Nokian Tyres Plc

Good afternoon from Helsinki and welcome to Nokian Thaieus Q1 2025 results webcast and conference call. My name is Anu Kangaria and I'm working at Nokian Thaieus Investor Relations. Together with me in this call I have our President and CEO Paolo Pompei and our CFO Niko Haavisto. As usual, Paolo and Niko will present the results, and after that, there will be time for the questions. Without further due, Paolo, please go ahead.

Good afternoon all from my side. I'm Paolo Pompei, I'm the President and CEO, and I will guide you through our Quarter 1 Interim Report this afternoon. I start from page one. The headline is strong sales growth in all regions, actions accelerated to improve financial performance. Moving to slide number two, the agenda of this today call will be the financial performance in quarter one. We will go through the numbers of the business unit. There will be some reflections from my side and at the end, we will also address the situation of the tariff in North America, as well as the guidance for 2025. Moving to slide number three, Quarter one financial performance. Let's move to slide number four. We had strong sales growth in quarter one. This is continuing our journey and strong sales growth that we had also in quarter four and quarter three last year. This was succeeded in all market and all region. Our Romanian factory is proceeding according to plan. We were starting to deliver tyres already at the end of March. We had an extremely good performance in a declining market for the heavy tyre division and obviously we are not fully satisfied actually with the financial performance and we have accelerated actions to improve our financial performance in the next quarters. The tariff, of course, are causing some disturbances and some uncertainties in North America. But of course, with our local to local strategy, we are working hard to mitigate any kind of impact. Moving to slide number five, the market has been pretty stable in North America when we talk about passenger car and light truck tires, and has been actually growing by 5% in Europe. The truck tire market has been stable in the aftermarket in Europe while the agri-tire business was actually declining both in the replacement market by 7% as well as in the OE segment by minus 20%. We are pleased to see that Nokian Tire in terms of sales outperform the market in all the segments where we are operating today. Moving to slide number six, net sales at 269 million was growing by 14.2% with comparable currency. We had a positive development in all the business units and we improved our market position in all regions. Our segment EBITDA was stable at 12.5 million euros and our percentage, 4.6% of net sales was declining compared to previous year. Our segment operating profit was minus 18.5 million, compared to minus 15.1 million previous year at 6.9% on net sales, minus 6.9% on net sales. The declining was mainly driven by the higher raw material and obviously the necessary SG&A cost to reinforce our market position in the growing market areas. We have implemented price increases in Quarter 1, which are obviously intended to offset the increased raw material cost, and this will be reflected in our Quarter 2 onwards results. Moving to slide number seven, you will see that we were, as anticipated, able to grow by almost 6% in the Nordics, where we have already leading position. We've been growing fast in Central Europe, once again, by 34%, and we were also growing fast in North America by 15%. Moving to slide number eight, I will ask Nico to comment the following slides.

Thank you, Paolo, and welcome on my behalf as well. From the key figures, I want to point out the net sales. As Paolo said, we increased the net sales by some 14% compared to previous year. But at the same time, I need to say that the profitability is not where we want to be, and we must continue our tasks in order to improve the profitability with more control and a quicker way. As everybody knows in this call, we are still final year in our investment phase. So the major investments to build on our new Nokian will be done by the end of this year. within this three years period we have been investing close to 800 million euros and that's a gross number. I want to highlight as well that the Romanian state aid approved by EU that will be paid by Romania uh is not reflected in any of our numbers and as said in the earlier calls throughout last year as well we'll see that it will be in our our cash flow in the next three years to come Also, we are returning back to the more maintenance type of investments, i.e. the maintenance capex, estimating that to be around 120 million euros starting next year, so clearly below our depreciations. From the business units side, we'll start with the passenger car tires. So their sales, once again, were on a good level, but the profitability was weak, mainly due to the higher raw material costs and the SG&A. and we see that the inventories are on a lower level, so more healthier than in the previous or the comparable Q1 last year. From the sales bridge, there we can see that the volume plus 31 million euros was then fairly neutral on the on the price and and and mix site in in in terms of net sales and then when you look at the segments operating bridge those same elements there i.e 10 million euro coming from the volumes one million euro from the price and mix And then the materials and the supply chain as well as the SG&A were negatives in terms of the profitability. Slide number 13, this is the sales and the quarterly changes there. Volume, but I would like volume up by close to 22%, but really I think what is good is the price and mix. So there the trend is positive, slightly positive, but we have ended the two quarters decline that we had. last year ie h2 last year so that has what was changed in in in the q1 of 2025 Heavy tires also, as Paolo pointed out, really solid performance, especially weak OE market. We were able to find new customers in the aftermarket. So even with the low volumes, we're able to make 13% EBIT. So really proud of this, something we need to continue and contribute. to the whole of Nokian tires. In terms of Vianor, the first quarter is always seasonally low. And now the Easter was late actually in April. So the profitability was at the last year's level. But this is a constant balance of controlling our costs. Of course, the lower inflation will help us, but we need to monitor and be on top of the business at all times. And with that, I hand it back to the Paolo and CEO reflections.