Nokian Tyres plc Half Year Financial Report January–June 2022: War in Ukraine overshadowed H1, preparations to exit Russia started

Nokian Tyres plc Half Year Financial Report January–June 2022, August 2, 2022 at 2:00 p.m.

 

This release is a summary of Nokian Tyres’ Half Year Financial Report for January–June 2022. The complete report is attached to this release. It is also available on the company website at www.nokiantyres.com/company/investors/.

April–June 2022

  • Net sales were EUR 482.1 million (416.2 in April−June 2021) and grew by 15.8%. With comparable currencies, net sales increased by 7.4%.
  • Segments operating profit was EUR 86.3 million (89.6), with positive currency impact of approximately EUR 17 million. Operating profit was EUR -202.8 million (81.8) as EUR -289.1 million (-7.8) was booked as non-IFRS exclusions. In June, the Board of Directors decided to initiate a controlled exit from Russia. As part of the process, impairments and write-downs of EUR 300.7 million were recorded in the second quarter.
  • Segments earnings per share were EUR 0.55 (0.51). Earnings per share were EUR -1.67 (0.47).
  • Cash flow from operating activities was EUR -109.4 million (9.3).

January–June 2022

  • Net sales were EUR 898.6 million (758.0 in January−June 2021) and grew by 18.5%. With comparable currencies, net sales increased by 13.9%. The year began with good demand in all markets. The war in Ukraine started to impact on the operating environment in late February.
  • Segments operating profit was EUR 152.8 million (139.9), with positive currency impact of approximately EUR 13 million. Operating profit was EUR -143.5 million (126.1) as EUR -296.3 million (-13.8) was booked as non-IFRS exclusions.
  • Segments earnings per share were EUR 0.93 (0.80). Earnings per share were EUR -1.33 (0.72).
  • Cash flow from operating activities was EUR -223.7 million (-15.1).

 

Guidance for 2022 (updated on June 17, 2022)

The war in Ukraine and resulting sanctions cause significant uncertainty to Nokian Tyres’ operating environment. In 2022, Nokian Tyres’ net sales are expected to decrease or to be at previous year’s level, and segments operating profit is expected to decrease significantly compared to 2021.

Jukka Moisio, President and CEO:

“The second quarter of 2022 was marked by increasing challenges in our operating environment due to the war in Ukraine and the subsequent, tightening sanctions. In June, the Board of Directors decided to initiate a controlled exit from Russia as it is no longer feasible nor sustainable for Nokian Tyres plc to continue operations in Russia. We are evaluating different options for the exit and discussions with possible candidates are ongoing. We will focus on growth opportunities in our other core markets, without a presence in Russia.

Tire demand remained good in April-June, and net sales with comparable currencies grew by 7%. Segments operating profit declined slightly due to lower sales volumes that were driven by supply constraints. At the same time, we succeeded in implementing price increases to mitigate cost inflation.

Our exit from Russia will significantly impact our financial results in 2022. Discontinued supply of tires from Russia will have an adverse impact on sales especially in Central Europe in the second half of 2022. We are working on many fronts to secure supply of our products. We have continued to increase capacity at our factories in Finland and in the US, and are proceeding with our investment in new supply capability in Europe, which is one of our key mid-term priorities.

I am proud of the entire Nokian Tyres team, which has performed extremely well in these unprecedented and demanding times. We are especially proud to have been able to serve our customers despite the fast-changing and highly uncertain operating environment. Going forward, we will focus on building the new Nokian Tyres.”
Key figures

EUR million 4–6/22 4–6/21 Change CC*
Change
1–6/22 1–6/21 Change CC*
Change
2021
Net sales 482.1 416.2 15.8% 7.4% 898.6 758.0 18.5% 13.9% 1,714.1
Operating profit -202.8 81.8 -143.5 126.1 268.2
Operating profit % -42.1% 19.6% -16.0% 16.6% 15.6%
Result before tax -199.3 79.6 -141.7 123.3 258.2
Result for the period -231.1 64.5 -184.2 100.0 206.2
EPS, EUR -1.67 0.47 -1.33 0.72 1.49
Segments operating profit 86.3 89.6 152.8 139.9 324.8
Segments operating profit % 17.9% 21.5% 17.0% 18.5% 19.0%
Segments EPS, EUR 0.55 0.51 0.93 0.80 1.84
Segments ROCE, %** 15.2% 13.9% 15.8%
Equity ratio, % 63.7% 66.1% 68.4%
Cash flow from operating
activities
-109.4 9.3 -223.7 -15.1 396.5
Gearing, % 14.8% 9.4% -6.1%
Interest-bearing net debt 243.0 140.0 -98.7
Capital expenditure 18.7 22.2 32.8 39.3 119.6

* Comparable currencies
** Rolling 12 months

The definitions of alternative performance measures (non-IFRS figures) are presented in the report by the Board of Directors in Nokian Tyres Financial Review 2021.

In this Half Year Financial Report, the following exchange rates for the Russian ruble have been used: 85.3 at end of 2021, 98.0 average in January–March 2022, 84.5 average in January–June 2022 and 56.4 at the end of June 2022 (source: Refinitiv).

 

BUSINESS UNIT REVIEWS

Passenger Car Tyres

EUR million 4–6/22 4–6/21 Change CC*
Change
1–6/22 1–6/21 Change CC*
Change
2021
Net sales 334.7 279.9 19.6% 7.3% 649.6 525.8 23.6% 17.2% 1,199.2
Operating profit -225.0 63.1 -158.0 109.1 263.4
Operating profit, % -67.2% 22.6% -24.3% 20.8% 22.0%
Segment operating profit 63.8 70.6 137.9 123.4 298.7
Segment operating profit, % 19.1% 25.2% 21.2% 23.5% 24.9%

* Comparable currencies
Heavy Tyres

EUR million 4–6/22 4–6/21 Change CC*
Change
1–6/22 1–6/21 Change CC*
Change
2021
Net sales 73.9 62.6 18.0% 16.5% 140.4 119.7 17.3% 15.7% 254.0
Operating profit 15.6 11.7 28.4 24.3 39.1
Operating profit, % 21.1% 18.8% 20.2% 20.3% 15.4%
Segment operating profit 15.6 11.7 28.4 24.3 40.3
Segment operating profit, % 21.1% 18.8% 20.2% 20.3% 15.9%

* Comparable currencies

Vianor, own operations

EUR million 4–6/22 4–6/21 Change CC*
Change
1–6/22 1–6/21 Change CC* Change 2021
Net sales 99.1 91.5 8.3% 8.8% 156.2 149.6 4.4% 4.7% 342.9
Operating profit 9.4 9.7 -2.8 0.6 -15.0
Operating profit, % 9.4% 10.6% -1.8% 0.4% -4.4%
Segment operating profit 9.6 10.0 -2.5 0.2 4.1
Segment operating profit, % 9.7% 11.0% -1.6% 0.2% 1.2%
Number of own service centers at period end 174 174 175

* Comparable currencies

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