Nokian Tyres Plc

Good afternoon from Helsinki and welcome to Nokian Tire's third quarter result conference call. My name is Saivi Antola and together with me I have in the call the President and CEO Jukka Moisio and Niko Haavisto, the CFO. And as usual, we have some prepared notes and then after that there's a Q&A. So Jukka, please go ahead.

Thank you Päivi and welcome on my behalf and indeed we have some prepared notes and we have a presentation with the page one heading is mortgage against driving sales growth in a weak market and Romanian factory progressing on schedule and I move to page two which is then Q3 Net sales and segments operating profit increased. That's the heading. So our net sales were 314 million, which is about 14% higher in comparable currencies. We had market share gains, which were driven by the improved passage of car tire availability. Geographically, the strongest growth in the quarter were Central Europe and the Nordics. segments have been down at 58.8 million versus 46 million the prior year and margin percentage 18.8 versus 16.7 segments operating profit in the quarter at 30.4 million versus 19.6 a year ago and 9.7 margin main driver for the profitability improvement is higher sales and lower raw material cost also over overall statement of the quarter is that car and tire market is weak and it's difficult to estimate market and consumer behavior going forward i may move to page three some of the key figures and first of all to to say that the investment phase approaching its end and therefore the net debt in 2024 is speaking, and from 2024 onwards, the net debt is expected to go down and the cash flow is turning positive. We've had a negative, strongly negative cash flow in 23 and 24, based on the investment requirements and the build of Romanian factory, as well as the completion of date on investment, and at the same time, having shortage of, big availability of tires because we lack the production capability. I call out some key numbers on page three. One is the capital expenditure. So in the quarter, we spent 101 million, mostly in Romanian factory. And year to date, nine months, 260 million versus 157 million a year ago. Also, net sales after nine months, 875 million versus 805, and segments EBITDA at 13.5% versus 12.2 in 23. Return on capital employed at this moment, 12-month rolling is 4.2%, equity ratio 49.6% versus 6.1%, and indeed gearing at 64%. and interest rate net debt at 800 million this is the highest number we will see from this moment onwards this number will go down and I now hand over to Niko to talk about financial numbers Niko please go ahead thank you Jukka I will go through the segment numbers so on page four

In the passenger car tire segment, we had higher sales and improved profitability, and this was driven especially by our central Europe. And the average selling prices with comparable currencies, however, decreased. Profitability, we improved there due to the higher volumes and lower material costs. I need to point out that in our Q3 numbers, the non-IFRS exclusions included the inventory write downs of the contract manufacturing. And as we've said earlier in the year, these are the products that came in late and we wanted to sell these contract manufacturing summer products during the Q3 now. We tried that earlier in the summer or in the season, didn't manage to do that as they came in late, but did that now in Q3. In the table there below, you can see the segments operating profit landed at 34.4 million euros and with operating profit percentage of 16.4 compared to last year's 11.1. On the page five, we have the passenger car tire business bridge. So first, there is the net sales bridge, and there you see the volumes impacted heavily. Then on the price side, price and mix, it was a negative minus 18 million, as well as the currency still had headwind there, minus 2 million euros on the sales level, and landed at 210 million euros in terms of net sales. On the operating profit table, there on the low bottom on that page, we see that once again the volume gain on the profit was 26 million euros, price a mix, the 18 million euros, and then the rest netted roughly 8 million euros, and we landed with 34 million euros in terms of segments operating profit in Q3. Then a little bit split year on year, the passenger car tires, still the quarterly change is there. You see that the sales volume gained 35.4%, so clear increase. And the trend there is what we want to see as well. And then in terms of price and mix, you see there minus 10.5%. But without this exclusion with the write-down, it would be on the level of 3% in terms of price and mix. And that would come mainly from the mix. Then the currency is, of course, still headwind, but on a much more moderate level than in the prior year. On the page 7, when we go to our heavy tire segment, There, the story continues. The net sales are decreasing, and that's mainly due to the weak OEM market. I think we have visibility, but it doesn't look too promising when we are looking towards the year end. Profitability, I think that is on the level that we can be proud of. The 12.9% is actually better than what we had. did last year, so this tells that we have the costs in control. And we had the production temporarily adapted during the summer break to meet the demand in the market. And then finally the last segment, the Vianor, there we see that the sales are at the last year's level, or slightly increased compared to last year. But what we are facing is the negative segments operating profit, and this is mainly due to the inflation, which we've said earlier, and also we are facing quite a weak business-to-business market there. Of course, now when the Q4 comes and really the season kicks in, we believe that we are in a well position there going into the Q4. then uh the final the guidance uh for for this year we've said that it's it's unchanged ie that our net sales with the comparable currencies and the segments operating profit are expected to grow significantly compared to last year and with that i hand back to you thank you nico some of the uh