Nokian Tyres Plc

Good afternoon from Helsinki, and welcome to Nokian Tires Q1 results conference call. My name is Taivi Antola, and I'm the head of investor relations in Nokian Tires. And together with me in the call, I have Jukka Moisio, the president and CEO, and Teemu Kangaskärki, the CFO. As usual, we will start the call with a brief. introduction into the results and that will be then followed by your Q&A. So Jukka please go ahead.

Thank you Päivi and welcome on my behalf as well. I move directly to page two on the presentation heading says net sales and operating profit increased significantly Net sales was in the first quarter 341.8 million. That's a 28.5% increase in comparable currencies. All-time high first quarter volumes in passenger car tires as well as in heavy tires. We also saw that the demand recovered in all markets significantly. Most important recovery was in Russia and then weakest recovery in terms of percentages was in Nordics which was a single digit. All the other markets with the exception of Nordics recovered and grew by double digit numbers. Important to mention that heavy tires achieved all-time high quarterly net sales and segment operating profit in the first quarter. Segments operating profit was 50.3 million versus 16.3 a year ago. Most important factor to improve the profitability was increased volume. We also recorded a negative impact on currencies, which was in about 10 million euro negative impact. I move to page two. some of the highlights in the financial key numbers, starting with the capital expenditure, 17.1 million in the quarter versus 50.9 a year ago. You may remember that a year ago, we still had the investment in Dayton Factory, as well as a significant part of the investment in Spanish Test Track going on in 2020, while These items were pretty much completed by the end of 2020. Small items related to Spanish test track was recorded in the first quarter of 2021. Net debt at the end of March was 31 million versus 121 million a year ago. And cash flow from operating activities, not including the investments, was minus 24 million in 2021. 39 million in 2020. In addition, the operating profit percentage was 14.7, and that compares strongly versus 2020 operating profit, segment operating profit at 5.8%, and segment EPS was 29 cents versus 9 cents a year ago. Gearing is 1.9% and our balance sheet remains strong, as has been mentioned in the heading of the slides. And now I hand over to Teemu Kangaskärki to talk about the segment performance, business area performance, sorry. Teemu, please go ahead.

Thank you Jukka. Let's start with the passenger car tire business unit. Our net sales reached the level of 246 million euros. Our segment operating profit was on a level of 53 million. Net sales increased in all main markets led by strong volume growth in Russia. Our average sales price declined, and the main reasons behind that is naturally the weak Russian ruble that we have been highlighting in our previous course, as well as the high share of volume in Russia and the strong summer and all-season tire sales from the product mix point of view. As we have communicated, we have started recruitment in in finland and in u.s in order to increase the production in both two locations then moving to the passenger car tire net says breakdown here we can see that the volume was up close to 40 percent our price mix was negative about one percent And as I have been commenting in the previous course, in the price mix, we have also the country mix impact, and because of high share of Russia, the impact of that is about minus 3% negative in the first quarter. Then the currency impact or the headwind was about 9%, and here we can see that the weekly ruble starting to impact our numbers in the second half of last year. In the first quarter this year, we also got headwind from USD and Canadian dollar, among others. Then moving to our bridges, net sales and segment operating profit in euros. Here we can see that in euro terms, the net sales, Edwin, from currency was about 18 million. And in the segment operating profit, it was on a level of 10 million as anticipated in the previous call after Q4. Then the biggest contributor to profit improvement is naturally the sales volume up by 35 million, and here we can see also the positive development in materials for the first quarter, and as we have been estimating, we will have a headwind from the raw materials for the full year, meaning that that in the second half the impact is is significant currently our estimate for the headwind for the full year is about close to nine percent then moving to to heavy tires excellent start for the for the year all-time high net sales and and segment operating profit Net sales was on a level of 57 million and the segment operating profit close to 13 million with good profitability. The demand was strong in agriculture segment as well as in mining and truck tires. We had some softness in the forestry segment because of their issues in their production. The profitability was positively impacted by the improved productivity that we have been doing in the factory and that paid off in the first quarter. Generally, the inventories are at the low level at the moment. Then moving to the last business unit, which is the VNR. had also a good performance in in the first quarter which is which is seasonally low and uh looking that the net sales grow on on reported numbers six point eight percent growth and the segment operating profit or loss close to minus 10 million improvement in the in the operating profit due to the fact that we have been able to manage our cost really well and that is something that that we have learned from the from the covet times that we can improve the cost levels really well also in the coming quarters and years to come with that i will add over back to you