Nokian Tyres Plc

I'd like to hand the call over to Kaivi Antola. Please go ahead.

Good afternoon from Helsinki and welcome to Nokian Tyres Q2-23 results conference call. My name is Kaivi Antola from Nokian Tyres Industrial Relations and together with me in the call I have Jukka Moisio, the President and CEO of the company and Teemu Kangaskarki, the CFO of Nokian Tyres. And in this call, we will go through the Q2 results and how we are proceeding with building the new Nokian tires. But now I'm handing over to Jukka and Teemu, please go ahead.

Thank you, Päivi. Jukka Moisio here. So welcome on my behalf. And indeed, we have a presentation there that heading is building the new Nokian tires is on track. And so I move on that presentation to page two and talk quickly about the strategic projects. They are proceeding as planned. First of all, we have the Romanian factory. So building work is underway and we had the groundbreaking in May, 2023. We got building permit on the same day. And so we are very much progressing on the building. Main equipment, as you may remember, were ordered already in 2022, so that we secure the availability and delivery times. Our timeline is such that first buyers are expected in the second half of 2024, and the commercial production will start in 2025. Application for the investment subsidiary of up to 99.5 million is under EU review, so that they will approve the state aid as proposed by the Romanian government. Another project in Finland, so we have a passenger car tire capacity increased and in use as we speak. In the US, the ramp-up of the factory is proceeding, so we've hired additional employees to the production and the equipment installations are ongoing. New production lines are being started sequentially at this very moment and towards the end of Q3, we expect that they all are installed and then we start of the year. Contract manufacturing volume of 1.5 million tires have been secured for 2023, so first internal season tires to Central European market will be in the second half of 2023. No significant minor volumes only of the contract manufacturing has been delivered in the first six months of the year. secured volume will be benefiting top line and the company in the second half of 2023. I move to page three about the profitability. So these numbers in Q2 are excluding Russia. So first of all, the segments net sales at 293 million versus 332 million in 22. This is a 12% reported decline, but if we exclude the currency, Plain reasons, there were lower passenger car tire supply volumes. This is a reflection that we did not have the full capability to deliver in the early part of the year. We get additional tires and additional volume in the second half, and that will help our top line. Also, the car and tire market environment for the replacement tires were quite demanding, Nordic markets, so Norway and Sweden, Norway being the most or the biggest headwind in terms of currency conversion. Segment operating profit at 15.2 million versus 0.9 million in 22. Price increases to combat cost inflation led to higher ASP. Segment EBITDA was 41.3 million versus 25.9 in 22, so we Move to page four. Here are some of the key financial numbers. I call out some key numbers that I didn't mention earlier. So segments operated profit at 5.2%, segments EBITDA at 14.1, and small earnings per share for 5 cents per share in the quarter. And if you look at the capital expenditure, we spent 3 million in the quarter, versus 19 million a prior year, and cash flow from operating activities was minus 67 million versus 109 million a year ago. In the first six months, if you look at the top line, so all in all, we had a reported change over minus 19%, so 529 in 23 versus 655 in 22 in constant current, Segments EBITDA for the first six months in 23 was 9.9% versus 13% in 22. And as mentioned in our guidance, the segments operating profit was 1 million, and we said that the profitability and profit of 23 will be generated in the second half of the year. However, we are at 1.1 million, slightly positive in the first half. and that compares to 35.5 million in 2022. In terms of equity ratio, we are still at the high level, 60%, gearing at 16.2, and interest rate and net debt at 220 million, out of which 130 million are IFRS 16 leases. And capital expenditure in the first half, 87 million versus 33 million in the prior year, and cash flow from operating activities in the first six months, 124 million negative. Again, we experienced a strong seasonality, explained by the fact that most of our products sold and our top line will be consisting of winter tires. And with that, I hand over to Teemu to talk about financials. Teemu, please go ahead.