focused on winter tyres, which accounted
for 82% (78%) of full-year net sales. SUV winter tyres represented the fastest
growing product segment. Sales of the new winter tyre, the Nokian Hakkapeliitta
5, were timed primarily towards the fourth quarter of the year. Sales was boosted
by several top rankings published in the Nordic and Russian trade magazines.
New products accounted for 34% (27%) of full-year net sales. The share of
contract-manufactured tyres was at the previous year's level.
The market share of Nokian-branded summer and winter tyres grew significantly in
the Nordic countries, elsewhere in Europe and Russia. The strongest growth areas
included Russia, the CIS countries and the Nordic countries.
A good sales mix and the price increase due to new products resulted in a 1.5%
increase in the average price per tyre compared to the previous year. Summer tyre
prices and the prices of contract manufactured tyres dropped compared to the
previous year. The company's production volume rose as a result of capacity
increases in line with plans at the Russian plant.
In January Nokian Tyres introduced two new winter tyre families, the studded car
winter tyre Nokian Hakkapeliitta 5 and the SUV tyre Nokian Hakkapeliitta Sport
Utility 5. In September, Nokian Tyres introduced a new Nokian Hakka summer tyre
range with a totally new concept to complement the traditional Nokian
Hakkapeliitta winter tyre family. The sale of four different Nokian Hakka summer
tyre product ranges, the first to be launched on the market, will begin in the
Nordic and Russian tyre stores in the spring of 2007.
HEAVY TYRES
10-12 10-12 Change 1-12 1-12 Change 1-3 4-6
2006 2005 % 2006 2005 % 2006 2006
Net sales,MEUR 24.4 22.1 10.3 90.1 76.2 18.2 21.9 23.3
Operating profit,
MEUR 4.6 5.4 -15.0 19.9 14.7 35.5 5.5 5.4
Operating profit,% 18.8 24.5 22.1 19.3 24.9 23.3
RONA, % 39.0 32.4
(rolling 12 months)
The net sales of Nokian Heavy Tyres in January to December totalled EUR 90.1
million (EUR 76.2 million), showing an increase of 18.2% over the previous year.
The operating profit for Heavy Tyres increased to EUR 19.9 million (EUR 14.7
million), and the operating profit percentage was 22.1% (19.3%).
Nokian Heavy Tyres sales picked up and the profits improved. Sales grew in all
significant product groups and key markets, both in the original equipment
installation and replacement markets. Even with the declining manufacture of
forestry machinery, sales of Nokian forestry tyres continued to grow and market
shares picked up. Other heavy special tyres also sold well. Profitability
improved as a result of the good sales mix and price increases.
The heavy tyres production capacity was in full use with production volumes
rising by about 13% on the previous year. The four-million-euro investment made
in March allowed for continued increase in the heavy tyres production volumes.
After the completion of the investment in early 2007, the capacity of radial
tyres will increase by some 30% and overall capacity by some 10% a year.
Nokian Heavy Tyres introduced a brand new type of radial forestry tyre in the
review period: the Nokian Forest Rider. The tyre is designed for medium-sized cut-
to-length forestry machines and represents the latest tyre technology. The new
product attracted a lot of attention, and its production began in the end of
2006.
Original equipment installation accounted for 42.0% (49.0%) of net sales.
VIANOR
10-12 10-12 Change 1-12 1-12 Change 1-3 4-6
2006 2005 % 2006 2005 % 2006 2006
Net sales, MEUR 96.9 87.0 11.4 246.9 235.1 5.0 34.1 64.9
Operating profit,
MEUR 8.3 7.7 8.3 2.3 5.3 -56.1 -8.8 4.5
Operating profit, % 8.6 8.9 0.9 2.2 -25.8 6.9
RONA, % 1.8 4.9
(rolling 12 months)
Vianor's net sales in the January to December period totalled EUR 246.9 million
(EUR 235.1 million), showing an increase of 5% compared to the previous year.
Vianor's operating profit amounted to EUR 2.3 million (EUR 5.3 million), and the
operating profit percentage was 0.9% (2.2%). Vianor's comparable operating profit
was on the previous year's level.
The summer tyre season for passenger cars was similar to the previous year. The
winter tyre season got off to a good start and went well. There was a steady
sales increase in the retail, fleet and wholesale sectors. Likewise, new and
retreaded truck tyres and heavy tyres sold better than a year earlier. Nokian-
branded tyres accounted for a larger share of Vianor's sales.
Expenses resulting from the expansion of the Vianor chain and from closing down
unprofitable outlets hampered Vianor's performance.
The Vianor chain, consisting of 261 (197) outlets expanded in Russia and in
Sweden. The number of Vianor partner outlets in Russia at the year-end was 70.
Expansion of the chain will continue primarily through franchising, particularly
in Russia and in CIS countries.
Vianor's fast fit service concept was further extended during the year.
OTHER OPERATIONS
Truck tyres
The net sales of Nokian truck tyres in January-December were EUR 31.8 million
(EUR 30.1 million), up 5.8% on the previous year. The unit's product range
consists mainly of winter products, the sales of which are highest in the second
half of the year.
New truck tyres sold better than a year before. The new Nokian Nordic truck tyre
range customised for the Nordic markets and the extended size range boosted sales
growth. The majority of products were sold in the Nordic countries. New import
agreements were signed in several new European export areas during the year,
which offers better sales opportunities outside the Nordic countries. New
products accounted for 25% of truck tyre sales.
Contract manufacturing of Nordman-branded truck tyres began in China, and the
sale of these products began in early 2007. These tyres are destined for the
Nordic and Russian markets. Two different product segments will increase the
opportunities for signing more distribution agreements and for boosting the sale
of new truck tyres.
Furthermore, retreading materials sold better than a year earlier. The so-called
ECE 108/109 quality system requirement for retreading plants reduced the number
of small retreading plants in Finland and focused the operations on a few large
retreading facilities. These include Nokian Tyres' own retreading plants in
Nurmijärvi and Kuopio in Finland.
RUSSIA
During the period under review, Nokian Tyres' sales in Russia and in the CIS
countries increased by 78.6% compared to the previous year, and the market shares
improved. The distribution network was strengthened by signing new distribution
agreements and by expanding the Vianor network.
The first two production lines at the Russian plant operated continuously in
three shifts, and the plant's production output and quality level met the
objectives. The installation of the third production line has begun and the line
is scheduled to be fully operational in early 2007. Installation of the fourth
production line will begin in late summer 2007.
The extension of the plant progressed as planned, and the new mixing department
and central warehouse were introduced in June. The manufacture of rubber
compounds began in the two mixing lines of the mixing department, and, as a
result, the deliveries of compounds from Finland were discontinued.
The extension of both the plant and the mixing department will continue.
INVESTMENTS
Gross investments in the final quarter amounted to EUR 20.7 million (EUR 26.4
million). Gross investments for the full year totalled EUR 97.0 million (EUR
119.6 million) and net investments EUR 96.1 million (EUR 105.5 million). The
Russian production plant accounted for EUR 59,6 million (EUR 60.4 million) of the
total investments and Vianor for EUR 6.4 million (EUR 14.0 million). Other
investments involved moulds for new products as well as machinery and equipment
purchases for the Finnish production plant.
OTHER MATTERS
1. Changes in ownership
On 9 October Nokian Tyres received an announcement from INVESCO Asset Management
reporting that as a result of share transactions concluded on 17 July 2006, the
funds managed by the subsidiaries of AMVESCAP PLC now held more than 5% of Nokian
Tyres. The funds managed by the subsidiaries of AMVESCAP PLC hold 6,653,883
shares in Nokian Tyres, which correspond to 5.45% of the company's 122,032,270
shares and votes.
Deutsche Bank AG London has informed on the behalf of Deutsche Bank AG that as a
result of transactions in the ordinary shares of Nokian Tyres plc undertaken on
11 May 2006, Deutsche Bank AG and its subsidiary companies were in possession of
5,817,505 ordinary shares of Nokian Tyres plc, representing 4.80% of the total of
121,091,600 shares and of the voting rights of that company. Deutsche Bank AG is
a corporation domiciled in Frankfurt, Germany, of which Deutsche Bank London is a
branch.
2. Warrants on the Main List of the Helsinki Stock Exchange
Nokian Tyres applied for its 2004A warrants of the 2004 option scheme to be
listed on the Main List of the Helsinki Stock Exchange as of 1 March 2006. The
Annual General Meeting of Nokian Tyres held on 5 April 2004 decided to grant
bonds with warrants to the personnel of Nokian Tyres. A total of 245,000 warrants
2004A, 245,000 warrants 2004B and 245,000 warrants 2004C have been issued on the
basis of the bond loan.
The subscription period of warrants 2004A began on 1 March 2006 and will end on
31 March 2008. Each warrant entitles the holder to subscribe ten shares in Nokian
Tyres plc with a nominal value of 0.2 euros, at a subscription price of EUR 6.079
per share. The subscription price will be reduced by the amount of dividends paid
before the subscription, on the balancing date of each dividend payment. As a
result of subscriptions, the number of company shares may rise, at the most, by
2,450,000 shares and the share capital, at the most, by EUR 490,000. The warrants
were transferred to the book-entry securities system prior to their listing. On
30 December 2005 the Financial Supervision Authority granted the company an
exemption from the duty to publish a prospectus when offering shares for public
trading.
3. Shares subscribed for with bonds with warrants
After the increase in share capital registered on 11 November 2005, a total of
9,400 shares were subscribed with the 2001A bonds with warrants attached to the
2001 option scheme, 19,340 shares with the 2001B warrants and 63,940 shares with
the 2001C warrants. As a result of the subscriptions an increase in share capital
totalling EUR 18,536 was entered in the Trade Register on 22 February 2006.
Trading of the shares, along with the old shares, began on 23 February 2006.
After the increase, Nokian Tyres has a total of 121,091,600 shares and a share
capital of EUR 24,218,320.00.
After the increase in share capital registered on 22 February 2006, a total of
30,500 shares were subscribed for with the 2001A bonds with warrants attached to
the Nokian Tyres' Option Schemes of 2001 and 2004, 56,460 shares with the 2001B
warrants, 231,060 shares with the 2001C warrants, and 474,000 shares with the
2004A warrants. The increase in share capital resulting from the subscription,
EUR 158,484, was entered in the Trade Register on 19 May 2006. Trading of the
shares along with the old shares began on 22 May 2006. After the increase, the
number of Nokian Tyres shares is 121,884,020 and the share capital is EUR
24,376,804.00.
After the increase in share capital registered on 19 May 2006, a total of 22,300
shares were subscribed for with the 2001A bonds with warrants attached to the
Nokian Tyres' Option Schemes of 2001 and 2004, 17,800 shares with the 2001B
warrants, 89,600 shares with the 2001C warrants, and 18,550 shares with the 2004A
warrants.
The increase in share capital resulting from the subscription, EUR 29,650, was
entered in the Trade Register on 21 August 2006. Trading of the shares, along
with the old shares, began on 22 August 2006. After the increase, the number of
Nokian Tyres shares was 122,032,270 and the share capital was EUR 24,406,454.00.
After the increase in share capital registered on 21 August 2006, a total of
39,550 shares were subscribed for with the 2001A bonds with warrants attached to
the Nokian Tyres' Option Schemes of 2001 and 2004, 104,100 shares with the 2001B
warrants, 143,340 shares with the 2001C warrants, and 127,350 shares with the
2004A warrants.
The increase in share capital resulting from the subscription, EUR 82,868, was
entered in the Trade Register on 12 January 2007. Trading of the shares, along
with the old shares, began on 15 January 2007. After the increase, the number of
Nokian Tyres shares was 122,466,610 and the share capital was EUR 24,489,322.00.
4. Development of the share price
Nokian Tyres' share price was EUR 15.52 at the end of the period (EUR 10,65). The
average price during the period was EUR 13.28 (EUR 13.93) with the price reaching
a high of EUR 16.68 (EUR 20.14) and a low of EUR 9.90 (EUR 9,70). A total of
257,824,937 shares (240,284,231) were traded during the year, representing 211%
(119%) of the company's share capital. The company's market value at the end of
the period was EUR 1,894 billion (EUR 1,289 billion). Finnish shareholders
represented 35.0% (39.8%) of all shareholders while 65.0% (60.1%) were nominee-
registered foreign shareholders, Bridgestone's 16.1% holding included.
5. Decisions made at the Annual General Meeting
The Annual General Meeting of Nokian Tyres held on 6 April 2006 accepted the
profit and loss statement for 2005 and discharged the Board of Directors and the
President from liability. The final dividend was set at EUR 0.23 per share. The
matching date was 11 April 2006 and the payment date on 20 April 2006.
Board of Directors and auditor
The meeting decided that the Board of Directors shall have seven members. Rabbe
Grönblom, Managing Director, AB R.Grönblom International LTD; Hannu Penttilä,
CEO, Stockmann plc; Petteri Walldén, MSc (Eng.), and Kim Gran, President and CEO,
Nokian Tyres plc, will continue as Board members. New members of the Board
include Hille Korhonen, Director of Operations, Iittala Group; Koki Takahashi,
General Manager, Headquarters Accounting Department 1, Bridgestone Corporation,
and Aleksey Vlasov, Deputy Director of JSC Mezhregiongaz, Gazprom. At its meeting
following the Annual General meeting, the Board elected Petteri Walldén as
Chairman of the Board.
Authorised public accountants KPMG Oy Ab continue as auditors.
Remuneration of the members of the Board of Directors
The Annual General Meeting decided that the monthly fee paid to the Chairman of
the Board would be EUR 5,000, or EUR 60,000 per year, while that paid to Board
members was set at EUR 2,500, or EUR 30,000 per year. In line with former
practices, 60% of the annual fee will be paid in cash and 40% in company shares
to the effect that in the period from 7 April to 30 April 2006, EUR 24,000 worth
of Nokian Tyres plc shares will be purchased on the stock exchange on behalf of
the Chairman of the Board and EUR 12,000 worth of shares on behalf of each Board
member. This means that the fees of Board members are linked to the performance
of the company's share. No separate compensation will be paid to the President
and CEO for Board work.
Authorisation granted to the Board of Directors to increase the share capital
The Annual General Meeting authorised the Board of Directors to make a decision
regarding an increase in the share capital on one or more occasions by issuing
new shares and/or convertible bonds. As a result of the authorisation, the
company's share capital may increase by a maximum of EUR 4,000,000. A maximum of
20,000,000 new shares may be issued, each bearing a nominal value of EUR 0.20.
The Board of Directors also has the right to deviate from the shareholders pre-
emptive right to subscribe for shares, provided there is a compelling financial
reason referred to in chapter 4, section 2a of the Companies Act. The Board of
Directors has the right to decide upon the parties who are entitled to subscribe,
as well as the subscription prices, terms and conditions of share subscription,
and the terms and conditions of convertible bonds. The validity of the
authorisation is one year from the date of the Annual General Meeting.
OUTLOOK FOR 2007
The tyre markets continue to be challenging. Raw material prices will rise and
raising tyre prices will continue to be challenging.
Growing demand for Nokian Tyres' key products, i.e. winter tyres, UHP summer
tyres and SUV tyres, will continue, and sustained demand is also anticipated in
the company's key markets in Russia, the CIS countries, Eastern Europe and North
America. More moderate growth is expected in the Nordic countries and elsewhere
in Europe. Fewer forestry machines will be manufactured than a year earlier, but
the sales forecast for forestry tyres continues to be good. The forestry tyres
manufacture is expected to resume on growth track in 2008. The manufacture of
other industrial machinery will continue at a brisk pace, and heavy special tyres
will continue to be in high demand.
Regardless of the downward turn in the price of natural rubber in late 2006,
Nokian Tyres expects the raw material prices in manufacturing (EUR/kg) for the
full year 2007 to be approximately 8% higher than in 2006.
The company will continue to introduce a large number of new products to the
market, which will provide opportunities to increase tyre prices. Tyres
manufactured in Russia represent an increasingly large part of the Group's sales,
which contributes to a healthy profit margin. The outlook for all profit centres
for 2007 is good.
In the Nordic countries and Russia, the company's objective is to achieve further
sales growth and market share improvement. More sales efforts and investments
will be allocated to the CIS countries, North America and Eastern Europe, where
the company has good growth potential and a strong presence.
In 2007 Nokian Tyres will pay special attention to sustaine strong growth, sales
and logistics management, control of inventories and receivables and to extend
and develop the distribution network. Capacity will be increased with an
accelerated plan in Russia. The main goal in the Finnish plant is to improve
productivity. Investments will be made in Heavy Tyres to eliminate production
bottlenecks in order to further increase capacity.
Owing to the seasonal nature of the business, the company's net sales and
operating profit are primarily generated in the latter part of the year,
especially in the last quarter, in both the manufacturing business and
distribution.
The order book for the beginning of the year is record high and the company's
output capacity is stronger than a year earlier. The company is well positioned
for the strong sales growth and improved profits in 2007 in line with the
previous years.
Nokian Tyres' total investments in 2007 will amount to EUR 100 million (EUR 97
million) with EUR 58 million (EUR 60 million) allocated to the Russian production
plant. The remainder comprises production investments in the Nokia plant and
moulds for new products.
Nokia 15th of February 2007
Nokian Tyres plc
Board of Directors
This interim report has been prepared in accordance with IAS 34 'Interim
Financial Reporting' and the same accounting policies have been applied as in the
previous annual financial statements.
NOKIAN TYRES
CONSOLIDATED INCOME STATEMENT
Million euros 10-12/06 10-12/05 1-12/06 1-12/05 Change%
Net sales 302.0 241.0 835.9 686.5 21.8
Cost of sales -177.7 -142.6 -491.3 -401.0 22.5
Gross profit 124.2 98.4 344.5 285.5 20.7
Other operating income 0.6 4.0 2.0 4.6 -56.4
Selling and marketing expenses -48.4 -42.8 -157.6 -143.0 10.2
Administration expenses -6.0 -4.9 -18.9 -15.6 21.4
Other operating expenses -3.0 -3.9 -17.0 -15.8 7.6
Operating profit 67.5 50.7 153.1 115.8 32.2
Financial income 3.9 -9.4 22.3 22.8 -2.2
Financial expenses -9.9 7.3 -36.2 -26.0 39.1
Profit before tax 61.5 48.6 139.3 112.6 23.7
Tax expense (1 -13.4 -13.2 -32.0 -30.4 5.1
Profit for the period 48.0 35.5 107.3 82.2 30.5
Attributable to:
Equity holders of the parent 48.0 35.6 107.3 82.4
Minority interest 0.0 0.1 0.0 -0.2
Earnings per share from the profit
attributable to equity holders of the
parent
basic, euros (2 0.39 0.30 0.88 0.70 27.0
diluted, euros (2 0.38 0.29 0.86 0.68 26.9
KEY RATIOS 31.12.06 31.12.05 Change%
Equity ratio, % 63.0 59.1
Gearing, % 22.8 25.4
Equity per share, euro (2 4.56 3.89 17.1
Interest-bearing net debt,
mill. euros 126.9 119.5
Capital expenditure, mill.
euros 97.0 119.6
Depreciation, mill. euros 40.8 35.6
Personnel, average 3,234 3,041
Number of shares (million units)
at the end of period 122.03 121.00
in average 121.63 118.57
in average, diluted 125.15 121.96
1) Tax expense in the consolidated income statement is
based on the taxable profit for the period.
2) The per-share data include the effect of the share split
carried out on 15 April 2005.
CONSOLIDATED BALANCE SHEET 31.12.06 31.12.05
Non-current assets
Property, plant and equipment 353.2 304.0
Goodwill 51.8 50.7
Other intangible assets 8.2 8.5
Investments in associates 0.1 0.1
Available-for-sale
financial assets 0.2 0.3
Other receivables 0.8 2.1
Deferred tax assets 14.3 11.9
Total non-current assets 428.6 377.6
Current assets
Inventories 159.8 146.1
Trade and other receivables 257.3 228.1
Cash and cash equivalents 39.0 45.7
Total current assets 456.1 419.9
Equity
Share capital 24.5 24.2
Share premium 142.7 137.8
Translation reserve -2.2 5.7
Fair value and hedging reserves -0.1 -0.5
Retained earnings 391.6 303.4
Minority interest 0.0 0.7
Total equity 556.6 471.4
Non-current liabilities
Deferred tax liabilities 20.5 22.7
Interest bearing liabilities 110.6 152.5
Other liabilities 1.9 2.1
Total non-current liabilities 133.0 177.3
Current liabilities
Trade and other payables 138.9 135.1
Provisions 1.0 0.9
Interest-bearing liabilities 55.3 12.8
Total current liabilities 195.2 148.7
Total assets 884.7 797.4
CONSOLIDATED CASH FLOW STATEMENT 1-12/06 1-12/05
Million euros
Cash flow from operating activities:
Cash generated from
operations 165.7 90.0
Financial items and taxes -59.1 -59.8
Net cash from operating
activities 106.6 30.2
Cash flow from investing activities:
Net cash used in investing
activities -89.8 -95.4
Cash flow from financing activities:
Proceeds from issue of share
capital 5.2 133.6
Change in current financial
receivables and debt 42.5 -42.1
Change in non-current financial
receivables and debt -41.0 21.4
Dividends paid -27.9 -25.9
Net cash from financing
activities -21.2 87.0
Net change in cash and cash
equivalents -4.5 21.8
Cash and cash equivalents at
the beginning of the period 45.7 23.9
Effect of exchange rate changes 2.2
Cash and cash equivalents at
the end of the period 39.0 45.7
-4.5 21.8
The effect of exchange rate changes 2.2 million euros are included in the net
cash from operating activities. Year 2005 that effect was -1.2 million euros.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Million euros
Fair
value Re- Mino-
Trans- and tained rity
Share Share lation hedging earn- inte-
capital premium reserve reserves ings rest Total
Equity,
Jan 1st 2005 21.7 6.7 0.9 -1.1 240.1 0.0 268.3
Share issue expenses -1.1 -1.1
Interest rate swaps,
net of tax 0.6 0.6
Translation differences 4.5 0.0 4.5
Gains/losses from hedge of net
investments in foreign operations,
net of tax 0.3 0.3
Profit for the period 82.4 -0.2 82.2
Total recognised income
and expenses
for the period 0.0 -1.1 4.8 0.6 82.4 -0.2 86.6
Share issue 2.1 128.9 131.0
Dividends paid -25.9 -25.9
Exercised warrants 0.3 3.4 3.7
Share-based payments 6.7 6.7
Other changes -0.2 -0.2
Change in minority interest 0.9 0.9
Equity,
Dec 31st 2005 24.2 137.8 5.7 -0.5 303.4 0.7 471.4
Equity,
Jan 1st 2006 24.2 137.8 5.7 -0.5 303.4 0.7 471.4
Interest rate swaps,
net of tax 0.4 0.4
Translation differences -7.2 -7.2
Gains/losses from hedge of net
investments in foreign operations,
net of tax 0.3 0.3
Profit for the period 107.3 107.3
Total recognised income
and expenses
for the period 0.0 0.0 -6.9 0.4 107.3 0.0 100.8
Dividends paid -27.9 -27.9
Exercised warrants 0.3 4.9 5.2
Share-based payments 8.0 8.0
Other changes -1.0 0.8 -0.3
Change in minority interest -0.7 -0.7
Equity,
Dec 31st 2006 24.5 142.7 -2.2 -0.1 391.6 0.0 556.6
SEGMENT INFORMATION 10-12/06 10-12/05 1-12/06 1-12/05 Change%
Million euros
Net sales
Passenger car tyres 189.0 135.2 533.2 416.2 28.1
Heavy tyres 24.4 22.1 90.1 76.2 18.2
Vianor 96.9 87.0 246.9 235.1 5.0
Others and eliminations -8.3 -3.3 -34.3 -41.1 16.4
Total 302.0 241.0 835.9 686.5 21.8
Operating result
Passenger car tyres 52.4 34.2 133.4 101.9 30.9
Heavy tyres 4.6 5.4 19.9 14.7 35.5
Vianor 8.3 7.7 2.3 5.3 -56.1
Others and eliminations 2.1 3.4 -2.5 -6.1 58.7
Total 67.5 50.7 153.1 115.8 32.2
Operating result, % of net sales
Passenger car tyres 27.7 25.3 25.0 24.5
Heavy tyres 18.8 24.5 22.1 19.3
Vianor 8.6 8.9 0.9 2.2
Total 22.3 21.0 18.3 16.9
Cash Flow II
Passenger car tyres 211.9 127.6 68.9 -24.5 381.3
Heavy tyres 13.4 7.3 19.4 15.8 22.9
Vianor 14.8 9.8 7.5 -6.1 222.0
Total 242.8 157.7 77.7 -17.1 553.1
CONTINGENT LIABILITIES 31.12.06 31.12.05
Million euros
FOR OWN DEBT
Mortgages 0.0 0.2
Pledged assets 0.0 0.0
OTHER OWN COMMITMENTS
Guarantees 1.0 1.0
Leasing and rent
commitments 82.5 65.0
Acquisition commitments 5.3 0.7
INTEREST RATE DERIVATIVES
Interest rate swaps
Fair value -0.2 -0.7
Notional amount 15.4 16.5
Options, purchased
Fair value 0.0 0.0
Notional amount 0.0 0.0
CURRENCY DERIVATIVES
Forward contracts
Fair value 1.1 -1.6
Notional amount 199.9 176.2
Options, purchased
Fair value 0.0 0.0
Notional amount 12.6 5.3
Options, written
Fair value -0.1 -0.1
Notional amount 12.6 5.3
The fair value of interest rate derivatives is defined by cash flows due to
contracts. Interest rate swaps are wholly designated as cash flow hedges and
their changes in fair value relating to the effective portion of the hedge is
recognised in equity and the potential ineffective portion is recognised in the
income statement.
The fair value of forward foreign exchange contracts is calculated at the forward
rates on the balance sheet closing date on the basis of cash flow arising from
contracts. The fair value of options is calculated by using the Garman-Kohlhagen
option valuation model.
Currency derivatives are only used to hedge the Group's net exposure. The changes
in the fair values of currency derivatives are reported in the income statement
excluding the forward foreign exchange contracts that are hedging the foreign
currency denominated net investment in a foreign subsidiary. Hedge accounting is
applied for those hedges and for hedges meeting the hedge accounting criteria the
changes in the fair values are wholly deferred in equity. The fair value of those
forward foreign exchange contracts was EUR 1.3 million.
The notional amount of currency derivatives is the euro equivalent of the
contracts' currency denominated amount on the balance sheet closing date.
Nokian Tyres plc
Raila Hietala-Hellman
Vice President, Corporate Communications
Further information: Kim Gran, President and CEO, tel. +358 3 340 7336.
Distribution: OMX and the key media
***
Nokian Tyres will publish the year 2006 financial results on Thursday, February
15, 2006 at 9.00 am Finnish time.
The result presentation to analysts and media will be held at Hotel Kämp,
Helsinki on Thursday, February 15 at 10.00 am Finnish time. The presentation
language will be English.
The presentation can be listened through audiocast via internet on February 15,
2007 at 10 am Finnish time
http://www.nokiantyres.com/resultinfo2006q4en
The event will be audiocasted live via internet. To be able to ask questions
during the event you can participate in the conference call. Please dial in 5-10
minutes before the beginning of the event:
+44 (0)20 7162 0125
Password: Nokian Tyres
Stock exchange release and presentation material will be available before
the event at http://www.nokiantyres.com/investors_en. After the event
the audio recording can be found at the same address.