Nokian Tyres Plc

Hello and welcome to the Notion TIRES Q4 conference call. My name is François and I will be your operator for today's event. Please note that this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you'll have opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to your host, Evian Tola, to begin today's conference. Thank you.

Thank you. Good afternoon from Helsinki, and welcome to Nokia and TIAS Q4 and the full year results conference call. My name is Saivi Antola, and I am the Head of Investor Relations in Nokian Tyres. And together with me in the call, I have Jukka Moisio, the President and CEO of Nokian Tyres, and Teemu Kangaskärki, the CFO. In this call, we will go through Q4 and full-year results, and more importantly, discuss our plans for 2023 and beyond, and the new start for Nokian Tyres. But now I'm handing over to Jukka and Teemu. Please go ahead.

Thank you, Päivi, and welcome on my behalf as well. So, first of all, I will go through the prepared presentation. The heading is Resilient Performance in 2022 and 2023 a New Start for Nokian Tyres. And indeed, we could also say about 2022, that was an eventful year. I move to page two, and there we reflect the first steps we've taken to build the new Nokian tires. The most important thing is that we made a decision in 2022 to build a new factory in Romania. We went through more than 35 sites in Europe in about six months' time, prepared the investment proposal, decided and announced that in November. So quite a rapid action to rebuild our capacity. First IS will be rolling out in the second half of 2024, and we aim for commercial production in 2025. Right now we have various actions ongoing, including land purchases, permitting processes, and indeed we've ordered the first production equipment already in late 2022. Financing will be taken care of with our own cash flow and leveraging a strong balance sheet. We are not looking to raise new equity to finance this factor in. Actions also to increase capacity in Finland and in the US are proceeding in line with the plan. So we had a plan to go all the way up to 4 million tyres in Dayton. That plan is very much ongoing. Equipments will be installed this year and ramping up of those equipments will be taking place this year and early 2024 to achieve that 4 million tyre capacity or capabilities. Also in Nokia, we are increasing capacity. We decided that those investments on new equipment, late 21 and early 22, they are being installed as we speak. And also we are increasing, ramping up the capacity increases in Nokia right now. First contract manufacturing agreements were signed in Q4 and negotiations with other manufacturers are ongoing. So the first of the volume to be expected in the second half of 2023. And the same process in Russia is ongoing. Move to page three. Despite an eventful year, we had a resilient performance and I want to highlight some of the key achievements. First of all, Heavy Tyres had all-time high net sales, all-time high profitability and productivity. Viano delivered all-time high net sales. In North America, we achieved the highest ever sales in terms of volume in passenger car tires and also, of course, production records in our data factory, which progressed in 22 according to plan or actually ahead of the plan in 22. Important achievement was also our new products, which were high-performing and efficient. We had strong partnerships with our customers, which drove our net sales in 2022, despite a demanding year and eventful year because of the war in Ukraine. I go to page four. So Q4 is impacted by lower supply volumes. Net sales at 411 million euros. This is 22% behind the 21 fourth quarter. incomparable currencies and the most impacting reason for that was the lower passage of car tire supply volumes. Segment operating profit at 13.5 million euro was 88 million a year ago. We had the same reasons, lower passage of car tire volumes and also changed factory mix and But we also had price increases to combat cost inflation and we had higher net selling price, average selling price. Then we will talk more about the profitability impacting factory mix and supply volume impacts soon. I got paid fine, which is reflecting the full year 22 performance. So in our net sales, they're 1.78 million, which is all-time high. Last year, we achieved 1.71 billion. sorry, 1.78 billion net sales in 2022 and 1.71 billion in 2021. So, actually, 2022, despite it being an eventful year, had the all-time high net sales of Nokian tires. However, in comparable currencies, we're slightly behind 2021 net sales. We had lower passenger car tire volumes as the Sanctions came into force and the tire imports from Russia to Europe and North America ended in July. However, we had also a record year in heavy tires and Vianor. This shows a strong performance by our Nokia tires team and also the resilience under very demanding circumstances in 2022. Segments operating profit were 221 million versus 325 million in 2021. Again, the supply of or the lower passenger car tire supply volumes as well as changed factory mix had the most important impact on the profitability. We had tailings from price increases and they helped to combat the cost inflation. Based on 22 performance, the board proposal on the dividend payment is as follows, 35 cents to be paid in May, and also the board will seek authorization to decide on the second dividend payment of maximum 20 cents per share in second half of 2023. So all in all, the dividend payment proposal is up to 55 cents per share. On page six, we have the highlights of the financial performance. I call out some key numbers here. In the final quarter, cash flow from operating activities, €319 million. Capital expenditures, €70 million. In that €70 million, we have about slightly below €40 million of new equipment for the Romania factory. Our segments EBITDA, a new profitability measurement, segments EBITDA at 12.5% and segments operating profit at 3.3%. Full year net sales at 1.78 billion versus 1.71 billion in 2021, as I mentioned earlier. Segments EBITDA in 2022, 21% at 367 million versus 400. in 2021. Equity ratio remains strong, so we have 65% equity ratio and interest rate and net debt at the end of the year at 141 million. Capital expenditure for the year at almost 130 million. And on page 7, just to highlight also achievements in sustainability, we had excellent safety performance. Lost time incident frequency was record low at 3.2 per million hours worked. We also started to build the first CO2 emission factory in Romania. Entire industry introduced the most sustainable concept tire yet, and also an important achievement in 2022, if included in Dow Jones Sustainability Year Index, being one of the top scoring companies in automobiles and automotive components industry. With those highlights, I hand over to Teemu to give more color to financial performance and financial details. Teemu, please go ahead.