Nokian Tyres plc Interim Report, 6 August 2008, 8:00 am
INTERIM REPORT FOR NOKIAN TYRES PLC JANUARY-JUNE 2008
Continued strong sales growth, clear improvement in profits.
The Group's net sales were up by 22.6% to EUR 530.3 million (EUR 432.5 million
in the corresponding period 2007). Operating profit increased to EUR 128.6
million (EUR 89.2 million), and EPS rose to EUR 0.80 (EUR 0.57). In 2008 the
company is positioned to achieve strong growth in sales and to outperform the
previous year's results.
Key figures, EUR million:
Q2/08 Q2/07 H1/08 H1/07 2007
Net sales 284.0 232.6 530.3 432.5 1,025.0
Operating profit 74.2 50.2 128.6 89.2 234.0
Profit before tax 68.6 41.9 99.1 70.1 168.9
Net profit 54.0 46.9 118.4 82.4 213.8
Earnings per share, EUR 0.43 0.34 0.80 0.57 1.37
Equity ratio,% 56.4 52.1 61.8
Cash flow from operations, -68.6 -20.4 -146.9 -124.2 105.6
(Cash Flow II)
RONA,% (rolling 12 months) 25.6 22.4 24.2
Gearing,% 47.3 46.6 14.3
Kim Gran, President and CEO:
“Nokian Tyres sales continued to grow steeply, and operating profit improved
clearly in the second quarter and the whole review period. Most of the growth
came from the pre-sales of winter tyres for passenger cars in Russia and the
other CIS countries. Other product groups and core markets did also well. The
late start to the summer tyre season shifted Vianor's sales and result to the
second quarter. The average prices rose from the previous year as a result of a
good sales mix, price increases and new products. Russian manufacture increased
in line with targets, and the advantages thereof improved profitability. The
outlook for 2008 is good, and we expect strong growth to continue in our key
markets."
Market situation
The replacement market for passenger car tyres grew in Russia and the other CIS
countries. Also the Nordic tyre markets grew slightly, whereas the overall
Western European tyre markets declined. The strongest growth was recorded in
winter tyres, SUV tyres and high-speed summer tyres. The demand for heavy
special tyres and truck tyres continued to be strong. Several tyre manufacturers
raised their prices in response to higher raw material prices.
April-June 2008
In the second quarter of 2008 the Nokian Tyres Group recorded net sales of EUR
284.0 million (EUR 232.6 million), showing an increase of 22.1% on the
corresponding period a year earlier. Sales increased in the Nordic countries by
14.1%, in Russia and the other CIS countries by 44.4%, in Eastern Europe by 8.9%
and in the USA by 43.6%.
Raw material prices in manufacturing were up 9% year-over-year in the second
quarter. Fixed costs were EUR 74.9 million (EUR 67.3 million), accounting for
26.4% (28.9%) of net sales.
Nokian Tyres Group's operating profit rose to EUR 74.2 million (EUR 50.2
million). This includes a EUR 2.0 million fee for technical and management
support given to the joint venture in Kazakhstan. Net financial expenses were
EUR -5.5 million (EUR -3.3 million).
Profit before taxes was EUR 68.6 million (EUR 46.9 million). Profit for the
period amounted to EUR 54.0 million (EUR 41.9 million), and EPS was EUR 0.43
(EUR 0.34).
Income financing after the change in working capital, investments and the
disposal of fixed assets (cash flow II) was EUR -68.8 million (EUR -20.4
million).
January-June 2008
Nokian Tyres Group's net sales in the first half of 2008 totalled EUR 530.3
million (EUR 432.5 million), signifying a 22.6% year-over-year increase. Sales
increased in the Nordic countries by 8.4%, in Russia and the other CIS countries
by 53.7% and in the USA by 39.1% from the previous year. Sales in Eastern Europe
were down 1.9%.
Raw material prices increased by 6% year-over-year in the first half.
Fixed costs amounted to EUR 148.3 million (EUR 129.6 million), accounting for
28.0% (30.0%) of net sales.
Nokian Tyres Group's operating profit rose to EUR 128.6 million (EUR 89.2
million). This was negatively affected by the IFRS 2-compliant option scheme
write-off of EUR 8.5 million (EUR 5.1 million).
Net financial expenses were EUR -10.1 million (EUR -6.8 million). Financial
expenses include EUR 3.5 million in non-cash expenses related to convertible
bonds. Net financial expenses include EUR -2.5 million (EUR -0.5 million) of
exchange rate differences.
Profit before taxes was EUR 118.4 million (EUR 82.4 million). The Group's tax
rate was 16.4% (15.0%). Profit for the period amounted to EUR 99.1 million (EUR
70.1 million), and EPS was EUR 0.80 (EUR 0.57).
Return on net assets (RONA, rolling 12 months) was 25.6% (22.4%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (cash flow II) was EUR -146.9 million (EUR -124.2 million). Equity
ratio was 56.4% (52.1%).
The Group employed an average of 3,736 (3,372) people, and 3,764 (3,384) at the
end of the period. The Vianor tyre chain employed 1,471 (1,219) people and
Russian operations 580 (390) people at the end of the period.
Tax rate
The company's tax rate has decreased as a consequence of tax reliefs in Russia.
The tax relief is valid for as long as the company accrues tax on yields
corresponding to the amount of the Russian investment, and for two years
thereafter.
Since the tax reliefs from Russia have been realised according to the agreements
and the uncertainty related to the reliefs has reduced considerably, the company
has revised its estimate of the recognition of tax assets in the balance sheet.
From now on, tax assets related to the tax reliefs will be recognised at their
probable realisation value. Owing to this change in estimate, the first half of
2008 includes EUR 6.5 million of non-recurring tax reliefs from the latter half
of 2007.
PASSENGER CAR TYRES
EUR, million Q2/08 Q2/07 Change H1/08 H1/07 Change 2007
% %
Net sales 195.6 146.6 33.4 385.7 288.0 33.9 691.2
Operating profit 63.8(x 42.0 51.1 128.8 83.6 54.1 212.0
Operating profit,% 32.6(x 28.6 33.4 29.0 30.7
RONA,% 34.9 28.4 31.2
(rolling 12 months)
The net sales of Nokian passenger car tyres increased 33.9% year-over-year in
the first half, amounting to EUR 385.7 million (EUR 288.0 million). Operating
profit was EUR 128.8 million (EUR 83.6 million) and the operating profit
percentage 33.4% (29.0%).
(x Operating profit includes a EUR 2.0 million fee for technical and management
support given to the joint venture in Kazakhstan.
Both summer and winter tyre sales increased significantly over the previous
year. Sales growth was strongest in Russia and Ukraine, but sales also picked up
in the Nordic countries and the USA. The biggest growth was seen in SUV and UHP
tyres. The sales of Nokian Hakka summer tyres increased clearly from the
previous year and the winter tyre pre-sales were brisk in all key markets.
Winter tyre sales were boosted by the new studless Nokian Hakkapeliitta R winter
tyre range, which will be introduced to consumers this autumn.
The average tyre prices rose as a result of an improved sales mix, new products
and successfully implemented price increases.
The production volume rose following the planned increase in capacity at the
Russian plant. Increased capacity was not, however, sufficient to meet the
demand for tyres, and sales had to be restricted to Central and Eastern European
countries.
HEAVY TYRES
EUR, million Q2/08 Q2/07 Change H1/08 H1/07 Change 2007
% %
Net sales 25.5 24.9 2.3 53.4 50.5 5.7 100.8
Operating profit 5.1 5.8 -12.5 11.4 11.9 -4.2 22.3
Operating profit,% 19.8 23.2 21.3 23.5 22.1
RONA,% 35.6 38.0 39.0
(rolling 12 months)
The net sales of Nokian heavy tyres increased by 5.7% year-over-year in the
first half, amounting to EUR 53.4 million (EUR 50.5 million). The operating
profit was EUR 11.4 million (EUR 11.9 million) and the operating profit
percentage 21.3% (23.5%).
The share of sales of forestry and original equipment tyres increased compared
to the previous year. The sales of other heavy tyres were on the previous year's
level. The sales mix was slightly weaker in terms of margins than a year ago.
Delays in original equipment manufacturers' production postponed tyre deliveries
from the second quarter to the latter half of the year.
Tyre prices will be increased and the sales mix is expected to improve during
the second half of the year.
Although production capacity was in full use and production volumes increased as
planned, delivery capacity was insufficient to meet the high market demand.
VIANOR
EUR, million Q2/08 Q2/07 Change H1/08 H1/07 Change 2007
% %
Net sales 80.6 68.2 18.2 127.3 114.2 11.5 278.5
Operating profit 5.9 3.7 58.2 -4.5 -2.0 -121.6 8.4
Operating profit,% 7.3 5.5 -3.5 -1.8 3.0
RONA,% 4.0 3.5 6.0
(rolling 12 months)
Vianor's net sales increased by 11.5% year-over-year in the first half,
amounting to EUR 127.3 million (EUR 114.2 million). Operating profit was EUR
-4.5 million (EUR -2.0 million) and the operating profit percentage -3.5%
(-1.8%).
The Russian and Nordic summer tyre season, which was delayed to the second
quarter, did well, as did the related service sales. Sales grew and profits
improved considerably.
On 22 April 2008 Vianor acquired the Swiss company Pneu Bauriedel AG and on 1
July 2008 Montuori Tire,Inc. from the USA. At the end of the review period the
Vianor network comprised 425 outlets in Nordic countries, Russia, Ukraine,
Switzerland, the Baltic countries, the USA and Eastern Europe. Of these, 176
were partner and franchising outlets. A total of 59 new Vianor outlets were
opened during the period under review.
The expenses resulting from the establishment of new outlets reduced the
operating income.
OTHER OPERATIONS
The net sales of Nokian truck tyres were EUR 12.4 million (EUR 10.4 million), up
18.7% over the previous year. Since the unit's product range mainly consists of
winter items, the majority of its sales and profit is generated in the second
half of the year.
RUSSIA AND THE CIS COUNTRIES
Sales in Russia and the CIS countries increased by 53.7% year-over-year during
the period under review, and market shares improved. The distribution network
was extended by signing distribution agreements and through Vianor's activities.
During the second quarter of the year, the amount of production lines at the
Russian plant increased to six lines, which operate continuously in three
shifts. The plant's production volume and quality level are on target. The
capacity expansion has proceeded as planned and the new production lines will be
fully operational in the beginning of the third quarter of the year. The seventh
production line will be installed during 2008.
The extension of the mixing house has proceeded according to plan. In addition,
the extension of the warehouse has started and it will be partly taken into use
in the end of the year 2008. The construction work of Hakkapeliitta Village, the
housing area for the personnel, is ongoing.
KAZAKHSTAN
On 19 October 2007, Nokian Tyres announced it had signed an agreement with the
Kazakhstanian conglomerate Ordabasy Corporation JSC to build a green-field
passenger car tyre factory in Kazakhstan. Nokian Tyres has a 10% stake in the
joint venture, with the option to increase its ownership to a minimum of 50%.
The total investment will be approximately EUR 160 million, financed through
equity of approximately EUR 40 million and external loans. Nokian Tyres has
signed a long-term technical support and management aid agreement with Ordabasy
Corporation. The agreement is valued at EUR 12 million which will enter as
income within the next three years.
Construction work on the plant is expected to begin in 2008 and the tyre
manufacture is scheduled to start in 2009-2010.
INVESTMENTS
Investments in the period were EUR 80.3 million (EUR 57.7 million). The
company's total investments in 2008 will be approximately EUR 170 million (EUR
117 million). Around EUR 110 million (EUR 92 million) will be spent on the
Russian plant's operations and extension. The remainder comprises production
investments in the Nokia plant, moulds for new products and the Vianor expansion
projects.
OTHER MATTERS
1. Stock options on the Main List of the Helsinki Stock Exchange
The Board of Directors of Nokian Tyres plc has decided to apply for the listing
of stock options 2004C on the Helsinki Stock Exchange effective as of 1 March
2008.
There are a total of 245,000 2004C stock options. Each stock option 2004C
entitles the holder to subscribe for ten Nokian Tyres plc shares. The
subscription period for options 2004C commenced on 1 March 2008 and expires on
31 March 2010. The total number of shares available for subscription with
options 2004C is 2,450,000. The current subscription price with stock options
2004C is EUR 11.78/share. The annually paid dividends shall be deducted from the
share subscription price.
2. Shares subscribed for with stock options
After the increase in share capital registered on 20 December 2007, a total of
898,690 shares were subscribed for with the 2004A stock options attached to the
Nokian Tyres' Option Scheme of 2004, and 35,730 shares with the 2004B options.
The increase in share capital resulting from the subscription, EUR 186,884, was
entered in the Trade Register on 26 February 2008. Trading of the shares, along
with the old shares, began on 27 February 2008. Following the increase, the
number of Nokian Tyres shares is 124,630,700 and the share capital is EUR
24,926,140.
After the increase in share capital registered on 26 February 2008, a total of
192,150 shares were subscribed for with the 2004A stock options attached to the
Nokian Tyres' Option Scheme of 2004, 3,130 shares with the 2004B options and
1,560 shares with the 2004C options. As a result of the subscriptions, an
increase in share capital totalling EUR 39,368 was entered in the Trade Register
on 20 May 2008.
Trading of the shares, along with the old shares, began on 21 May 2008.
Following the increase, Nokian Tyres has a total of 124,827,540 shares and a
share capital of EUR 24,965,508.
3. Share price development
Nokian Tyres' share price was EUR 30.50 at the end of the review period (EUR
26.02). The average share price during the period was EUR 27.16 (EUR 20.25), the
highest EUR 33.73 (EUR 27.39) and the lowest EUR 19.04 (EUR 13.99). A total of
126,584,416 shares were traded during the period (135,978,695), representing
101% (111%) of the company's overall share capital. The company's market value
at the end of the period was EUR 3,807,239,970 billion (EUR 3,200,189,912
billion). Finnish nationals accounted for 24.8% (31.4%) and foreign nationals
registered in the nominee register for 75.2% (68.6%) of the company's
shareholders. The latter figure includes Bridgestone's ownership of
approximately 16%.
4. Decisions made at the Annual General Meeting
The Annual General Meeting of Nokian Tyres held on 3 April 2008 approved the
financial statements for 2007 and discharged the Board of Directors and the
President from liability. The final dividend was set at EUR 0.50 per share. The
matching date was 8 April 2008 and the payment date 15 April 2008.
4.1 Board of Directors and auditor
The number of Board members was set at seven. Kim Gran, Hille Korhonen, Hannu
Penttilä, Koki Takahashi, Aleksey Vlasov and Petteri Walldén will continue as
Board members. Kai Öistämö was elected as a new member of the Board. At its
meeting held after the Annual General Meeting, the Board elected Petteri Walldén
as Chairman of the Board.
Authorised public accountants KPMG Oy Ab continue as auditors.
4.2 Remuneration of the Board members
The monthly fee paid to the Chairman of the Board was set at EUR 5,833, or EUR
70,000 per year, while that paid to Board members was set at EUR 2,917, or EUR
35,000 per year. The Annual General Meeting also decided that each member of the
Committee will receive a meeting fee of EUR 500 for each Committee meeting
attended.
A decision was made to follow existing practices and pay 60% of the annual fee
in cash and 40% in company shares, so that in the period from 4 April to 30
April 2008, EUR 28,000 of Nokian Tyres plc shares will be purchased at the stock
exchange on behalf of the Chairman of the Board and EUR 14,000 of shares on
behalf of each Board member. This decision means that the final remuneration
paid to Board members is tied to the company's share performance. No separate
compensation will be paid to the President and CEO for Board work.
4.3 Amendments to the Articles of Association
The Annual General Meeting decided to make the following amendments to the
Articles of Association:
- sections 3 and 4 of the present Articles of Association will be removed and
the numbering will be revised correspondingly
- section 5 of the Articles of Association will be changed to the following:
“The company's shares belong to the book-entry securities system”
- section 8 of the Articles of Association will be changed to the following:
“Both the Managing Director and the Chairman of the Board may represent the
company alone, and the Members of the Board, two together.”
- section 10 of the Articles of Association will be changed to the following:
“The company will have one auditor, who must be approved by the Central Chamber
of Commerce. The term of office of the auditor ends with the election of the
following auditor at the Annual General Meeting.”
- section 11 of the Articles of Association will be changed to the following:
“The invitation to the Annual General Meeting must be published no earlier than
three months and no later than one week before the date referred to in Chapter
4, section 2, subsection 2 of the Limited Liabilities Companies Act, in
accordance with the Board decision, on the company's website and in one national
and in one Tampere regional daily newspaper.”
- section 12 of the Articles of Association will be changed to the following:
“In order to be able to participate in the Annual General Meeting, shareholders
must inform the company no later than the day stated in the meeting invitation,
which may be no earlier than ten days before the meeting. The method of voting
is determined by the chairman of the Annual General Meeting.”
- section 13 of the Articles of Association will be changed to the following:
“The Annual General Meeting must be held annually on a date specified by the
Board of Directors before the end of May. The Annual General Meeting is held in
accordance with the decision by the Board, either at the registered office of
the company or in Tampere or in Helsinki.
The Annual General Meeting must present
1. annual accounts, including profit and loss account, balance sheet and annual
report,
2. auditor's report;
to be decided
3. confirmation of the company's annual accounts,
4. use of profit based on the balance sheet,
5. discharge from liability of the Board members and the Managing Director,
6. remuneration for the Board members and auditor,
7. number of Board members
to be elected
8. Board members,
9. auditor.
- section 14 of the Articles of Association will be changed to the following:
”The annual accounts, the Board's annual report and other documents relating to
company operations must be submitted to the auditor by the end of March, and the
auditor must submit his/her report to the Board before 15th April.”
CHANGES IN SHARE OWNERSHIP
On 5 May 2008, Nokian Tyres received a notification from Grantham, Mayo, Van
Otterloo & CO LLC, according to which Grantham, Mayo, Van Otterloo & Co LLC's
holding in Nokian Tyres had dropped under the limit of 5 per cent as a
consequence of the share transaction on 30 April 2008. Grantham, Mayo, Van
Otterloo & Co LLC now holds a total of 6,220,002 Nokian Tyres' shares, which
represents 4.99% of the company's 124,630,700 shares and voting rights.
RISKS, UNCERTAINTY FACTORS AND DISPUTES IN THE NEAR FUTURE
Roughly 35% of the Group's net sales are generated from euro-denominated sales.
The most important sales currencies in addition to the euro are the Russian
rouble, the U.S. dollar and the Swedish and Norwegian krona. A change of one per
cent in the EUR/RUB exchange rate would cause a change of approximately EUR 4.0
million in the company's net sales. A corresponding change in the EUR/USD
exchange rate would cause a change of approximately EUR 0.5 million in the
company's net sales. A change of one per cent in the EUR/SEK and EUR/NOK
exchange rates would cause a change of roughly EUR 1 million in the company's
net sales.
Nokian Tyres' future risks and uncertainty factors have to do with the
development of the growing markets, the success of winter tyre sales in the key
markets, and the development of raw material prices. The Russian plant capacity
increase has been implemented as planned, but future success depends on the
availability of skilled personnel.
Nokian Tyres has certain pending legal proceedings and litigations in some
countries. At the moment, the company does not expect these proceedings to have
any material impact on the performance or future outlook.
OUTLOOK FOR 2008
The economic growth in Russia and the CIS countries is expected to continue at a
brisk pace. The strong growth in the sales of new cars and the expansion of the
car park is also expected to continue in the coming years. In Nordic countries,
the demand is expected to be on the previous year's level. Winter tyre
inventories in the Central European distribution are exceptionally high.
The outlook for 2008 is good for Nokian Tyres. Demand for winter tyres, UHP
summer tyres and SUV tyres is increasing in Russia, the CIS countries and
Eastern Europe. In North America prospects in the winter tyre market have
improved. The manufacture of forestry machinery, as well as other machinery and
equipment, is active, and the global shortage of heavy special tyres continues.
Raw material prices are expected to rise steeply during the end of the year. The
increase for the whole of 2008 is estimated to be about 11.0% compared to 2007.
Nokian Tyres' average prices will rise as a result of new products, an enhanced
sales and product mix, and price increases.
Nokian Tyres is positioned to increase sales and achieve the targeted margin
level. Tyres manufactured in Russia represent an increasingly large proportion
of the Group's sales, which contributes to sustaining a good profit margin.
Traditionally, the sales and profits of Nokian Tyres are focused on the second
half of the year, and in particular on the last quarter of the year, owing to
the seasonal nature of the operations and high share of winter tyres. Growth in
Russia and the higher share of
pre-season sales of tyres have brought some balance to the seasonality which
will show in more evenly divided sales and profits within the year compared to
2007.
In 2008 the company is positioned to achieve strong growth in sales and to
outperform the previous year's results. The third quarter has begun as planned,
the order book is larger than a year earlier and production capacity is higher.
Due to normal seasonality, the margin level in the third quarter is expected to
be lower than in the beginning of the year as more sales will be generated from
Nordic countries and other markets instead of Russia. The Group's full-year
target for net sales growth is approximately 15%. This translates to net sales
of approximately EUR 1,150-1,200 billion, depending on the success of the winter
tyre season in core markets.
This interim report has been prepared in accordance with IAS 34
'Interim Financial Reporting' and the same accounting policies as
in the most recent annual financial statements.
The interim report figures are unaudited.
NOKIAN TYRES
CONSOLIDATED INCOME STATEMENT
Million euros
4-6/08 4-6/07 1-6/08 1-6/07 Last 12 1-12/07
months
Net sales 284.0 232.6 530.3 432.5 1,122.8 1,025.0
Cost of sales -151.6 -130.0 -285.0 -239.4 -614.7 -569.1
Gross profit 132.5 102.6 245.4 193.1 508.1 455.8
Other operating income 0.2 0.5 0.6 0.9 2.1 2.4
Selling and marketing
expenses -48.4 -43.3 -96.3 -83.9 -191.8 -179.4
Administration expenses -5.3 -5.8 -11.4 -10.9 -24.0 -23.5
Other operating expenses -4.8 -3.8 -9.7 -10.0 -21.0 -21.3
Operating profit 74.2 50.2 128.6 89.2 273.4 234.0
Financial income 2.9 8.0 21.9 13.6 71.3 63.1
Financial expenses -8.4 -11.3 -32.0 -20.4 -94.9 -83.3
Profit before tax 68.6 46.9 118.4 82.4 249.8 213.8
Tax expense (1 -14.7 -4.9 -19.4 -12.4 -51.9 -44.9
Profit for the period 54.0 41.9 99.1 70.1 197.9 168.9
Attributable to:
Equity holders of the
parent 54.0 41.9 99.1 70.1 197.9 168.9
Minority interest 0.0 0.0 0.0 0.0 0.0 0.0
Earnings per share from
the profit attributable
to equity holders of the
parent
basic, euros 0.43 0.34 0.80 0.57 1.61 1.37
diluted, euros 0.40 0.33 0.75 0.55 1.53 1.31
KEY RATIOS 30.6.08 30.6.07 31.12.07
Equity ratio, % 56.4 52.1 61.8
Gearing, % 47.3 46.6 14.3
Equity per share, euro 6.07 4.94 5.76
Interest-bearing net debt,
mill. euros 358.7 283.1 102.0
Capital expenditure, mill.
euros 80.3 57.7 117.1
Depreciation and amortisation,
mill. euros 26.3 22.7 47.1
Personnel, average 3,736 3,372 3,462
Acquisitions and disposals of items
of property, plant and equipment 70.7 48.8 89.0
Number of shares (million units)
at the end of period 124.83 122.99 123.70
in average 124.39 122.64 122.95
in average, diluted 132.49 126.95 129.09
1) Tax expense in the consolidated income statement is based on the
taxable profit for the period.
CONSOLIDATED BALANCE SHEET 30.6.08 30.6.07 31.12.07
Non-current assets
Property, plant and equipment 463.0 386.3 419.9
Goodwill 54.7 52.9 52.8
Other intangible assets 13.7 7.7 7.5
Investments in associates 0.1 0.1 0.1
Available-for-sale
financial assets 0.3 0.2 0.2
Other receivables 13.7 0.8 12.8
Deferred tax assets 22.4 22.0 17.7
Total non-current assets 567.9 470.1 511.0
Current assets
Inventories 237.1 211.9 193.2
Trade receivables 421.4 318.4 225.3
Other receivables 92.8 43.3 67.7
Cash and cash equivalents 26.2 123.5 158.1
Total current assets 777.6 697.1 644.3
Equity
Share capital 25.0 24.6 24.7
Share premium 155.0 144.2 149.0
Translation reserve -21.0 -4.8 -12.8
Fair value and hedging reserves 0.2 0.1 0.0
Retained earnings 598.8 443.3 551.9
Minority interest 0.0 0.0 0.0
Total equity 757.8 607.4 712.8
Non-current liabilities
Deferred tax liabilities 29.0 27.6 30.1
Interest-bearing liabilities 252.1 300.3 248.7
Other liabilities 2.3 1.8 2.4
Total non-current liabilities 283.4 329.7 281.1
Current liabilities
Trade and other payables 170.3 122.9 148.9
Provisions 1.1 1.0 1.1
Interest-bearing liabilities 132.8 106.2 11.4
Total current liabilities 304.3 230.1 161.4
Total assets 1,345.4 1,167.2 1,155.4
Changes in networking capital arising from operative business are partly covered
by EUR 250 million domestic commercial paper program.
CONSOLIDATED CASH FLOW STATEMENT 1-6/08 1-6/07 1-12/07
Million euros
Cash flows from operating activities:
Cash generated from
operations -54.4 -63.3 206.2
Financial items and taxes -61.0 -18.4 -36.3
Net cash from operating
activities -115.3 -81.6 169.9
Cash flows from investing activities:
Net cash used in investing
activities -83.7 -57.9 -117.7
Cash flows from financing activities:
Proceeds from issue of share
capital 6.2 1.6 6.5
Change in current financial
receivables and debt 120.5 51.5 -44.4
Change in non-current financial
receivables and debt 3.1 208.7 143.9
Dividends paid -62.3 -38.0 -38.0
Net cash from financing
activities 67.5 223.7 68.0
Net change in cash and cash
equivalents -131.5 84.2 120.3
Cash and cash equivalents at
the beginning of the period 158.1 39.0 39.0
Effect of exchange rate changes 0.3 -0.3 1.2
Cash and cash equivalents at
the end of the period 26.2 123.5 158.1
-131.5 84.2 120.3
The effect of exchange rate changes 0.3 million euros are included in
the net cash from operating activities. Year 2007 that effect was
-0.3 million euros.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Million euros
Fair
Value Mino-
Trans- and Retai- rity
Share Share lation hedging ned inte-
capital premium reserve reserves earnings rest Total
Equity,
1 Jan 2007 24.5 142.7 -2.2 -0.1 391.6 0.0 556.6
Interest rate
swaps, net of
tax 0.2 0.2
Translation
differences -3.0 -3.0
Gains/losses
from hedge of
net investments
in foreign
operations,
net of tax 0.4 0.4
Profit for
the period 70.1 70.1
Total recogni-
sed income and
expenses for
the period 0.0 0.0 -2.6 0.2 70.1 0.0 67.7
Dividends paid -38.0 -38.0
Exercised
warrants 0.1 1.5 1.6
Share-based
payments 5.1 5.1
Equity component
of the convertible
bond 13.9 13.9
Other changes 0.5 0.5
Change in
minority interest 0.0
Equity,
30 Jun 2007 24.6 144.2 -4.8 0.1 443.3 0.0 607.4
Equity,
1 Jan 2008 24.7 149.0 -12.8 0.0 551.9 0.0 712.8
Interest rate
swaps, net of
tax 0.2 0.2
Translation
differences -11.6 -11.6
Gains/losses
from hedge of
net investments
in foreign
operations,
net of tax 3.4 3.4
Profit for
the period 99.1 99.1
Total recogni-
sed income and
expenses for
the period 0.0 0.0 -8.2 0.2 99.1 0.0 91.0
Dividends paid -62.3 -62.3
Exercised
warrants 0.2 6.0 6.2
Share-based
payments 8.5 8.5
Equity component
of the convertible
bond 0.0
Other changes 1.6 1.6
Change in
minority interest 0.0
Equity,
30 Jun 2008 25.0 155.0 -21.0 0.2 598.8 0.0 757.8
SEGMENT INFORMATION 4-6/08 4-6/07 1-6/08 1-6/07 1-12/07
Million euros
Net sales
Passenger car tyres 195.6 146.6 385.7 288.0 691.2
Heavy tyres 25.5 24.9 53.4 50.5 100.8
Vianor 80.6 68.2 127.3 114.2 278.5
Others and eliminations -17.7 -7.1 -36.1 -20.2 -45.6
Total 284.0 232.6 530.3 432.5 1,025.0
Operating result
Passenger car tyres 63.8 42.0 128.8 83.6 212.0
Heavy tyres 5.1 5.8 11.4 11.9 22.3
Vianor 5.9 3.7 -4.5 -2.0 8.4
Others and eliminations -0.6 -1.3 -7.1 -4.2 -8.7
Total 74.2 50.2 128.6 89.2 234.0
Operating result, % of net sales
Passenger car tyres 32.6 28.6 33.4 29.0 30.7
Heavy tyres 19.8 23.2 21.3 23.5 22.1
Vianor 7.3 5.5 -3.5 -1.8 3.0
Total 26.1 21.6 24.2 20.6 22.8
Cash Flow II
Passenger car tyres -57.1 -25.8 -101.5 -109.0 102.3
Heavy tyres 2.8 8.5 -3.8 2.7 21.0
Vianor -4.3 -3.0 -17.2 -10.7 -5.6
Total -68.8 -20.4 -146.9 -124.2 105.6
CONTINGENT LIABILITIES 30.6.08 30.6.07 31.12.07
Million euros
FOR OWN DEBT
Mortgages 1.0 1.0 1.0
Pledged assets 41.8 0.0 0.0
OTHER OWN COMMITMENTS
Guarantees 1.4 1.0 1.0
Leasing and rent commitments 103.1 81.4 89.9
Purchase commitments of
property, plant and equipment 24.4 30.4 28.2
INTEREST RATE DERIVATIVES
Interest rate swaps
Notional amount 14.7 15.3 15.0
Fair value 0.2 0.1 0.1
FOREIGN CURRENCY DERIVATIVES
Currency forwards
Notional amount 622.4 298.1 312.1
Fair value 0.4 -2.2 2.6
Currency options, purchased
Notional amount 13.0 76.8 4.8
Fair value 0.2 0.4 0.1
Currency options, written
Notional amount 14.0 79.5 4.8
Fair value -0.2 -0.8 0.0
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 exchange contracts is calculated at the
forward rates on the balance sheet closing date on the basis of cash
flows arising from contracts. The fair value of currency options is
calculated using the Garman-Kohlhagen option valuation model.
Foreign currency derivatives are only used to hedge the Group's net
exposure. The changes in fair value of foreign currency derivatives
are reported in the income statement excluding the foreign currency
derivatives 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 fair value are wholly deferred in equity except for the
potential ineffective portion and the time value of currency options,
which are recognised in the income statement.
The notional amount of foreign currency derivatives is the euro
equivalent of the contracts' currency denominated amount on the
balance sheet closing date.
RELATED PARTY TRANSACTIONS
The Group has related party relationships with members of the Board
of Directors, the President, other key management personnel, and
Bridgestone Group with significant influence through share ownership.
Transactions and outstanding balances with parties having
significant influence
Shareholders
Bridgestone Group
1-6/08 1-6/07 1-12/07
Sales of goods 24.2 24.4 24.1
Purchases of goods 12.4 11.1 37.6
30.6.08 30.6.07 31.12.07
Trade and other receivables 10.9 6.2 3.5
Trade and other payables 7.6 8.3 9.7
Key management personnel 1-6/08 1-6/07 1-12/07
Total employee benefit expenses 3.8 2.7 7.1
Of which share-based payments 2.5 1.6 4.0
During 1 January and 30 June 2008 the President and other key
management personnel were granted a total of 766,000 share options
for the subscription of 766,000 shares (during 1 January and 30 June
2007 a total of 684,200 share options for the subscription of 812,000
shares). The share option plan terms for the key management personnel
are equal to the share options directed at other personnel. On 30
June 2008 the key management personnel held 1,450,300 share options
for the subscription of 1,759,000 shares (797,950 share options for
the subscription of 1,949,500 shares on 30 June 2007). Of these share
options 34,300 pcs were exercisable for the subscription of of
343,000 shares on 30 June 2008 (47,750 pcs exercisable for the sub-
scription of 477,500 shares on 30 June 2007).
No share options have been granted to the other members of the
Board of Directors.
ACQUISITIONS
Acquisitions in 2008
In 2008 the Group has still expanded only through two minor asset
deals in Vianor. With these asset deals Vianor acquired on 22 April
2008 the business in Pneu Bauriedel AG, domiciled in Switzerland,
and on 1 July 2008 the business in US-based Montuori Tire, Inc..
The expectations relating to the growth in sales through increased
customer base, and the future expectations on improved market area
coverage and sales increase resulted in the recogition of goodwill.
Specification of the cost of business combinations
Paid in cash 3.1
Costs directly attributable to the business combinations 0.0
Total cost of the business combinations 3.1
Fair value of the net assets acquired 0.8
Goodwill 2.3
Carrying
Fair values amounts
recorded in before
combination combination
Specification of acquired net assets
Intangible assets 0.0 0.0
Property, plant and equipment 0.0 0.0
Inventories 0.8 0.7
Receivables 0.0 0.0
Cash and cash equivalents 0.0 0.0
Liabilities 0.0 0.0
Net assets acquired 0.8 0.8
Consideration paid in cash 3.1
Cash and cash equivalents
in the subsidiaries acquired 0.0
Net cash outflow 3.1
Since these pieces of information are not material individually,
the presentation is aggregated. The profits of the acquired
companies, totalling EUR 0.2 million, are included in the consoli-
dated income statement. The actual acquisition dates and the nature
of the operations taken into account the effect of the acquisitions
on the consolidated net sales and profits is not material even if
they were combined as of the beginning of the financial year.
DEFINITIONS OF CONSOLIDATED KEY FINANCIAL INDICATORS
Earnings per share, euro:
Profit for the period attributable to the equity holders of the
parent / Average adjusted number of shares during the period
Earnings per share (diluted), euro:
Profit for the period attributable to the equity holders of the
parent / Average adjusted and diluted number of shares during
the period
the share options affect the dilution as the average share market
price for the period exceeds the defined subscription price
Equity ratio, %:
Total equity x 100 / (Total assets - advances received)
Gearing, %:
Interest-bearing net debt x 100 / Total equity
Equity per share, euro:
Equity attributable to equity holders of the parent / Adjusted
number of shares on the balance sheet date
Nokian Tyres plc
Raila Hietala-Hellman
Vice President, Corporate Communications
Further information: Kim Gran, President and CEO, tel. +358 10 401 7336.
Distribution: OMX, key media and www.nokiantyres.com
***
Nokian Tyres will publish the January-June 2008 Interim Report on Wednesday 6
August 2008 at 8:00 am.
The results will be presented in English at an event for analysts and the press
on the same day at 10:00 am at Hotel Kämp in Helsinki.
The event can be followed live on the Internet on Wednesday 6 August 2008, 10:00
am, at:
http://www.nokiantyres.com/tulosinfo2008q2
A telephone conference in English will be arranged in conjunction with the
event. To participate in the conference, dial the following number 5 to 10
minutes before the event: +44 (0)20 7162 0025. The password is "Nokian Tyres".
The stock exchange release and presentation material will be available for
download before the beginning of the event at:
http://www.nokiantyres.com/ir-kalenteri
A recording of the telephone conference will be available for download on this
page after the event.
Nokian Tyres Q3 result will be published October 31, 2008. Releases and company
information will be found from Internet www.nokiantyres.com