Nokian Renkaat
Nokian Tyres plc Financial Statement Bulletin 2013: Improved market shares and solid margins in challenging conditions

DGAP-News: Nokian Renkaat /

07.02.2014 / 07:00

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Nokia, Finland, 2014-02-07 07:00 CET (GLOBE NEWSWIRE) -- Nokian Tyres plc
Financial Statement Bulletin 2013  7 February 2014, 8 a.m. 

Nokian Tyres plc Financial Statement Bulletin 2013:  Improved market shares and
solid margins in challenging conditions 

10-12/2013
Nokian Tyres Group's Net sales in the fourth quarter were EUR 411.8 million
(EUR 446.4 million in 10-12/2012). Operating profit amounted to EUR 93.2
million (111.8), including expensed credit losses and provisions of EUR 8.4
million (0.4). Result for the period was EUR -36.4 million (88.3), due to the
additional taxes of EUR 100.3 million in Finland from years 2007-2010. Earnings
per share amounted to EUR -0.28 (EUR 0.67). 

1-12/2013
Nokian Tyres Group's Net sales decreased by 5.7% to EUR 1,521.0 million (EUR
1,612.4 million in 2012). Operating profit was down by 7.1% to EUR 385.5
million (415.0), including expensed credit losses and provisions of EUR 14.3
million (5.3). Profit for the period amounted to EUR 183.7 million (330.9),
penalized by exceptional additional taxes of EUR 100.3 million in Finland from
years 2007-2010. Earnings per share amounted to EUR 1.39 (EUR 2.52). Cash flow
from operations was EUR 325.6 million (EUR 262.3 million). The Board of
Directors proposes a dividend of EUR 1.45 (EUR 1.45) per share. 

Outlook

The market demand for replacement car tyres is expected to show growth in the
Nordic countries and in Central Europe in 2014. In Russia relatively low GDP
growth and flat car sales still limit growth in tyre demand. Heavy industrial
tyre demand in Nokian core products is expected to improve clearly. The pricing
environment for 2014 remains tight for all tyre categories. 

Nokian Tyres sales are expected to show growth in 2014, with a slow start in
Q1. Sales in all target markets, Nordic countries, Central Europe, North
America and Russia & CIS are expected to grow in 2014. Some growth is targeted
in all core product groups. Margins will be supported by easing of raw material
costs (EUR/kg) by 16% in Q1/2014 year-over-year and 5% in full year 2014,
providing a tailwind of EUR 22 million versus 2013. 

Financial guidance

In 2014, the company is positioned to show growth in Net sales and Operating
profit. 



Key figures, EUR million                                                        
                          10-12/13  10-12/12  Change%     2013     2012  Change%
Net sales                    411.8     446.4     -7.7  1,521.0  1,612.4     -5.7
Operating profit             93.2*     111.8    -16.6   385.5*    415.0     -7.1
Profit before tax             57.7     104.2    -44.7    312.8    387.7    -19.3
Result for the period      -36.4**      88.3   -141.2  183.7**    330.9    -44.5
Earnings per share, EUR      -0.28      0.67   -141.3     1.39     2.52    -45.0
Equity ratio, %                                           67.6     71.2         
Cash flow from               515.9     552.0     -6.5    325.6    262.3     24.2
 operations                                                                     
RONA,% (roll. 12 months)                                  20.2     23.0         
Gearing, %                                                -4.1     -4.5         

*) Incl. bad debt provision of 8.4 mEUR in Q4, (full year 14.3 mEUR)

**) Incl. additional tax of 100.3 mEUR in Q4


Kim Gran, President and CEO:

'Nokian Tyres' strong market leader position in Russia and Nordic countries
improved further in 2013 and we managed again to increase both market share and
our distribution footprint. The newly launched Nokian Hakkapeliitta 8 winter
tyre set new standards for winter tyres and helped us to maintain price
leadership, to improve sales mix and to book good growth in the premium
segment. Despite the headwind from the markets in 2013 we maintained a
reasonably good level of profitability and provided strong cash flow. The
company is debt free with a strong balance sheet, which gives us a good
platform to create further growth and improve owner value. In 2014 we see signs
of recovery, especially in Central Europe, and we aim to grow our top line and
to provide healthy margins on the back of our renewed successful product lines,
expanding distribution, efficient industrial structure and decreasing raw
material cost. 

Nokian Tyres' sales in the Nordic countries were again solid, and our already
strong market position was further improved by clear growth especially in
Sweden. Our market share improved to an all-time high 37% of winter tyres in
the Nordic region. Our sales growth in Russia took a breath, even though we
managed again to grow winter tyre sales clearly in a weaker market. One of our
highlights was a clear improvement in our CE sales. The expansion of our
distribution network in CE is starting to pay dividends with sales volumes
increasing faster than the average market demand. We showed clear growth in
Germany, Poland and France. 

Our sales mix was strong securing an almost flat ASP (EUR/kg) of -1.1% in a
challenging market. Our margins were good while the result was being pulled in
two directions: a strong tailwind from material cost was challenged by the
unfavourable exchange rate of the Russian Rouble and a tough pricing
environment. A reasonable utilization rate and an increased share of Russian
production compensated for the increased depreciation and marketing costs. 

We continued to develop and improve productivity and our industrial structure.
In Q1 we commissioned another line (line 12) in the Russian factory and
followed up in Q2 with installation of line 13. This took the annualized
capacity in Russia to more than 15 million tyres by end of 2013. We have an
inbuilt capability to increase our output rapidly without capex to meet market
growth. 

Expanding our distribution network continued as we opened 169 new Vianor stores
in 2013, now totalling 1,206 stores in 27 countries. In Russia Nokian
dealership programs now include nearly 3,300 tyre stores and car dealers. A new
softer partner franchise model Nokian Authorized Dealer (NAD) has also been
rolled out with 432 shops contracted in Europe and China. 

Our net profit was hit hard in Q4 by exchange rate changes and by additional
taxes of EUR 100.3 million in Finland. We strongly disagree with the tax
decision, which we consider to be in conflict with legislation and tax
agreements. We will appeal against this decision in all instances necessary,
and trust that the decision will be revised. 

We are looking into the future with confidence. With the expanded product range
combined with the overwhelming test victories in all core markets in 2013, our
product offering is the best we have ever had. Our market geography is showing
signs of improving demand and our tyre chains Vianor and NAD are to be expanded
further, offering us a good base to increase sales in 2014. Lower material cost
and a higher share of Russian production will support our profitability.' 

Market situation

The global economy has showed signs of improvement since late 2013. The global
GDP growth in 2013 was modest but is expected to turn to a growth of 3.5-4.0%
in 2014. USA seems to be the growth engine with shale energy, improved
industrial investments, competitiveness of companies and consumer confidence
giving fuel for GDP growth. The economy in China is believed to remain solid
with an estimated GDP growth of 7.5% in 2014. During the summer 2013 the
European economy turned to growth after 18 months of recession. Growth in
Europe is still fragile but the outlook is turning more optimistic in the
beginning of 2014. 

In Nokian Tyres' core markets the Nordic countries continue to show slow but
comparatively stable development with a full year 2014 GDP growth estimate of 2
%. Due to oil price levelling off, and higher interest rates, the growth in
Russia has been slowing down with full year 2013 GDP growth estimated at 1.3%
and growth for 2014 projected as 2.5-3.0%. 

In Russia consumer confidence has been on a relatively healthy level in 2013,
but consumer spending has been held back by increased interest rates and the
uncertainty relating to the global economic turmoil. The sales of new cars in
2013 in Russia decreased by 5%, while foreign brands, representing some 80% of
total, were down 3% compared to 2012. In 2013 demand for premium tyres
decreased compared to 2012 by approximately 9%, slightly for winter tyres and
clearly for summer tyres. Tyre prices decreased in the mid class B-segment, due
to price pressure from the Japanese suppliers. Both car and tyre demand are
estimated to be flat in Russia in 2014 versus 2013. 

In Europe the weak economy had a clear negative effect on consumer confidence
and spending. In 2013 the sales of new cars dropped by 1.7% year-over-year.
However, the car sales turned to growth and were up in all months September to
December. Replacement car tyre sales decreased by 1%, with winter tyre sell-in
to distributors down by 5% compared to 2012. Consumer sales for tyres turned to
growth during summer months and demand for winter tyres picked up in H2 due to
seasonality and pent up demand. There has been pricing pressure both in the
premium and economy tyre segments in Central Europe and sell-in prices of the
tyre industry declined during H1/2013. The price rot seems to have stopped
during H2 but there is still little evidence of price increases. Inventory
levels in distribution are lower than a year ago and tyre demand is estimated
to show growth in Europe in 2014. 

In the Nordic countries the new car sales decreased by 2.6% in 2013
year-over-year. The market volume of car tyres showed a decrease of 2%, with
winter tyre sell-in being on par with year 2012. Both sales of new cars and
tyre demand are estimated to grow in 2014. 

The demand for speciality heavy tyres remained comparatively weak in 2013.
Forestry tyres and radial industrial tyre demand has turned back to growth in
H2/2013  and are estimated to continue to improve in 2014. Demand for mining
machinery tyres decreased along with the weakening prices of metals and have
stabilized. 

In 2013 there was a recovery in truck tyre demand. In Europe the demand for
premium truck tyres was up by 8%, and in Russia the demand increased by 3%
year-over-year. In the Nordic countries the recovery was postponed with demand
still down by 3%. The recovery is expected to continue on all Nokian key
markets in 2014. 

Raw materials

Tyre industry raw material prices continued to decrease in 2013, and the
tailwind is expected to continue into H1/2014. The raw material cost (EUR/kg) for
Nokian Tyres was down 12.9% in 2013 year-over-year. The raw material cost is
estimated to decrease by 16% in Q1/2014 versus Q1/2013 and to decrease 5% in
full year 2014, providing a tailwind of EUR 22 million versus 2013. 

October-December 2013

In the fourth quarter Nokian Tyres Group recorded Net sales of EUR 411.8
million (446.4), showing a decrease of 7.7% compared with Q4/2012. In the
Nordic countries sales were up by 0.6%. Sales in Russia decreased by 20.1%.
Russia and CIS consolidated sales were down by 21.5%. In Other Europe sales
increased by 12.7% year-over-year. In North America sales increased by 3.2%. 

Raw material cost (EUR/kg) in manufacturing decreased in the fourth quarter by
15.4% year-over-year and decreased by 2.1% versus the third quarter of 2013.
Fixed costs amounted to EUR 112.8 million (112.5), accounting for 27.4% (25.2%)
of Net sales. 

Nokian Tyres Group's Operating profit amounted to EUR 93.2 million (111.8). The
Operating profit was negatively affected by expensed credit losses and
provisions of EUR 8.4 million (0.4) and a bonus of EUR 2.0 million (2.3) for
personnel and management. 

Net financial expenses were EUR 35.6 million (7.6). Net interest expenses were
EUR 25.3 million (4.2) including EUR 20.2 million penalty interests related to
additional taxes and EUR 2.5 million (2.3) in non-cash expenses related to
convertible bonds. Net Financial expenses include EUR 10.3 million (3.3) of
exchange rate differences of which EUR 5.6 million was related to internal
lending in Rouble. 

Profit before tax was EUR 57.7 million (104.2), including EUR 20.2 million
penalty interests related to additional taxes. Result for the period was EUR
-36.4 million (88.3), and EPS were EUR -0.28 (EUR 0.67), penalized by
additional taxes of EUR 100.3 million in Finland, including punitive tax
increases and interests. 

Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR 515.9 million
(552.0). 

January-December 2013

Nokian Tyres Group recorded Net sales of EUR 1,521.0 million (1,612.4), showing
a decrease of 5.7% compared with 2012. In the Nordic countries sales increased
by 1.5% representing 35.8% (34.4%) of the group's total sales. Sales in Russia
decreased by 7.6%. Russia and CIS consolidated sales were down by 4.9% and
formed 34.2% (35.1%) of the group's total sales. In Other Europe sales were
down by 4.0% year-over-year representing 22.4% (22.8%) of the group's total
sales. In North America sales increased by 0.1% and were 7.0% (6.9%) of the
group's total sales. 

Sales of Passenger car tyres were down by 6.8% representing 71.1% (72.1%) of
the group's total sales. Heavy tyres' sales decreased by 8.4% and were 6.0%
(6.2%) of the group's total sales. Vianor's sales decreased by 0.9% forming
19.5% (18.6%) of the group's total sales. The sales of Other operations were up
by 2.2% representing 3.4% (3.1%) of the group's total sales. 

Raw material cost (EUR/kg) in manufacturing decreased by 12.9% year-over-year.
Fixed costs amounted to EUR 410.0 million (389.2), accounting for 27.0% (24.1%)
of Net sales. Total salaries and wages were EUR 189.6 million (197.1). 

Nokian Tyres Group's Operating profit amounted to EUR 385.5 million (415.0).
The Operating profit was negatively affected by the IFRS 2 -compliant option
scheme write-off of EUR 13.2 million (11.8) and expensed credit losses and
provisions of EUR 14.3 million (5.3). 

Net financial expenses were EUR 72.7 million (27.3). Net interest expenses were
EUR 38.5 million (15.5) including EUR 20.2 million penalty interests related to
additional taxes and EUR 9.5 million (9.0) in non-cash expenses related to
convertible bonds. Net Financial expenses include EUR 34.2 million (11.8) of
exchange rate differences of which EUR 17.7 million was related to internal
lending in Rouble. 

Profit before tax was EUR 312.8 million (387.7), including EUR 20.2 million
penalty interests related to additional taxes. Profit for the period amounted
to EUR 183.7 million (330.9), and EPS were EUR 1.39 (EUR 2.52), penalized by
additional taxes of EUR 100.3 million in Finland, including punitive tax
increases and interests. 

Return on net assets (RONA, rolling 12 months) was 20.2% (23.0%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR 325.6 million (262.3). 

The Group employed an average of 4,194 (4,083) people, and 4,170 (4,039) at the
end of the year. The equity-owned Vianor tyre chain employed 1,480 (1,362)
people and Russian operations 1,319 (1,252) people at the end of the year. 

Exchange rate differences

Net Financial expenses include EUR 34.2 million (11.8) of exchange rate
differences of which EUR 17.7 million is related to internal RUB-nominated
loans granted by the Finnish parent company to Russian subsidiaries. 

Investments

Investments in 2013 amounted to EUR 125.6 million (209.2). This comprises of
production investments in the Russian and Finnish factories, moulds for new
products and the Vianor expansion projects. 

Financial position on 31 December 2013

Gearing ratio was -4.1% (-4.5%). Interest-bearing net debt amounted to EUR
-56.4 million (-65.2). Equity ratio was 67.6% (71.2%). 

The Group's interest-bearing liabilities totalled EUR 368.1 million (365.1) of
which current interest-bearing liabilities amounted to EUR 182.3 million
(42.0). The average interest rate of interest-bearing liabilities was 4.7%
(4.5%). The average interest rate of interest-bearing liabilities was 2.4%
(2.3%) with calculatory non-cash expenses related to the convertible bond
eliminated. Cash and cash equivalents amounted to EUR 424.6 million (430.3). 

At the end of 2013 the company had unused credit limits amounting to EUR 656.6
million (656.8) of which EUR 305.8 million (306.0) were committed. The current
credit limits and the commercial paper program are used to finance inventories,
trade receivables, subsidiaries in distribution chains and thus control the
typical seasonality in the Group's cash flow due to changes in the working
capital. 

Tax rate

In 2013 the Group's tax rate was 41.3% (14.7%). The exceptional tax rate is
caused by a reassessment decision from the Tax Administration in Finland,
according to which the Company recorded the 2007-2010 total additional taxes of
EUR 100.3 million, including punitive tax increases and interests, to the
financial statement and result of year 2013. 

The tax rate is positively affected by tax incentives in Russia based on
present investments and further investment-related incentive agreements. The
authorities' final approvals of the new factory building in Russia took place
at the end of 2012 and the new agreed tax benefits and incentives came into
force in the beginning of January 2013. The agreement will prolong the benefits
and incentives until approximately 2020. 

The estimated tax rate going forward will depend on the timetable and final
result of the appeal process against the Finnish Tax Administration. If the
claim to the Administrative Court does not lead to annulment of the tax
decision, the Group's corporate tax rate is expected to rise in the next 5
years, from the previously announced 17 per cent to maximum 22 per cent. 

PASSENGER CAR TYRES



                                10-12/  10-12/  Change     2013     2012  Change
                                    13      12       %                         %
Net sales, mEUR                    271.6   304.2   -10.7  1,137.0  1,220.1    -6.8
Operating profit, mEUR              75.3    94.1   -20.1    378.5    410.8    -7.8
Op.profit excl. expensed          82.4    94.1            389.4    415.0        
 credit losses and provisions,                                                  
 mEUR                                                                             
Operating profit, %               27.7    30.9             33.3     33.7        
Op.profit excl. expensed          30.3    30.9             34.2     34.0        
 credit losses and provisions,                                                  
 %                                                                              
RONA,% (roll.12 m.)                                        28.2     32.5        

10-12/2013

Net sales of Nokian Passenger Car Tyres were EUR 271.6 million (304.2).
Operating profit was EUR 75.3 million (94.1). Operating profit percentage was
27.7% (30.9%). Excluding the expensed credit losses and provisions, Operating
profit was EUR 82.4 million (94.1) and Operating profit percentage 30.3%
(30.9%). 

Sales and Operating profit were down compared to Q4/2012, caused by the
unfavourable exchange rate development of the Russian Rouble and a black winter
season limiting sales. A major expensed credit loss and provision was booked
relating to a German wholesaler insolvency proceedings. 

1-12/2013
Net sales of Nokian Passenger Car Tyres totalled EUR 1,137.0 million (1,220.1),
down by 6.8% compared to 2012. Operating profit amounted to EUR 378.5 million
(410.8). Operating profit percentage was 33.3% (33.7%). Excluding the expensed
credit losses and provisions, Operating profit was EUR 389.4 million (415.0)
and Operating profit percentage 34.2% (34.0%). The negative sales growth
related mainly to Nokian Tyres ending contract manufacturing of tyres to
Bridgestone in H1 and the unfavourable exchange rate development of the Russian
Rouble in H2. 

Nokian Tyres is the market and price leader in Nordic countries and Russia &
CIS and a growing premium player in CE. The company continued to win market
share in Russia & CIS and the company is the clear market leader in the premium
and mid segment winter tyres. In the Nordic countries and CE the company
continued to gain market share during 2013, especially in winter tyres as well
as in SUV winter and summer tyres. 

The Average Selling Price (EUR/kg) was down by 1.4% compared with 2012 although
the share of mid segment tyres increased and the pricing environment for tyres
was tight. Winter tyres represented 79% (74%) of the company's sales volume in
2013, which improved mix and supported ASP. 

Raw material costs (EUR/kg) were down 13% year-over-year, which supported margins.

A major overhaul of key winter product offering, altogether five new product
ranges, was done in 2013. The biggest launch ever included the new generation
of studded Nokian Hakkapeliitta 8, non-studded Hakkapeliitta R2 and
Hakkapeliitta R2 SUV targeting further growth in core markets. In addition to
the Nordic product range, Nokian Tyres also introduced two new winter tyres for
the Central European and North American markets: Nokian WR G3 and Nokian WR SUV
3. 

The new Nokian Hakkapeliitta 8 has dominated the winter tyre tests with
victories in practically all car magazines. Also the Central European winter
tyre test results have been a success for Nokian Tyres with test wins in key
markets. The new summer tyre range with the spearhead products Nokian Hakka
Black, Nokian Hakka Blue, Nokian Hakka Green and Nokian Line won several car
magazines' tests in the core markets and in Central Europe in 2012-2013. 

Fixed costs increased due to the commissioning of the new factory in Russia
which increased depreciation and due to increased marketing costs relating to
the launch of new products. Cash flow improved due to lower finished goods
inventory and investments. 

The production capacity increased with commissioning of a new line (12) in
Russia in March. Yet another line (13) in Russia was installed in Q2. The
company did not utilize full capacity in 2013 due to soft demand. Productivity
(kg/mh), however, improved year-over-year. In 2013, 80% of Nokian car tyres
(pcs) were manufactured in the Russian factories. 

In 2014 the focus is to increase sales more than average market growth in all
targeted car and SUV tyre markets, to improve price position with the newly
launched products, to expand distribution further and to improve productivity
and utilization of capacities. 

HEAVY TYRES



                      10-12/13  10-12/12  Change%  2013   2012  Change%
Net sales, mEUR             25.1      25.9     -2.8  95.7  104.4     -8.4
Operating profit, mEUR       2.7       1.4     91.2  10.3   11.3     -9.3
Operating profit, %       10.8       5.5           10.7   10.8         
RONA,% (roll.12 m.)                                12.1   12.5         

The net sales of Nokian Heavy Tyres totalled EUR 95.7 million (104.4), down by
8.4% year-over-year. Operating profit was EUR 10.3 million (11.3), and the
Operating profit percentage 10.7% (10.8%). 

Nokian Heavy Tyres' sales decreased due to generally weak demand in special
heavy tyres and slowing down of machine building in Europe in most of the heavy
end use product groups. However, forestry tyre order book started to grow
during the last quarter of 2013. Average Selling Price remained on the same
level year-over-year despite a challenging market situation. Margins were
supported by lower raw material cost and improved productivity. 

The production volume was cut by reducing working days to match a lower demand
and to control the inventory level. In 2013 the production output (tonnes)
decreased by 11%. The low utilization rate with a higher share of fixed costs
penalized the profits. 

An investment program has been in progress to modernize the factory, to open
bottlenecks in production and to increase radial tyre output. The upgrade of
the factory will be completed in the beginning of 2014. The structural changes
in manufacturing have already reduced manning and improved product quality,
flexibility, and productivity in 2013. 

A restructuring of the Heavy tyres operation to include also the Truck tyre
profit center was done in Q4 and the new organization has become effective from
the beginning of 2014. Synergies are expected to materialize both in sales and
in fixed costs already in 2014. 

Truck Tyres

Net sales of Nokian Truck Tyres were EUR 54.0 million (52.9), up by 2.2%
compared to 2012. Operating profit was EUR 10.1 million (8.6). Cash flow
improved and was on a healthy level. 

Net sales improved although the truck tyre market was challenging in the Nordic
countries with overall tyre industry sales down by 3%. In the core markets,
Nordic countries and Russia, Nokian Tyres' market share increased due to an
improved product range in both premium and standard tyres. 

The Truck tyre division has been integrated to the Heavy tyres division from
the beginning of 2014. 

THE NEW PROFIT CENTRE AS OF 1 JAN 2014 (Heavy tyres and Truck tyres combined)

Pro Forma Heavy Tyres



                       10-12/13  10-12/12  Change%   2013   2012  Change%
Net sales, mEUR              40.0      40.5     -1.2  149.7  157.3     -4.8
Operating profit, mEUR        5.6       3.9     42.2   20.4   19.9      2.3
Operating profit, %        13.9       9.7            13.6   12.7         
RONA, % (roll. 12 m.)                                17.7   15.9         

The outlook going into 2014 is improving with demand in core Heavy tyre as well
as Truck tyre product groups estimated to grow in OEM and the replacement
market. The focus is to increase sales especially in forestry, radial heavy
tyres and truck winter tyres and to improve productivity clearly. 

VIANOR

Equity-owned operations



                      10-12/13  10-12/12  Change%   2013   2012  Change%
Net sales, mEUR            117.2     121.3     -3.3  312.5  315.3     -0.9
Operating result, mEUR      12.8      11.8      8.7   -1.8    0.0         
Operating result, %       10.9       9.7            -0.6    0.0         
RONA, % (roll.12 m.)                                -1.1    0.0         

At the end of 2013 Vianor had 183 (182) equity-owned stores in Finland, Sweden,
Norway, USA, Switzerland and Russia. Vianor's Net sales amounted to EUR 312.5
million (315.3), down by 0.9% compared with 2012. Operating result was EUR -1.8
million (0.0) and the Operating result percentage was -0.6% (0.0%). 

Vianor succeeded in its strategic task of expanding distribution and setting
market prices for Nokian products and was able to win winter tyre market shares
in a challenging market situation. Operating result was negative in 2013 due to
the 'black winter' without snow continuing over the year-turn in the Nordic
countries, which resulted in winter tyre consumer sales partly shifting from
Q4/2013 to Q1/2014. The service revenues continued to increase in 2013. 

The gradual change of operating model from tyre sales to full car service in
the stores continues with investments and local acquisitions of car service
shops. At the end of 2013 a total of 45 car service operations had been
acquired and integrated to existing Vianor stores, which has increased service
sales and caused some consolidation costs. 

The projects concerning the expansion of the network, improving consumer tyre
sales and developing car services business have proceeded as planned. 

Franchising and partner operations

Vianor expanded the shop network in Nokian Tyres' key markets by 169 stores
during 2013. At the end of the year the Vianor network operates in 27 countries
and is comprised of totally 1,206 stores of which 1,023 were partners. Nokian
Tyres' market shares improved as a result of the expansion in each respective
country. Expanding the partner franchise network will continue according to
plans; the target is to have 1,340 Vianor stores by the end of 2014. 

A new softer partner franchise model Nokian Authorized Dealer (NAD) has been
rolled out with first 432 shops contracted in Europe and China. The target is
to add 4-5 new countries and double the amount of NADs by the end of 2014. 

RUSSIA AND THE CIS COUNTRIES

Nokian Tyres' sales in Russia decreased year-over-year by 7.6% to EUR 520.1
million (563.0). Sales in CIS countries (excluding Russia) increased to EUR
56.6 million (43.7). Consolidated sales in Russia and CIS decreased by 4.9% to
EUR 576.7 million (606.7). The decrease in sales relate mainly to weakening of
the Russian Rouble. The Operating profit and margin of the Russian as well as
CIS entities improved compared to the previous year. 

Nokian winter tyre sales increased clearly with a growing share of mid-price
segment tyres, despite a decrease of new car sales in Russia. Nokian winter
tyre market shares improved clearly and the company strengthened its market
leader position. Summer tyre sales were down due to distributors' carry-over
stocks from two consecutive weak summer tyre consumer seasons in 2012-2013.
Payments of customers' trade receivables and governmental tax incentives came
in as planned. 

The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network by 88 stores. There were a total of
621 Vianor stores in 363 cities in Russia and CIS countries at the end of 2013.
The Hakka Guarantee network and other retail partners working closely with
Nokian Tyres in Russia comprised nearly 3,300 tyre stores, Vianor shops, car
dealers, and web shops. Nokian Tyres' e-commerce development proceeded
according to plans. 

The second line (line 12) in the new factory became on stream in Q1/2013,
increasing annual capacity in the Russian factories to approximately 14 million
tyres. Capacity and productivity increased further as line 13 installation was
completed in Q2/2013. The completion of line 13 increased the annualized
capacity to in excess of 15 million tyres by end 2013. 

Due to oil price levelling off, and higher interest rates, the growth in Russia
has been slowing down with full year 2013 GDP growth estimated at 1.3% and
growth for 2014 projected as 2.5-3.0%. In Russia consumer confidence has been
on a relatively healthy level in 2013, but consumer spending has been held back
by increased interest rates and the uncertainty relating to the global economic
turmoil. The sales of new cars in 2013 in Russia decreased by 5%, while foreign
brands, representing some 80% of total, were down 3% compared to 2012. In 2013
demand for premium tyres decreased compared to 2012 by approximately 9%,
slightly for winter tyres and clearly for summer tyres. Tyre prices decreased
in the mid class B-segment, due to price pressure from the Japanese suppliers.
Both car and tyre demand are estimated to be flat in Russia in 2014 versus
2013. 

By Russia joining WTO, the tyre duties will go down gradually; duty of car and
van tyres is expected to decrease from 18% in 2013 to 16% in 2014 and gradually
to 10% in 4 years. 

The Nokian Tyres plant located in Russia inside the customs borders combined
with strong brands and an expanding distribution provides a significant
competitive edge on the market, and Nokian Tyres targets to outperform the
market also in 2014. 

A re-organization in the Ukraine, Kazakhstan and Belarus sales companies have
been completed in 2013 and the clear sales increase which commenced in all CIS
countries is targeted to continue in 2014. 


OTHER MATTERS

1. Stock options on the NASDAQ OMX Helsinki Stock Exchange

The total number of stock options 2010A is 1,320,000. Each stock option 2010A
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010A during 1 May 2012 - 31 May 2014. In
the aggregate, the stock options 2010A entitle their holders to subscribe for
1,320,000 shares. The present share subscription price with stock options 2010A
is EUR 14.84/share. The dividends payable annually shall be deducted from the
share subscription price. 

The total number of stock options 2010B is 1,340,000. Each stock option 2010B
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010B during 1 May 2013 - 31 May 2015. In
the aggregate, the stock options 2010B entitle their holders to subscribe for
1,340,000 shares. The present share subscription price with stock options 2010B
is EUR 30.25/share. The dividends payable annually shall be deducted from the
share subscription price. 

2. Shares subscribed with option rights

After 17 December 2012 registered new shares a total of 116,427 Nokian Tyres
plc's shares have been subscribed with the 2007C option rights and 248,376 with
the 2010A option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007 and 2010. New shares have been registered into
the Trade Register on 19 February 2013, as of which date the new shares have
established shareholder rights. As a result of the share subscriptions, the
number of Nokian Tyres plc shares increased to 132,321,930 shares. 

After 19 February 2013 registered new shares a total of 160,246 Nokian Tyres
plc's shares have been subscribed with the 2007C option rights and 127,320 with
the 2010A option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007 and 2010. The subscription time with the 2007C
option rights ended on 31 March 2013. New shares have been registered into the
Trade Register on 14 May 2013, as of which date the new shares have established
shareholder rights. 
As a result of the share subscriptions, the number of Nokian Tyres plc shares
increased to 132,609,496 shares. 

After 14 May 2013 registered new shares a total of 464,130 Nokian Tyres plc's
shares have been subscribed with the 2010A option rights and 40 with the 2010B
option rights. These option rights are attached to the Nokian Tyres plc's
Option Program of 2010. New shares have been registered into the Trade Register
on 22 August 2013, as of which date the new shares have established shareholder
rights. As a result of the share subscriptions, the number of Nokian Tyres plc
shares increased to 133,073,666 shares. 

After 22 August 2013 registered new shares a total of 206,775 Nokian Tyres
plc's shares have been subscribed with the 2010A option rights. These option
rights are attached to the Nokian Tyres plc's Option Program of 2010. New
shares have been registered into the Trade Register on 13 November 2013, as of
which date the new shares have established shareholder rights. As a result of
the share subscriptions, the number of Nokian Tyres plc shares increased to
133,280,441 shares. 

After 13 November 2013 registered new shares a total of 6 655 Nokian Tyres
plc's shares have been subscribed with the 2010A option rights. These option
rights are attached to the Nokian Tyres plc's Option Program of 2010. New
shares have been registered into the Trade Register on 13 December 2013, as of
which date the new shares have established shareholder rights. As a result of
the share subscriptions, the number of Nokian Tyres plc shares increased to
133,287,096 shares. 

3. Share price development

The Nokian Tyres' share price was EUR 34.87 (EUR 30.10) at the end of the
review period. The volume weighted average share price during the period was
EUR 34.11 (EUR 31.92), the highest EUR 38.72 (EUR 38.20) and the lowest EUR
29.85 (EUR 24.84). A total of 127,823,377 shares were traded during the period
(186,898,418), representing 96% (142%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 4.648 billion
(EUR 3.972 billion). 

The company's percentage of Finnish shareholders was 35.7% (38.9%) and 64.3%
(61.1%) were foreign shareholders registered in the nominee register. This
figure includes Bridgestone Corporation's ownership of approximately 15%. 

4. Decisions made at the Annual General Meeting

On 11 April 2013, Nokian Tyres Annual General Meeting accepted the financial
statements for 2012 and discharged the Board of Directors and the President and
CEO from liability. 

The meeting decided that a dividend of EUR 1.45 per share shall be paid for the
period ending on 31 December, 2012. The dividend shall be paid to shareholders
included in the shareholder list maintained by Euroclear Finland Ltd on the
record date of 16 April 2013. The dividend payment date was decided to be 26
April 2013. 

4.1. Members of the Board of Directors and Auditor

The meeting decided that the Board of Directors has six members. Current
members Kim Gran, Hille Korhonen, Risto Murto, Hannu Penttilä, Aleksey Vlasov
and Petteri Walldén will continue in the Nokian Tyres' Board of Directors.
Authorised public accountants KPMG Oy Ab continue as auditors. 

4.2. Remuneration of the Members of the Board of Directors

The meeting decided that the fee paid to the Chairman of the Board is EUR
80,000 per year, while that paid to Board members is set at EUR 40,000 per
year. With the exception of the President and CEO, members of the Board and the
Nomination and Remuneration Committee are also granted an attendance fee of EUR
600 per meeting. 

In addition, 50% of the annual fee be paid in cash and 50% in company shares,
such that in the period from 12 April to 30 April 2013, EUR 40,000 worth of
Nokian Tyres plc shares will be purchased at the stock exchange on behalf of
the Chairman of the Board and EUR 20,000 worth of shares on behalf of each
Board member. This 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. Issue of stock options

The Board of Directors decided that stock options will be issued by the General
Meeting of Shareholders to the personnel of the Nokian Tyres Group as well as
to a wholly owned subsidiary of Nokian Tyres plc. 

The Company has a weighty financial reason for the issue of stock options,
since the stock options are intended to form part of the incentive and
commitment program for the personnel. The purpose of the stock options is to
encourage the personnel to work on a long-term basis to increase shareholder
value. The purpose of the stock options is also to commit the personnel to the
Company. 

The maximum total number of stock options issued will be 3,450,000 and they
will be issued gratuitously. Of the stock options, 1,150,000 are marked with
the symbol 2013A, 1,150,000 are marked with the symbol 2013B and 1,150,000 are
marked with the symbol 2013C. The stock options entitle their owners to
subscribe for a maximum total of 3,450,000 new shares in the Company or
existing shares held by the Company. The stock options now issued can be
exchanged for shares constituting a maximum total of 2.5 percent of all of the
Company's shares and votes of the shares, after the potential share
subscription, if new shares are issued in the share subscription. 

The share subscription period for stock options 2013A, will be 1 May 2015 - 31
May 2017, for stock options 2013B, 1 May 2016 - 31 May 2018 and for stock
options 2013C, 1 May 2017 - 31 May 2019. 

The share subscription price for stock option 2013A is the trade volume
weighted average quotation of the Company's share on NASDAQ OMX Helsinki Ltd.
during 1 January - 30 April 2013, for stock option 2013B, the trade volume
weighted average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1
January - 30 April 2014, and for stock option 2013C, the trade volume weighted
average quotation of the share on NASDAQ OMX Helsinki Ltd. during 1 January -
30 April 2015. The share subscription price will be credited to the reserve for
invested unrestricted equity. 

The Board of Directors will decide on the distribution of stock options
annually in spring 2013, 2014 and 2015. 

A share ownership plan shall be incorporated with the 2013 stock options,
obliging the Group's senior management to acquire the Company's shares with a
proportion of the income gained from the stock options. 

Terms and conditions of the Stock options and the Share ownership plan are
presented in the appendix of the press release dated 11 April 2013. 

4.4. Authorizing the Board of Directors to resolve to repurchase treasury shares

The Annual General Meeting of Shareholders authorized the Board of Directors to
resolve to repurchase a maximum of 300,000 shares in the Company by using funds
in the unrestricted shareholders' equity. The proposed number of shares
corresponds 0.2 per cent of all shares of the Company. 

The price paid for the shares repurchased under the authorization shall be
based on the market price of the Company's share in public trading. The minimum
price to be paid would be the lowest market price of the share quoted in public
trading during the authorization period and the maximum price the highest
market price quoted during the authorization period. 

The Board decides how treasury shares will be repurchased. Treasury shares can
be repurchased otherwise than in proportion to the shareholdings of the
shareholders (directed repurchase). 

The authorization will be used for purposes determined by the Board of
Directors, among other things, for the Company's incentive plans. 

The authorization be effective until the next Annual General Meeting of
Shareholders, however, at most until 11 October 2014. 

5. Corporate social responsibility

Nokian Tyres plc is qualified to the OMX GES Sustainability Finland index. The
index is designed to provide investors with a liquid, objective and reliable
benchmark for responsible investment. The benchmark index comprises of the 40
leading NASDAQ OMX Helsinki listed companies in terms of sustainability. The
index criteria are based upon international guidelines for environmental,
social and governance (ESG) issues. The index is calculated by NASDAQ OMX in
cooperation with GES Investment Services. 

Nokian Tyres published its Corporate Responsibility Report in June, 2013.

6. Changes in ownership

Nokian Tyres plc received an announcement from Bridgestone Europe NV and
Bridgestone Corporation on 2nd May 2013, according to which Bridgestone Europe
NV has concluded an agreement with Bridgestone Corporation to transfer
Bridgestone Europe NV's shares in the capital of Nokian Tyres plc to
Bridgestone Corporation on 7th May 2013. This agreement decreases the ownership
of Bridgestone Europe NV under the level of 5% of the share capital in Nokian
Tyres plc and increases the ownership of Bridgestone Corporation over the level
of 15% of the share capital in Nokian Tyres plc. 

7. Integrating Heavy and Truck Tyres profit centres as of 1st January 2014

On 23 September 2013 Nokian Tyres announced the decision to integrate Heavy
Tyres and Truck Tyres profit centers and form a new profit centre as of 1st
January 2014. The combined Net sales of the two profit centres were
approximately EUR 150 million in 2013 and they employ about 280 people in
Nokia, Finland. The integration of two small business units' resources,
operations and management is expected to improve sales and profitability. 

Pontus Stenberg, the current Director of Nokian Truck Tyres, was appointed
Director of the new profit centre. For the transition period, Pontus Stenberg
was appointed also as Director of Heavy Tyres as of 1st October 2013. 

8.  A new guidance for 2013 on 4 October

With a stock exchange release on 4 October 2013 Nokian Tyres announced that in
2013, Net sales and Operating profit are estimated show some decline compared
to 2012. The unfavorable currency exchange rate development of Russian Rouble
during 2013 was estimated to generate a negative effect of approximately EUR 25
million on Net sales and approximately EUR 14 million on Operating profit of
Nokian Tyres Group in full year 2013. 

In the same release the company stated that Nokian Tyres has booked excellent
test results and victories in all major magazines with its new winter tyre
Nokian Hakkapeliitta 8 and increased its market shares in all core markets. 

9. EUR 26.9 million additional payable tax in Finland concerning year 2007

Nokian Tyres plc received on 30 Dec 2013 a reassessment decision from the Tax
Administration, according to which the Company is obliged to pay EUR 26.9
million additional taxes with punitive tax increases and interests concerning
tax year 2007. 

10. Matters after the review period

10.1. A total of EUR 100.3 million additional payable tax in Finland regarding
years 2007-2010; the company will make a complaint against the decision 

On 21 January 2014 Nokian Tyres plc announced that it has received a
reassessment decision from the Tax Administration, according to which the
Company is obliged to pay EUR 73.3 million additional taxes with punitive tax
increases and interests concerning tax years 2008-2010. 

Nokian Tyres plc had previously announced on 30 Dec 2013 that the Company
received a reassessment decision from the Tax Administration, according to
which the Company is obliged to pay EUR 26.9 million additional taxes with
punitive tax increases and interests concerning tax year 2007. 

The Company has recorded the 2007-2010 total additional taxes with punitive tax
increases and interests of EUR 100.3 million in full to the financial statement
and result of year 2013. Of the total sum, EUR 67.1 million are additional
taxes and EUR 33.1 million punitive tax increases and interests. 

The Tax Administration's ruling does not affect the company's dividend
distribution. The Board of Directors will propose to the Annual General Meeting
that the dividend per share for the year 2013 would be at least on the previous
year's level. 

The Company considers the reassessment decision of the Tax Administration as
unfounded and is going to appeal against it by leaving the claim for
rectification to the Board of Adjustment and, if necessary, the Company will
continue the appeal process in the Administrative Court. 

10.2. 80 years since the invention of the winter tyre: The inventor of the
world's first winter tyre introduces new Hakkapeliitta winter tyres for SUVs
and vans 

Nokian Tyres announced on 22 Jan 2014 that the company strengthens its winter
tyre selection for Northern conditions by introducing three new products in its
Hakkapeliitta winter tyre range which is intended for the company's core
markets. Together with the product launch, the world's northernmost tyre
manufacturer is celebrating the 80th anniversary of the winter tyre. 

The studded Nokian Hakkapeliitta 8 SUV, tailor-made for the ever-growing sports
utility vehicle segment, and the Nokian Hakkapeliitta C3 and Nokian
Hakkapeliitta CR3, developed for use on vans and delivery vehicles, continue
the advance of the latest generation of Hakkapeliittas. All of the
Hakkapeliitta products are aimed at the company's core markets in the Nordic
countries and Russia. The tyres will start shipping to retailers in early 2014. 

In addition to the Nokian Hakkapeliittas, the champions of the world's most
demanding winter weather, Nokian Tyres is also supplementing its Nokian Nordman
family and introducing the durable Nokian Nordman 5 and Nokian Nordman 5 SUV
studded tyres for the B market segment. 


RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE

The global economy has showed signs of improvement during the last few months.
In Nokian Tyres' core markets the Nordic countries continue to show slow but
comparatively stable development, while in Russia the growth rate has been
slowing down. All in all the economic uncertainties may weaken future demand
for tyres and increase credit risk. 

The company's receivables increased in the review period due to seasonality and
business model. Tyre inventories are on a planned level. The company follows
the development of NWC very closely. At the end of 2013 Russian trade
receivables accounted for 35.6% of the Group's total trade receivables. 

Around 35% of the Group's Net sales in 2014 are estimated to be generated from
Euro-denominated sales. The most important sales currencies in addition to the
Euro are the Russian Rouble, the Swedish and Norwegian Krona, the US Dollar and
the Ukrainian Hryvnia. 

Nokian Tyres' other risks and uncertainty factors relate to the challenging
pricing environment of tyres. The maintaining of profitability in case of
rising raw material prices depends on the company's ability to raise tyre
prices in line with the increasing raw material cost. An efficient ramp-up of
new production lines in Russia will depend on the success of recruiting and
retaining work force in a tightening labour market. 

Nokian Tyres Group has a pending dispute with the Finnish Tax Administration
about EUR 100.3 million of additional taxes with punitive tax increases and
interests, concerning years 2007-2010. The Company has recorded the total sum
in full in the financial statement and the result of year 2013. Nokian Tyres
considers the reassessment decision of the Tax Administration to be incorrect
and is going to appeal against it by leaving the claim for rectification to the
Board of Adjustment. If necessary, the Company will continue the appeal process
in the Administrative Court. The Company will also, if needed, start a process
with the competent authorities to negotiate for the elimination of the double
taxation. The Company is considering to initiate a separate process to
determine the legality of the procedures used in the tax audit by Tax
Administration and tax inspectors. 

OUTLOOK FOR 2014

The global economy has showed signs of improvement since late 2013. The global
GDP growth in 2013 was modest but is expected to turn to a growth of 3.5-4.0%
in 2014. During the summer 2013 the European economy started to grow after 18
months of recession. Growth in Europe is still fragile and uncertainty
prevails, but the outlook is turning more optimistic in the beginning of 2014. 

In Nokian Tyres' core markets the Nordic countries continue to show slow but
comparatively stable development with a full year 2014 GDP growth estimate of
2%. In Russia GDP growth for 2014 is projected as 2.5-3.0%. 

The market demand for replacement car tyres is expected to show growth in the
Nordic countries and in Central Europe in 2014. In Russia relatively low GDP
growth and flat car sales still limit growth in tyre demand. Heavy industrial
tyre demand in Nokian core products is expected to improve clearly. 

Nokian Tyres sales are expected to show growth in 2014, with a slow start in
Q1. Sales in all target markets, Nordic countries, Central Europe, North
America and Russia & CIS are expected to grow in 2014. Some growth is targeted
in all core product groups. 

The pricing environment for 2014 remains tight for all tyre categories. Margins
will be supported by easing of raw material costs (EUR/kg) by 16% in Q1/2014
year-over-year and 5% in full year 2014, providing a tailwind of EUR 22 million
versus 2013. 

Nokian Tyres' growing car tyre production capacity in Russia and a rebuilt
heavy tyre production in Finland offer growth potential, productivity gains,
and a moderate growth of fixed costs supports profitability. There is an
inbuilt capability to increase output rapidly without capex to meet market
growth. 

Vianor is expected to add 140 stores to the retail network in 2014 and to reach
1,340 stores, increase sales, develop service business further and to show a
positive Operating result in full year 2014. 

A strong position in the core markets, an expanding distribution channel, and
an improved cost structure with majority of production inside duty borders of
Russia and CIS combined with new test winner Hakkapeliitta products give Nokian
Tyres opportunities to strengthen its market leadership in the core markets and
to show growth in 2014. 

Financial guidance

In 2014, the company is positioned to show growth in Net sales and Operating
profit. 

INVESTMENTS IN 2014

Nokian Tyres' budget for total investments in 2014 is EUR 116 million (125.6).
EUR 42 million will be invested in Russia. The balance comprises of investments
in Nokia plant (automation, moulds, ICT, R&D), Heavy tyres and sales companies
including Vianor chain. 

Nokia, 7 February 2014

Nokian Tyres plc

Board of Directors

***

The above-said information contains forward-looking statements relating to
future events or future financial performance of the company. In some cases,
such forward-looking statements can be identified by terminology such as 'may',
'will', 'could', 'expect', 'anticipate', 'believe' 'estimate', 'predict', or
other comparable terminology. Such statements are based on the current
expectations, known factors, decisions and plans of the management of Nokian
Tyres. Forward-looking statements involve always risks and uncertainties,
because they relate to events and depend on circumstances that may or may not
occur in the future. Future results may thus vary even significantly from the
results expressed in, or implied by, the forward-looking statements. 

***

Please read the whole release from www.nokiantyres.com

***

Nokian Tyres plc

Antti-Jussi Tähtinen, Vice President, Marketing and Communications

Further information: Mr. Kim Gran, President and CEO, tel: +358 10 401 7336

Distribution: NASDAQ OMX, media, www.nokiantyres.com

*****

Nokian Tyres Financial Statement Bulletin 2013 was published on Friday 7 Feb
2014 at 8.00 a.m. Finnish time. 

The result presentation to analysts and media will be held in Hotel Kämp in
Helsinki at 10.00 a.m. Finnish time. The presentation can be listened through
audiocast via internet at  http://www.nokiantyres.com/resultinfo2013 

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 0077. Conference id: 940132. 

Stock exchange release and presentation material will be available before the
event from http://www.nokiantyres.com/ir-calendar 

After the event the audio recording can be downloaded from the same page.

Nokian Tyres Interim Report 1-3/2014 will be published on Wednesday 7 May,
2014. Releases and company information will be found from
http://www.nokiantyres.com
News Source: NASDAQ OMX


End of Corporate News

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Language:    English         
Company:     Nokian Renkaat  
 
 
             Finland         
ISIN:        FI0009005318    
 
 
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251574 07.02.2014